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Caribbean Islands Role of Government
In the 1980s, the Dominican government attempted to strengthen
public finances, develop the productive capital infrastructure, and
diversify agricultural production. On two occasions, the government
entered into an extended arrangement with the International
Monetary Fund (IMF--see Glossary) to accomplish these goals.
Although the nation's stated development policy called upon the
private sector to be the engine of economic growth, the
government's involvement in key sectors of the economy remained
strong.
Dominica entered into an Extended Fund Facility program with
the IMF for the period 1982 to 1984. Under the program, the
government reorganized public finances, eliminating subsidies to
unproductive state enterprises, and expanded government revenues
through increased consumption taxes. Expenditure controls were also
introduced; the hallmark of this effort was the decision to
restrict salary increases of public employees to a level below the
anticipated rate of inflation. This decision appeared to influence
the rate of increase of private-sector wage settlements.
In 1987 the Dominican government signed a three-year structural
adjustment program with the World Bank. The adjustment program was
expected to encourage policies and programs that would increase GDP
through investment by the private sector. In preparing this
favorable investment environment, the government developed a
package of incentives for private investment that included the
removal of export taxes as well as the foreign exchange levy, the
termination of price controls on 40 percent of controlled items,
and a substantial reduction in corporate taxes for eligible
manufacturing firms. To stimulate diversified agricultural
production, the government removed price controls on imported
livestock products and took steps to revitalize export market
development for fruit and vegetable crops. At the public-sector
level, procedures for investment promotion were streamlined and
located in one agency, the Industrial Development Corporation. Each
ministry received technical assistance in project design, planning,
and management of public-sector projects. The Economic Development
Unit, the government's central planning body, was staffed with a
multidisciplinary pool of technical experts. In addition, wages in
the public sector were no longer to be raised automatically each
year; wage negotiation guidelines were drawn up that were expected
to help keep increases in the public wage bill to 3 percent per
year.
In support of these policy reforms, the International
Development Association (IDA) of the World Bank made available
US$3.1 million in credit as a structural adjustment loan. In
addition, the CDB was to provide US$2 million in parallel
financing.
The IMF program of structural adjustment was entered into
largely because of the failure of the private sector to lead the
way in economic development. As a result, the government was
playing a greater role in direct investment and commerce than
originally had been intended. In the late 1980s, the government
owned and operated a citrus processing plant, lime-producing
estates, and an export-import company and remained directly
involved in communications, transportation, electricity supplies,
and commercial banking.
Communications on Dominica were fair. A subsidiary of an
international company operated a fully automatic telephone system
with about 4,600 sets. New radio-relay links to Martinique and
Guadeloupe provided high-quality international service. The
government-owned Dominica Broadcasting Corporation operated a radio
station on 595 kilohertz. Radio Caribbean, with studios on St.
Lucia, had a small relay on 1210 kilohertz and the Gospel
Broadcasting Corporation had facilities on 1060 kilohertz.
The transportation network on Dominica was not well developed.
The island had about 370 kilometers of paved and 380 kilometers of
gravel roads. Road conditions were often poor, however, and many
areas of the interior and northwest could not be reached by
vehicle. A new small airport outside Roseau was completed in the
mid-1980s, and an older, larger airport was located near Melville
Hall on the northeast coast. The island had no railroads. Several
streams were navigable by canoe but none had economic significance.
Roseau and Portsmouth were the only ports.
Data as of November 1987
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