A windfall from Citizenship by Investment (CBI) Program revenues between 2021 and 2023 led to a significant increase in current spending. Following a sharp decline in CBI revenues since 2024, the authorities have implemented reforms primarily to streamline current expenditure and taken steps to mobilize revenue and to further strengthen the integrity and sustainability of the CBI program. Nevertheless, the fiscal deficit remains high, and reduced fiscal buffers limit the government’s capacity to respond to external shocks and meet development needs. The current account deficit also remains wide despite resilient tourism activity. Financial soundness has improved but vulnerabilities persist, particularly among public banks. Amid higher oil prices linked to the war in the Middle East, growth is still projected to rebound in 2026—albeit less than expected before the outbreak of the war—while inflation is projected to increase moderately. Potential growth has weakened over the past decades, constrained by low contributions from physical and human capital, while the economy is highly exposed to natural disasters (NDs). Near-term risks for growth are tilted to the downside, while inflation risks are tilted to the upside amid high global uncertainty.
International Monetary Fund. Western Hemisphere Dept. (Wed,) studied this question.