Dominica - Economic development

Dominica seeks to foster private enterprise. However, the Charles government was willing to intervene in the economy where it perceived a need. In 1986, for example, it created an export-import agency and announced a land-reform program, both to stimulate agriculture. Under the latter, the government purchased 800 hectares (2,000 acres) of land in prime growing areas and then guaranteed a minimum holding with security of tenure, as well as services and equipment, to small farmers and landless farm workers.

As of 1994, the government encouraged agriculture expansion by a program of diversification. This program was aimed at improving the marketing of production and providing income guarantees for farmers diversifying into new crops. There was still serious concern at the implication of the restructuring of formerly protected European markets, despite the EC's implementation of favorable banana terms on 1 July 1993.

The economy is dependent on agriculture and thus is highly vulnerable to climatic conditions. Agriculture accounts for about 20% of gross domestic product (GDP) and employs 40% of the labor force. Development of the tourist industry remains difficult because of the rugged coastline and the lack of an international airport, but the government bought land for the construction of an airport in 1999. In August 2002, Dominica negotiated a one-year $4.3 million Stand-By Arrangement with the International Monetary Fund (IMF). In the early 2000s, unemployment remained high, and output was in decline, in part due to weak export prices for bananas, and to weak growth of non-banana agriculture and tourism. In 2001–02, the government deficit was about 10.5% of GDP, and was largely financed by external borrowing. Due to the completion of investment projects in infrastructure and education, capital expenditure declined from 16.5% in 2000–01, to 6% in 2001–02.

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