Press Release No. 03/10

Press Release: IMF Approves US$4 Million in Emergency Assistance for Grenada

January 27, 2003

The Executive Board of the International Monetary Fund (IMF) today approved SDR 2.93 million (about US$4 million) in emergency assistance for Grenada in support of the government's efforts to deal with the devastating effects of tropical storm Lili, which struck the island on September 24, 2002. The amount approved is available immediately.

Tropical storm Lili caused considerable damage to Grenada's infrastructure, agriculture, and property, estimated at nearly 2 percent of the country's GDP. The potential loss of earnings from the destruction of crops, in particular nutmeg, is estimated at about one-third of agricultural exports in 2002.

The government responded immediately after the storm and temporarily repaired roads and bridges to help restore normal economic activity. Measures are being taken to rehabilitate infrastructure on a more permanent basis. In the 2003 budget, approved by parliament in November, the government increased the allocation for infrastructure rehabilitation on an emergency basis and for strengthening its disaster management and emergency relief operations. The government has also taken steps to broaden the tax base and curtail expenditures to ensure fiscal and debt sustainability and higher growth.

The IMF provides emergency assistance to member countries hit by natural disasters so that they can meet immediate balance of payments financing needs, and maintain or restore macroeconomic stability. The emergency loan, which currently carries a charge of 2.51 percent, will be repaid in eight equal quarterly installments over 3¼ to 5 years from the disbursement date.

At the conclusion of the Executive Board's discussion on Grenada, Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman, said:

"The authorities are to be commended for their speedy response to the effects of tropical storm Lili, which caused extensive damage—equivalent to nearly 2 percent of GDP—to infrastructure and the nutmeg crop, Grenada's main agricultural export. Essential infrastructure was repaired, and emergency assistance provided to the affected population. In the budget for 2003, the government has allocated funds for infrastructure rehabilitation and for strengthening its disaster management and emergency relief operations. The Fund's financial assistance will supplement the efforts of the authorities, and other donors, in rebuilding the infrastructure on a more permanent basis and restoring economic activity."