Strengthening Public Financial Management Program

In small island economies, fiscal consolidation measures should take into account the size of the public sector. The role and magnitude of the public sector in a small, island economy and sporadic wage increases for civil servants put pressure on recurrent expenditure. These make it difficult to manage fiscal expenditure over time. A small economic base limits areas for alternative employment opportunities. This could imply that the share of the public sector in the economy would remain large in the longer term. Thus, there is a case for considering the size of the public sector in any future reform program.