Dominica is known as the “nature island” due to its spectacular flora and fauna. It is the largest of the Windward Islands and the most mountainous of the Lesser Antilles. Some 3,000 Carib Indians still living on Dominica are the only pre-Columbian population remaining in the eastern Caribbean. Its total population is 72,660.

 

Key issues in EU-Dominica relations

The Dominican economy has traditionally depended on agriculture, primarily bananas. Due to some structural weaknesses as well as to the erosion of preference on the EC market, production of bananas has dropped in the last two decades and the country has had to cope with the severe economic and social consequences of the banana decline. Also through the Special Framework of Assistance for traditional ACP banana suppliers, the country has been trying to diversify the national agricultural production while concentrating its banana production in the Fair Trade niche market. Difficult air and road connections, the rugged nature and the small number of accessible beaches have prevented the development of mainstream tourism. Recently, government has started promoting Dominica as an "ecotourism" destination.

The economic crisis in 2001/2 led to a rise in poverty and in unemployment. In 2003 the authorities began a comprehensive restructuring of the economy to address the economic crisis, also in the context of a three-year Poverty Reduction and Growth Facility (PRGF) run by IMF for an amount equivalent to nearly € 9 M. In March 2006 both a Value Added Tax and an excise tax were introduced. The Government has developed and is implementing a medium-term Growth and Social Protection Strategy (GSPS), which was finalised in 2005 and revised in 2009. The strategy assumes that poverty will be reduced through balanced economic growth. The government has also launched a new initiative to reduce poverty, under the Dominica Social Investment Fund, which is being financed by the EU over three years. All in all, Dominica remains highly vulnerable to climatic conditions and international economic developments. The global financial and economic crisis has severely impacted the island through lower remittances, a decline in stay-over tourists and a reduction in foreign direct investment and economic growth shrank by 0.3% in 2009, down from the 3.2% figure recorded in 2008. Nevertheless, the near to medium-term economic outlook is positive; with the recovery of the global economy and expected improvements in international trade and tourism activities, the Dominican economy is expected to grow at 1.5% in 2010.

Under the 10^th EDF, it is proposed to focus 80% of the financial envelope, corresponding to € 4.56 M, on General Budgetary Supportto assist the Government in implementing its home-grown GSPS. The remaining amount (€ 1.14 M) will be equally divided between Technical Cooperation Facilityand Technical Assistance.

Dominica is a member of CARIFORUM, CARICOM and the Organisation of Eastern Caribbean States (OECS), the latter having established a single monetary area and a common currency (the Eastern Caribbean Dollar) as well as a common central bank (the Eastern Caribbean Central Bank). On 29 December 2009, the OECS Leaders met in Saint Kitts and Nevis and, 28 years after the original treaty of Basseterre creating the OECS, signed a new Treaty establishing an Economic Union among them. The Treaty will have to be ratified and all institutional arrangements are not expected to be in place before mid 2010. Together with all other OECS members, Dominica also committed to the Caricom Single Market and Economy (CSME), the regional pact allowing for the free movement of goods, skills, and labours, across participating countries. In January 2008 Dominica joined ALBA, the regional initiative promoted by Venezuela, and is also a member of Petrocaribe, a Caribbean oil alliance being promoted by Venezuela.