Press Release: Statement by IMF Deputy Managing Director Agustín Carstens at the Conclusion of his Visit to Grenada

December 13, 2005

Mr. Agustín Carstens, Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement on his visit to Grenada:

"I had a very productive dialogue with Prime Minister Mitchell and members of Cabinet on the last stop on my visit to the Eastern Caribbean Currency Union (ECCU) region. I also had the opportunity to listen to a wide cross-section of society—representatives of the Agency for Reconstruction and Development, the private sector, civil society, and labor unions.

"It is heartening to see signs of economic recovery in Grenada after the damage inflicted by Hurricanes Ivan and Emily. I understand that about two-thirds of the 28,000 houses damaged by Hurricane Ivan are in the process of being rebuilt. With help from the reconstruction activity and preparations for the 2007 Cricket World Cup, growth should be fairly strong in the coming year. This is good news, and it should help lower poverty and unemployment in the country.

"Progress has also been made in filling financing gaps and lowering the huge public debt the country faces. All stakeholders have contributed to this effort. The international community has disbursed significant amounts of aid. It is commendable that a successful debt restructuring agreement with commercial creditors was concluded last month. It substantially lowers debt service payments for the next few years. The government and people of Grenada have done their share with fiscal effort of their own.

"Despite the progress made thus far, the economic situation in Grenada remains challenging, both in the near-term and over a longer horizon. So I was glad to hear from Prime Minister Mitchell that the government has developed a medium-term reform program to boost economic growth and to ensure that Grenada remains on track toward achieving the Millennium Development Goals. This is welcome. Indeed, representatives in our meeting with the private sector and civil society urged adoption of such a medium-term strategy for the development of the country.

"It will be critical to improve the climate for investment and better enable the private sector find new niches for growth. This will require reform of the investment incentive regime and a number of other structural measures. But macroeconomic and financial stability are also needed to provide a solid platform on which the private sector can build. So I hope that Grenada will continue with the strengthening of the financial sector and continued fiscal reforms. Expenditure control, and greater efficiency in the use of government resources, will be needed to place the public finances on a sound footing.

"I welcome the attention being given in the reform program to social development, particularly by alleviating poverty. Of course, the steps that are taken to boost growth will also go a long way in bringing about social development. But it will be important to monitor progress in achieving social goals.

"I would like to stress the importance of extensive national consultations on the key elements of the medium-term reform program. Any reform program requires difficult decisions. The sustained implementation of these decisions will be much more likely if they are built on a solid consensus arrived at after consultation with all segments of society.

"We have worked in close collaboration with the Grenadian authorities over the past year. We will continue to assist in the reconstruction and development of Grenada as best we can."


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