Press Release: Statement by an IMF Mission to Grenada
March 23, 2011Press Release No. 11/99
March 23, 2011
An International Monetary Fund (IMF) mission led by Ms. Nita Thacker visited St. George’s during March 14–22 to conduct discussions on the second review of the government’s economic program supported by the IMF’s Extended Credit Facility (ECF) approved on April 2, 2010. The mission held discussions with the Minister of Finance Hon. Nazim Burke, Permanent Secretary of the Ministry of Finance Mr. Timothy Antoine, senior officials of various ministries, heads of statutory bodies, representatives from the political opposition, the financial sector and the business community. At the conclusion of the visit, Ms. Thacker issued the following statement:
“The mission had useful discussions on the second review under the IMF’s Extended Credit Facility program. The main elements for recommending a completion of the review have been agreed upon. Some remaining work to complete the required documentation is expected to be finalized in the coming weeks.
“Although real GDP declined for a second year in 2010, falling by 1.4 percent, there are some signs of a modest recovery this year. Tourism activity has picked up in the first quarter of 2011 compared to last year, agricultural output is expected to be higher, and construction is expected to grow as some previously delayed projects start. With growth in 2011 expected to be in the range of 1 to 1.5 percent, the authorities continue to face challenging circumstances. There are significant downside risks both from domestic and external factors. These risks stem from potential further increases in international prices of food and fuel, and a slower-than-expected recovery in advanced countries, which would affect the tourism sector and lead to a slow recovery on employment and growth.
“The mission commended Grenada’s authorities for addressing some of the structural impediments to private sector growth. There has been a reduction in the number of days it takes to start a business, a reduction in the number of days to register property due to simplification of procedures, and the establishment of a separate land registry. In addition, the cost and time needed for trading across borders have also decreased.
“Preliminary data indicate that the quantitative performance criteria on external debt accumulation have been met. The primary deficit (excluding grants) exceeded the target envisaged in the program by a moderate amount. The authorities remain firmly committed to fiscal consolidation to reduce the debt service-to-revenue ratio in the medium and long term allowing for a better allocation of resources for priority spending, while cognizant of the significant challenges ahead given the downside risks to the economic outlook.
“Significant progress has been made on the structural front, notwithstanding delays in some areas. In particular, the supervision of the non-banking financial sector has improved, but the introduction of the new customs platform and the establishment of a Public Procurement Unit has been delayed. The authorities remain committed to move this agenda forward.
“The mission thanks the authorities for their warm hospitality and close cooperation it received during its stay in Grenada.”