## IMF Executive Board Concludes Article IV Consultation with Grenada and Fourth Review Under the Extended Credit Facility with Grenada and Approves US$2.8 Million Disbursement

_IMF News, May 19, 2016_

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## Bibliographic details
- Published: May 19, 2016

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### Program implementation and disbursement
- Executive Board concluded Article IV consultation and fourth review of Grenada’s performance under a three-year ECF arrangement on May 18, 2016.
- Completion of the review enabled disbursement of the equivalent of SDR 2 million (about US$2.8 million).
- Total resources made available to Grenada under the ECF arrangement: equivalent of SDR 10.04 million (about US$14.1 million).
- All performance criteria for end-December 2015 were met.
- Most structural benchmarks for the fourth review were met on time or with minor delays; timely corrective actions were taken for two unmet benchmarks.
- Authorities continue to deliver a strong track record of program implementation and results.

### Economic outlook and projections
- Real GDP growth
  - 2015: 4.6 percent (estimated)
  - 2016: 3 percent (projected)
  - 2017: 2.7 percent (projected)
- Growth drivers in 2015: strong growth in agriculture and tourism, rebound in construction.
- GDP at constant prices (annual percentage change): 2011: 0.8; 2012: -1.2; 2013: 2.4; 2014: 5.7; 2015: 4.6; 2016: 3.0; 2017: 2.7.
- Inflation / prices
  - GDP deflator (annual percentage change): 2011: 0.2; 2012: 3.9; 2013: 2.9; 2014: 0.0; 2015: 1.5.
  - Consumer prices, end of period: 2011: 3.5; 2012: 1.8; 2013: -0.6; 2014: -0.2; 2015: 2.8.
- External position: gross international reserves (millions of dollars): 2011: 104.8; 2012: 104.0; 2013: 135.4; 2014: 158.3; 2015: 188.5; 2016: 201.0; 2017: 203.7.
- GIR (in months of imports): 2011: 3.2; 2012: 4.8; 2013: 5.8; 2014: 5.4; 2015: 5.8.

### Fiscal performance and debt dynamics
- Primary balance and overall balance
  - Primary balance (percent of GDP) 2011–2015: 2011: -2.7; 2012: -2.5; 2013: -3.9; 2014: -1.1; 2015: 3.1.
  - Overall balance (percent of GDP) 2011–2016: 2011: -5.2; 2012: -5.9; 2013: -7.3; 2014: -4.7; 2015: -1.3; 2016: 0.5 (proj.).
- Revenue and expenditure (percent of GDP)
  - Revenue: 2011: 23.6; 2012: 20.8; 2013: 20.9; 2014: 24.5; 2015: 25.6; 2016: 24.6; 2017: 25.4.
  - Expenditure: 2011: 28.8; 2012: 26.7; 2013: 28.1; 2014: 29.1; 2015: 26.8; 2016: 24.8; 2017: 24.9.
  - o.w. capital expenditure (percent of GDP): 2011: 7.8; 2012: 5.0; 2013: 7.1; 2014: 6.6; 2015: 6.8.
- Public debt (including guaranteed, percent of GDP)
  - 2011: 100.7; 2012: 103.3; 2013: 107.6; 2014: 101.4; 2015: 94.3; 2016: 89.2; 2017: 78.8.
  - Domestic: 2011: 31.7; 2012: 35.8; 2013: 37.4; 2014: 34.3; 2015: 30.2; 2016: 27.3; 2017: 25.3.
  - External: 2011: 69.0; 2012: 67.6; 2013: 70.2; 2014: 67.1; 2015: 64.1; 2016: 61.9; 2017: 53.5.
- External debt (gross): 2011: 136.3; 2012: 141.0; 2013: 144.1; 2014: 144.2; 2015: 140.2; 2016: 136.2; 2017: 125.5.
- Savings–Investment balance (percent of GDP)
  - Savings–Investment balance: 2011: -23.6; 2012: -21.1; 2013: -23.2; 2014: -15.5; 2015: -14.5; 2016: -12.1; 2017: -14.3.
  - Savings: 2011: -3.7; 2012: -3.2; 2013: 1.4; 2014: 4.4; 2015: (not listed for 2015 in table).
  - Investment: 2011: 19.9; 2012: 16.3; 2013: 20.0; 2014: 16.9; 2015: 18.9; 2016: 16.4; 2017: 18.2.
- Notes on debt: debt-to-GDP declined from 107 percent in 2013 to 94 percent in 2015; projected to continue downward.

### Structural reforms and policy priorities
- Structural fiscal reforms implemented since program onset:
  - Strengthened tax administration.
  - Improved public finance management.
  - Overhaul of the tax incentives regime.
  - New rules-based fiscal policy framework.
- Implementation priorities (high priority):
  - Make new legislations fully effective, with emphasis on reforms to strengthen management of the public wage bill, tax administration, and public debt management.
  - Reform management of the public sector wage bill to ensure sustainable personnel expenditure.
  - Implement reforms to improve the investment and business climate and modernize the labor market to unlock growth potential and lower unemployment.
  - Improve targeting and effectiveness of social spending while safeguarding total social spending.
  - Continue measures to strengthen financial stability and address remaining vulnerabilities in the banking sector and nonbank financial sector, and enhance the AML/CFT framework.

### Executive Board assessment and recommendations
- General assessment:
  - Directors welcomed strong economic recovery and significant improvements in fiscal and external balances and debt reduction.
  - Performance under the Fund-supported home-grown program described as satisfactory; government is on track to complete programmed fiscal adjustment and structural reform agenda.
- Key director recommendations:
  - Continue policy resolve to restore debt sustainability, boost medium-term growth, and strengthen financial stability.
  - Prioritize structural reforms to promote growth and job creation, including removing impediments to private sector activity and improving labor market skills, matching and mobility.
  - Safeguard fiscal consolidation gains through strict budget execution and adherence to the new rules-based fiscal framework.
  - Prioritize implementation of legislative reforms, including strengthened public debt management and improved management of the public sector wage bill.
  - Improve targeting of the social safety net and support implementation of the Support for Education, Employment and Development (SEED).
  - Take proactive measures to address remaining vulnerabilities in the banking sector while minimizing fiscal costs; strengthen regulation and supervision of the nonbank financial sector; enhance AML/CFT framework.
  - Complete comprehensive debt restructuring to restore debt sustainability and maintain fiscal discipline over the medium term to meet long-term debt reduction goals.

### Selected key statistics (exact values preserved)
- Disbursement enabled by fourth review: SDR 2 million (about US$2.8 million).
- Total ECF resources to Grenada: SDR 10.04 million (about US$14.1 million).
- Real GDP growth: 2015: 4.6 percent; 2016 projection: 3 percent.
- Primary balance 2015: 3.1 percent of GDP.
- Debt-to-GDP: 2013: 107.6; 2015: 94.3.
- Gross international reserves (millions of dollars) 2015: 188.5; 2016 proj.: 201.0.
- Current account / trade indicators excerpt: Exports of goods and services (percent of GDP) 2011–2014: 28.2; 28.9; 28.5; 29.7. Imports of goods and services (percent of GDP) 2011–2014: 50.8; 49.5; 50.4; 43.5.

*IMF Press Release No. 16/233 — May 19, 2016. IMF Communications Department.*

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## References

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_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16233_