Press Release No. 15/538

Press Release: IMF Executive Board Completes Third Review Under Extended Credit Facility Arrangement for Grenada, and Approves US$2.7 Million Disbursement

November 25, 2015

The Executive Board of the International Monetary Fund (IMF) today completed the third review of Grenada’s economic 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$2.7 million), bringing total resources made available to Grenada under the arrangement to the equivalent of SDR 8.04 million (about US$11 million). The Board’s decision on the third review was taken on a lapse of time basis¹.

The ECF arrangement in the amount equivalent to SDR 14.04 million (then about US$21.7 million, or 120 percent of Grenada’s quota at the IMF) was approved by the Executive Board on June 26, 2014 (see Press Release No. 14/310).

Grenada’s economic performance under the authorities’ home-grown program is on track and has remained strong. All performance criteria for end-June 2015 were met and all structural benchmarks for the third review were implemented.

Half-way into the authorities’ three-year reform program, fiscal sustainability and growth prospects are gradually improving. The authorities are on track to achieve the first primary surplus in a decade. Supported by the recent private debt exchange, the debt-to-GDP ratio is projected to decline to 90 percent at end 2015, down from 107 percent in 2013. Economic growth is projected to remain robust at about 3.5 percent (at market prices) in 2015, reflecting expanding agriculture output and solid external demand for Grenada’s tourism services.

Continued implementation of the authorities’ structural reform agenda is critical to improve Grenada’s long term fiscal prudence and growth prospects. The new Fiscal Responsibility Act will help ensure that medium term fiscal objectives are in line with debt reduction goals and ultimately debt sustainability. While the overhaul of the fiscal policy framework is now close to completion, fiscal discipline in the long term relies on its timely implementation. Reform of the public sector during the remainder of the program will be essential to safeguard the fiscal adjustment gains attained thus far and ensure a sustainable reduction in the government’s personnel expenditure. Continued focus on strengthening the banking system remains essential for stability and will contribute more effectively to promoting private sector growth. Going forward, attention on growth and competitiveness reforms will help solidify the success of structural reforms so far and contribute to boost employment.

¹ The Executive Board takes decisions without a meeting when it is agreed by the Board that a proposal can be considered without convening formal discussions.