IMF Executive Board Concludes 2024 Article IV Consultation with Grenada
IMF News, February 4, 2025
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Bibliographic details
- Published: February 4, 2025
Consultation outcome and context
- On January 24, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Grenada.
- Press Release No. 25/026; publication date on the page: February 4, 2025.
- Through end-June 2024, Grenada’s economy was experiencing sustained strong growth supported by buoyant tourism, moderating inflation, and a narrowing current account deficit.
- A surge in Citizenship-by-Investment (CBI) revenue supported a strong improvement in the fiscal position and reduction in public debt.
- On July 1, Hurricane Beryl caused damage in excess of 16 percent of GDP on the Grenadian islands of Carriacou and Petite Martinique, as well as in the northern parishes of the main island.
- Authorities responded with a package of fiscal measures, including suspension of fiscal rules to permit temporary deficit spending for recovery and reconstruction.
Near-term outlook and projections
- Near-term economic growth projection: 3.9 percent in 2025, buoyed by limited hurricane damages to tourism infrastructure and the authorities’ large recovery and reconstruction spending.
- Sizable government savings and triggering of disaster-contingent instruments create fiscal space for recovery and reconstruction spending.
- Public debt projection: projected to continue falling and reach the debt target of 60 percent of GDP by 2030 (assuming a timely return to the fiscal rules).
Medium-term outlook and risks
- Medium-term GDP growth is projected to slow given the tourism sector operates near its peak-season capacity.
- Key downside risks:
- further natural disasters,
- potential shocks to tourism demand,
- uncertain scale of future CBI inflows,
- rising vulnerabilities in the domestic non-bank financial system from rapid expansion of credit unions and rising costs of property insurance.
- Upside risks: prospective hotel developments and public investment projects.
Executive Board assessment and policy recommendations
- Directors agreed with the thrust of the staff appraisal and welcomed Grenada's robust economic performance in 2023 and the first half of 2024.
- Directors commended the authorities’ swift and prudently tailored response to Hurricane Beryl, which supported disaster-relief and helped mitigate the impact on economic growth.
- Fiscal policy recommendations:
- exercise continued fiscal prudence and pursue structural reforms to boost long-term growth and enhance resilience,
- timely return to the suspended fiscal rules,
- continued expenditure prioritization and revenue mobilization to create fiscal space for future investment needs, including for climate resilience,
- further strengthen public investment management and budget planning processes,
- develop a more uniform framework for managing all CBI resources,
- continue progress in resolving outstanding official arrears.
- Financial sector and regulatory recommendations:
- maintain vigilance and strengthen oversight in the rapidly expanding credit union sector,
- strengthen data collection and regional collaboration in the property insurance sector, given rising premiums,
- further enhancements in the AML/CFT frameworks to safeguard correspondent banking relationships.
- Disaster resilience and climate recommendations:
- continue implementation of Grenada’s Disaster Resilience Strategy, including investments in a risk-layering framework of disaster-contingency insurance and financing instruments,
- further advance the energy transition and investment in disaster resilient infrastructure with support from private financing.
- Structural reform recommendations:
- sustain efforts to foster long-term growth, including investing in active labor market policies and supporting off-season and niche tourism,
- address data gaps.
Financial stability and external sector
- The financial system remained stable through the period covered.
- Directors welcomed the banking system’s resilience despite repeated shocks.
- Gross international reserves (millions of dollars) and months-of-imports indicators appear in the selected indicators table (see Key statistics).
- Directors encouraged continued leveraging of Fund technical assistance.
Timing of next consultation
- It is expected that the next Article IV Consultation with Grenada will be held on the standard 12-month consultation cycle.
Key statistics (selected exact figures from Table 1)
- Rank in UNDP Human Development Index: 73
- Infant mortality rate per '000 births (2021): 14.4 out of 189 countries (2021)
- Adult illiteracy rate in percent (2014): 1
- Life expectancy at birth in years (2021): 75
- Poverty rate in percent of population (2019): 25
- GDP per capita in US$ (2021): 10,449
- Population in millions (2021): 0.13
- Unemployment rate (2021 Q2): 11.1
- GDP at constant prices by year (selected): 2019: 0.7; 2020: -13.8; 2021: 4.7; 2022: 7.3; 2023: 3.6; 2024 Est.: 3.9; 2025 Proj.: 3.3; 2026 Proj.: 2.7
- GDP deflator (selected): 2019: -0.3; 2020: 2.8; 2021: 2.2; 2022: 1.4; 2023: 2.0
- Consumer prices, end of period (selected): 2019: 0.1; 2020: -0.8; 2021: 1.9; 2022: 2.9; 2023: 1.2
- Credit to private sector (selected): 2019: 3.1; 2020: 3.8; 2021: 2.1; 2022: 4.2; 2023: 4.4; 2024: 4.6; 2025 Proj.: 4.5
- Broad money (M2) (selected): 2019: 9.1; 2020: 8.5; 2021: 9.9; 2022: 3.7; 2023: 5.2; 2024: 5.4; 2025 Proj.: 4.8
- Central government revenue and grants (percent of GDP): 2019: 26.6; 2020: 28.1; 2021: 31.5; 2022: 32.7; 2023: 36.9; 2024: 44.1; 2025 Proj.: 30.5; 2026 Proj.: 29.3; 2027 Proj.: 29.2; 2028 Proj.: 28.9; 2029 Proj.: 28.8
- Central government expenditure (percent of GDP): 2019: 21.6; 2020: 31.2; 2021: 31.8; 2022: 39.5; 2023: 39.4; 2024: 33.1; 2025 Proj.: 29.6
- Capital expenditure (percent of GDP, o.w.): 2019: 2.6; 2020: 9.6; 2021: 8.6; 2022: 10.2; 2023: 9.3; 2024: 11.7; 2025 Proj.: 12.2; 2026 Proj.: 8.7; 2027 Proj.: 6.2; 2028 Proj.: 5.8; 2029 Proj.: 5.6
- Primary balance (percent of GDP, selected): 2019: 6.8; 2020: -2.6; 2021: 9.5; 2022: 8.0; 2023: -5.1; 2024: -1.2; 2025 Proj.: 1.5
- Overall balance (percent of GDP, selected): 2019: 5.0; 2020: -4.5; 2021: 0.3; 2022: 1.0; 2023: -8.9; 2024: -3.8; 2025 Proj.: -0.4; 2026 Proj.: -0.1
- Central government debt (incl. guaranteed) (percent of GDP) 1/ (selected): 2019: 58.5; 2020: 71.4; 2021: 70.0; 2022: 62.8; 2023: 60.5; 2024: 59.3; 2025 Proj.: 58.1; 2026 Proj.: 53.9; 2027 Proj.: 53.2; 2028 Proj.: 51.4; 2029 Proj.: 49.6
- Public debt (incl. debt of SOEs and SBs) (percent of GDP, selected): 2019: 62.7; 2020: 89.5; 2021: 86.6; 2022: 78.8; 2023: 75.2; 2024: 73.3; 2025 Proj.: 66.5; 2026 Proj.: 65.2; 2027 Proj.: 62.9; 2028 Proj.: 60.6
- Savings-Investment balance (percent of GDP, selected): 2019: -10.4; 2020: -16.1; 2021: -14.5; 2022: -11.0; 2023: -9.1; 2024: -13.1; 2025 Proj.: -10.6; 2026 Proj.: -9.9
- Savings (percent of GDP, selected): 2019: 16.3; 2020: 15.6; 2021: 18.0; 2022: 30.8; 2023: 28.3; 2024: 18.1; 2025 Proj.: 17.8
- Investment (percent of GDP, selected): 2019: 24.9; 2020: 32.4; 2021: 30.1; 2022: 29.1; 2023: 39.9; 2024: 41.5; 2025 Proj.: 31.9; 2026 Proj.: 28.4; 2027 Proj.: 25.7; 2028 Proj.: 24.5; 2029 Proj.: 24.0
- Gross international reserves (millions of dollars, selected): 2019: 234.1; 2020: 290.9; 2021: 324.2; 2022: 352.6; 2023: 389.1; 2024: 435.1; 2025 Proj.: 364.5; 2026 Proj.: 364.8; 2027 Proj.: 390.3; 2028 Proj.: 405.6; 2029 Proj.: 424.6
- Current account balance, o/w: Exports of goods and services (percent of GDP, selected): 2019: 54.6; 2020: 41.1; 2021: 47.9; 2022: 57.8; 2023: 63.8; 2024: 62.5; 2025 Proj.: 63.0; 2026 Proj.: 62.6; 2027 Proj.: 62.3
- Imports of goods and services (percent of GDP, selected): 2019: 55.8; 2020: 52.2; 2021: 55.4; 2022: 64.3; 2023: 63.7; 2024: 69.9; 2025 Proj.: 68.5; 2026 Proj.: 65.6; 2027 Proj.: 65.0; 2028 Proj.: 63.4
- External debt (gross) (percent of GDP, selected): 2019: 64.7; 2020: 92.5; 2021: 94.8; 2022: 90.0; 2023: 86.9; 2024: 85.4; 2025 Proj.: 82.6; 2026 Proj.: 82.3; 2027 Proj.: 80.5; 2028 Proj.: 78.4
IMF Executive Board Concludes 2024 Article IV Consultation with Grenada, February 4, 2025.
