The Executive Board of the International Monetary Fund (IMF) today
completed the sixth and final review of Grenada’s performance under a
program supported by a three-year arrangement under the Extended Credit
Facility (ECF).
The completion of the review enables the disbursement of the equivalent of
SDR 2 million (about US$2.8 million), bringing total resources made
available to Grenada to the equivalent of SDR 14.04 million (about US$19.4
million). The ECF arrangement was approved by the Executive Board on June
26, 2014 (see
Press Release No. 14/310
).
The government met all continuous and end-December 2016 performance
criteria and structural benchmarks. The economy grew by about 3.9 percent
in 2016, reflecting continued strong construction activity and steady
external demand for Grenada’s tourism services. The pace of restructuring
of public debt was accelerated in recent months and Grenada’s debt-to-GDP
ratio declined to 83.4 percent at end-2016 from 108 percent in 2013.
Grenada succeeded in meeting the core objectives of the ECF-supported
program of restoring fiscal sustainability, strengthening the financial
sector, and setting the stage for sustainable growth. With successful
fiscal adjustment, debt restructuring and stronger growth during the
program period, the debt-to-GDP ratio is well on track to meet the
medium-term goal.
The authorities also passed a substantial number of legislative reforms
that helped strengthen the fiscal policy framework, including the Fiscal
Responsibility, Public Debt Management, and Public Finance Management Acts.
The government raised total social spending under the program and improved
the targeting of social transfers to those most in need. In addition,
Grenada’s banking sector has strengthened and financial stability has
improved.
While recent progress is commendable, Grenada remains a small open economy
susceptible to external shocks, including from natural disasters and swings
in tourism demand and commodity prices. While prospects for debt
sustainability have vastly improved, public debt is still relatively high
and the authorities need to continue their efforts to reach medium term
debt targets and to lower unemployment, raise productivity, and broaden the
base of growth.
Following the Executive Board’s discussion on Grenada, Mr. David Lipton,
First Deputy Managing Director and Acting Chair, said:
“Grenada’s performance during the last phase of the ECF-supported program
remained strong. The authorities met all performance criteria and
structural benchmarks for the sixth review. Moreover, the program’s core
objectives of restoring fiscal sustainability, strengthening the financial
sector, and setting the stage for sustained growth have been achieved.
Going forward, the authorities should focus on advancing structural reforms
that promote broad-based growth and lower unemployment, while adhering to
the strengthened fiscal policy framework to secure debt sustainability.
“The authorities have made significant progress in reducing the debt-to-GDP
ratio, but public debt is still high and the outlook remains vulnerable to
shocks. Going forward, the authorities should adhere to the new rules-based
fiscal policy framework to meet medium-term debt targets and build up
reserve buffers to help the country mitigate the impact of future shocks.
It will also be important to regularize all outstanding arrears and
conclude discussions with remaining creditors as soon as possible.
“Significant progress has been made in improving public finance management,
public debt management, tax administration, and targeting of social
transfers. The next phase of reform calls for concerted implementation of
the legislation passed during the program and follow through on the systems
of accountability accompanying the fiscal framework to secure lasting
success.
“To improve Grenada’s competitiveness and growth potential, priorities
should focus on removing impediments to private sector activity, advancing
institution-specific reforms to state-owned enterprises, and revitalizing
the agriculture sector. Efforts to lower unemployment should focus on
strengthening labor market skills and mobility and on implementing the
public service management reform.
“The balance sheet of the banking system has been strengthened and
financial stability has improved. Continued efforts are needed now to
strengthen the regulation and supervision of the non-bank financial sector
and ensure that the financial system contributes more effectively to
private sector growth.”
Grenada: Selected Economic and Financial Indicators
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|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
|
|
|
|
|
Projections
|
|
|
|
|
National income and prices
|
|
|
|
|
|
|
|
|
GDP at constant prices
|
7.3
|
6.2
|
3.9
|
2.5
|
2.3
|
2.2
|
2.5
|
|
Consumer prices, average
|
-1.0
|
-0.6
|
1.7
|
2.6
|
2.0
|
1.8
|
1.9
|
|
Consumer prices, end of period
|
-0.6
|
1.1
|
0.9
|
3.0
|
1.8
|
1.9
|
1.9
|
|
|
|
|
|
|
|
|
|
|
Money and credit, end of period
|
|
|
|
|
|
|
|
|
Credit to private sector
|
-5.1
|
-3.8
|
4.1
|
2.7
|
4.5
|
4.4
|
4.6
|
|
Broad money (M2)
|
4.1
|
5.2
|
5.5
|
5.2
|
4.5
|
4.4
|
4.6
|
|
|
|
|
|
|
|
|
|
|
Central government balances (accrual)
|
|
(In percent of GDP, unless otherwise specified)
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
24.5
|
24.8
|
26.8
|
26.5
|
26.1
|
25.9
|
25.7
|
|
Expenditure
|
29.2
|
26.0
|
24.5
|
24.3
|
23.7
|
23.3
|
22.8
|
|
o.w. Capital expenditure
|
9.2
|
8.4
|
4.3
|
4.4
|
4.1
|
4.1
|
3.8
|
|
Primary balance 1/
|
-1.1
|
2.2
|
5.3
|
4.4
|
4.3
|
4.3
|
4.4
|
|
Primary balance (excl. CBI revenues)
|
-1.1
|
1.6
|
5.3
|
4.4
|
4.3
|
4.3
|
4.4
|
|
Overall balance
|
-4.7
|
-1.2
|
2.4
|
2.2
|
2.4
|
2.6
|
2.9
|
|
Public debt (incl. guaranteed) 2/
|
101.8
|
91.7
|
83.4
|
71.8
|
65.8
|
60.4
|
54.9
|
|
Domestic
|
34.1
|
29.1
|
25.6
|
23.5
|
21.0
|
18.3
|
16.0
|
|
External
|
67.7
|
62.6
|
57.9
|
48.3
|
44.8
|
42.2
|
38.9
|
|
External Sector
|
|
|
|
|
|
|
|
|
Imputed net int’l reserves (US$ mn)
|
158.3
|
188.5
|
192.3
|
194.8
|
203.5
|
213.4
|
224.0
|
|
(in months of imports)
|
4.5
|
5.3
|
5.0
|
4.8
|
4.8
|
4.8
|
4.8
|
|
Current account balance, o/w:
|
-17.5
|
-17.5
|
-14.6
|
-15.4
|
-15.0
|
-15.0
|
-14.4
|
|
Exports of goods and services
|
27.9
|
27.2
|
29.0
|
28.2
|
28.4
|
28.7
|
29.0
|
|
Imports of goods and services
|
45.5
|
44.7
|
43.6
|
43.6
|
43.4
|
43.7
|
43.4
|
|
External debt (gross)
|
143.0
|
135.3
|
129.0
|
117.5
|
113.0
|
109.4
|
105.2
|
|
|
|
|
|
|
|
|
|
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Sources: Ministry of Finance; Eastern Caribbean Central
Bank; and Fund staff estimates and projections.
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1/ Includes 0.7% of GDP CBI-related non-tax revenue in
2015.
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|
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|
2/ Includes impact of debt restructuring agreement reached
with creditor committee for 2025 bonds.
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