An International Monetary Fund (IMF) team visited Grenada during August 18-27, 2014 to conduct discussions on the first review of Grenada’s IMF-supported program under the Extended Credit Facility (ECF). The program was approved on June 26, 2014 (see Press Release No. 14/310) for a total amount equivalent to SDR 14.04 million (about US$21.7 million, 120 percent of quota) with SDR 2.04 million disbursed upon program approval. Representatives from the World Bank, Caribbean Development Bank, and Eastern Caribbean Central Bank accompanied the mission.
The mission met with the Prime Minister and Minister of Finance and Energy Keith C. Mitchell, the Permanent Secretary of the Ministry of Finance Timothy Antoine, Deputy Permanent Secretary of the Ministry of Finance Mike Sylvester, senior officials, as well as representatives of the private sector and civil society, including the Monitoring Committee for the Home-grown Program.
At the conclusion of the visit, Ms. Aliona Cebotari, the Fund’s mission chief for Grenada, made the following statement:
“Grenada has made a strong start in implementing its program. The fiscal consolidation is on track and all quantitative performance criteria for end-June were met. The main structural benchmark for the first review―the introduction of a new Public Finance Management Act to strengthen budget preparation and execution in line with best international practices―was also met. The Fund mission reached preliminary understandings with the authorities on economic policies going forward.
“The economic recovery is slowly taking hold and the growth outlook remains broadly in line with the program, while inflation has been lower than expected. However, the economy continues to face significant challenges from high unemployment, a large debt overhang, and balance sheets weakened by impaired loans.
“Continued strong program implementation will be critical to overcoming the challenges faced by the Grenadian economy. Looking ahead, the authorities’ program will continue to focus on restoring fiscal sustainability, strengthening competitiveness and growth prospects, and securing financial stability. In addition to the programmed fiscal adjustment, progress on the comprehensive debt restructuring underway will be needed to secure fiscal sustainability. The structural reform agenda will focus on: (i) improving the business environment through amendments to the Investment Promotion Act, the tax incentive regime, and regulatory reforms to the energy sector; (ii) a continued strengthening of the fiscal policy framework through the introduction of fiscal responsibility legislation, new legislative frameworks for public debt management and tax administration, and a regulatory framework for the National Transformation Fund to ensure sustainable management of the citizenship-by-investment receipts; (iv) modernizing the public service; and (v) strengthening the financial position and oversight of statutory bodies.
“These preliminary understandings are subject to approval by the IMF’s Management and Executive Board. Consideration of the first review of Grenada’s IMF-supported program under the ECF could take place by the IMF’s Executive Board in November. Upon approval, SDR 2 million (about US$ 3 million) would be made available to Grenada.
“The mission would like to thank the authorities and technical staff for their excellent cooperation and kind hospitality, and reaffirm the IMF’s support for the government’s efforts to implement Grenada’s program.”