Press Release No. 14/103

IMF Mission Reaches Staff-Level Agreement with Grenada on an Economic Program under the Extended Credit Facility

March 14, 2014

Ms. Aliona Cebotari, the International Monetary Fund’s (IMF) mission chief for Grenada, made the following statement today:

“The Government of Grenada has designed an ambitious program to correct the country’s fiscal imbalances and lift sustainable growth. To support the implementation of this program, the IMF staff and the Grenadian authorities have reached a staff level agreement on a program that can be supported by a three-year Extended Credit Facility arrangement in the amount equivalent to SDR14 million (about US$21.9 million or 120 percent of Grenada’s quota). The agreement reached with the authorities is subject to approval of the IMF’s Executive Board and is contingent upon the timely completion of prior actions to be taken by the Grenadian authorities and obtaining the necessary financing assurances.

“The main objectives of the program are to restore fiscal and debt sustainability, boost long-term growth through structural reforms, and safeguard the resilience of the financial sector.

“The cornerstone of the program is a strong fiscal adjustment focused on curbing current spending and widening the revenue base, while maintaining space for infrastructure spending and social safety nets. The fiscal adjustment will be complemented by a comprehensive debt restructuring, which will aim to secure meaningful debt reduction, address financing shortfalls, and put Grenada’s public debt firmly on a downward path towards the Eastern Caribbean Currency Union (ECCU) regional target of 60 percent of GDP by 2020. The support from official and private creditors for the debt restructuring will be critical for the country’s return to fiscal sustainability. Ambitious public financial management reforms will support the durability of the adjustment.

“Another key element of the program is to bolster competitiveness and thus raise sustainable growth and reduce poverty. Reforms will focus on removing constraints to growth through the liberalization in the renewable energy and other strategic sectors, improving the investment environment, and putting in place the legal infrastructure for public private partnerships. Financial sector reforms will underscore the solvency of the system, as well as its regulation and supervision.

“The success of Grenada’s program will require an extraordinary effort on the part of the authorities, other segments of the society, as well as broad international support. While the initial implementation period will be challenging, Grenada will emerge stronger and more dynamic from the program, and it will be better poised to generate growth and job creation going forward.”