Grenada: 2023 Article IV Consultation-Press Release; and Staff Report

IMF Staff Country Reports, July 19, 2023

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Canonical URL: Grenada: 2023 Article IV Consultation-Press Release; and Staff Report

The 2023 Article IV Consultation analyses that the Grenada’ tourism-dependent economy continued to recover from the pandemic amidst rising energy and food prices.
Growth is estimated to have reached 6.4 percent in 2022, driven by a tourism rebound and construction activity.
Inflation rose moderately to 2.9 percent by end-2022, as the authorities’ policy response dampened the pass through from rising global food and fuel prices.
Public debt is now back on a downward trend.
The financial sector is well capitalized and liquid although nonperforming loans (NPLs) of credit unions have risen.
The government is committed to a return to the fiscal rules in 2023, after triggering the escape clause in 2020–22 to address the fallout of the pandemic.
The government planned to amend the Fiscal Responsibility Law this year to best support the country’s sustainable development.
The government is seeking international support to facilitate the implementation of its Disaster Resilience Strategy and a transition toward renewable energy, critical for enhancing resilience to natural disasters and economic competitiveness.

Growth: "6.4 percent in 2022" (estimated), driven by tourism rebound and construction activity.
Inflation: "2.9 percent by end-2022", described as a moderate rise.
External environment: recovery occurring "amidst rising energy and food prices" with policy measures to dampen passthrough.

Public debt: described as "back on a downward trend".
Fiscal rules and governance:
- Government "committed to a return to the fiscal rules in 2023".
- Escape clause was triggered in "2020–22" to address pandemic fallout.
- Government "planned to amend the Fiscal Responsibility Law this year" to support sustainable development.

Capitalization and liquidity: the financial sector is "well capitalized and liquid".
Asset quality concern: "nonperforming loans (NPLs) of credit unions have risen".

Fiscal policy: return to fiscal rules in 2023 and amendment of the Fiscal Responsibility Law to align with sustainable development objectives.
Resilience and climate-related priorities:
- Implementation of the Disaster Resilience Strategy.
- Transition toward renewable energy to enhance resilience to natural disasters and economic competitiveness.
International support: government is "seeking international support" to facilitate the above resilience and energy transitions.

Source: Grenada: 2023 Article IV Consultation-Press Release; and Staff Report (July 19, 2023).