Press Release No. 14/574

Press Release: IMF Executive Board Completes First Review Under Extended Credit Facility Arrangement for Grenada, and Approves US$2.9 Million Disbursement

December 12, 2014

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Grenada’s economic performance under a three-year program supported by an arrangement under the Extended Credit Facility (ECF). The completion of the review enables the disbursement of SDR 2 million (about US$2.9 million), bringing total resources made available to Grenada under the arrangement to SDR 4.04 million (about US$5.9 million).

The ECF arrangement in the amount of SDR 14.04 million (then about US$21.7 million, or 120 percent of Grenada’s quota at the IMF) was approved by the Executive Board on June 26, 2014 (see Press Release No. 14/310).

Following the Executive Board’s discussion on Grenada, Mr. Min Zhu, Deputy Managing Director and Acting Chair, said:

“The Grenadian authorities are implementing their Fund-supported economic program with great resolution. Fiscal consolidation is underway, structural reforms are advancing, and negotiations with creditors on public debt restructuring are progressing. While the economy is showing signs of recovery, it remains subject to significant risks. Continued strong commitment to the program, supported by all stakeholders, will be critical to boost Grenada’s growth prospects.

“Immediate priorities are to restore fiscal and debt sustainability, and bolster competitiveness. The planned fiscal consolidation will help meet the fiscal objectives for 2014-15, while protecting the most vulnerable. However, continued adjustment effort and strong implementation is needed to achieve the program’s primary surplus targets. In addition, a comprehensive restructuring of public debt will be essential to return public debt to sustainable levels.

“Reforms to the institutional framework for fiscal policy will be critical to support sound policies, going forward. Priority should be given to implementing the new public financial management legislation, introducing fiscal responsibility legislation, finalizing reforms of public institutions outside the central government, reforming the tax incentive regime, introducing a framework for sustainable management of citizenship-by-investment receipts, and improving the tax and customs administration.

“The legislative underpinnings of the authorities’ growth-enhancing strategy have been put in place. However, stronger reforms will be needed to improve competitiveness and longer-term prospects. A focus on the implementation of the investment framework and on the reform of the regulatory framework for the energy sector could yield important gains. Social protection programs should also be strengthened to ensure more inclusive growth.

“Advancing the regional strategy to strengthen the banking system, coordinated by the Eastern Caribbean Central Bank, remains essential to securing financial stability and efficient intermediation.”