June 17, 2025
Dominica is a small developing state (SDS) facing large economic imbalances, natural disasters (NDs), and substantial development needs amid slowing potential growth. Its narrow economic base (ecotourism and agriculture) with limited downstream integration leaves it exposed to external shocks, which have pushed debt well above the regional 60 percent of GDP threshold, heightening debt distress risks. The country is highly reliant citizenship-by-investment (CBI) flows—that are susceptible to abrupt halts from evolving third-party security concerns— for reconstruction and strategic investment, which has raised the current account deficit during the building phase. With no independent monetary policy, fiscal policy is the primary policy tool, but weak institutional capacity hampers policy formulation, monitoring, and execution.
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