Another Christmas is with us – the people of Grenada, Carriacou and Petite Martinique.
It was another twelve month period of a Structural Adjustment Programme (SAP) aimed at correcting a very serious fiscal imbalance that has plagued the country’s economy for the better part of 20 years.
As indicated earlier by this newspaper, it is the government’s finances that are in tatters and not the private sector as the banks have resources for lending to persons with sound developmental projects.
The problem is that the banks at this stage will be unwilling to lend additional sums to government for all kinds of fairy-tale projects.
The records speak for themselves. Over the years government has borrowed millions from the banks and most of them went to paying salaries as opposed to investments in the productive sectors of the economy.
The irony of the situation is that the government has not been able to repay the loans and wants the banks to reschedule payments. How tenable is that situation? Why would a bank want to be put in such a situation time and time again due to ill-advised borrowing by the State?
This current administration of Prime Minister Dr. Keith Mitchell, although being the chief culprit of such a policy over the years, has now come to the realisation that it cannot be business as usual and Grenada needs to put its financial house in order.
The country has no choice. Our governments have brought us into this sad state of play for living a false life – borrowing and spending more than we have been earning and producing over the years.
It is now a case of having to find a way to pay back our creditors who have been more than generous to us with our false lifestyle.
The Prime Minister has put to rest the claim in some quarters that his near two year old government has not been paying debts to creditors since taking office in February 2013.
In delivering the 2015 budget in late November, Dr. Mitchell pointed to over 200 million dollars in debt payments in the past 20 plus months.
However, a break down of the figures was not given and no one knows for sure which are the major financial institutions that received debts payments.
As far as THE NEW TODAY has been made aware the thorny issue for the government is the rescheduling of the debts of US$190 plus that is owed to the US bond holders and not the regular debts owed to local commercial banks and financial institutions.
This is the debt that virtually crippled the former National Democratic Congress (NDC) government of Tillman Thomas.
Government had to find over 15 million dollars every six months to service the debts of these bond holders – February and September.
These are monies that had to be found in addition to the usual M$25-30 that has to be found by the Treasury to pay the wages and salaries of civil servants.
Whenever, the time comes to pay the bond holders, the former Congress government had little time to find the additional millions that have to be found from wherever to pay public officers.
It will be interested to see the arrangement that is worked out between the Mitchell government and those representing the US bond-holders. Will the government get its 60% haircut from the bond-holders?
This is the major hurdle confronting the Mitchell-led administration as it seeks to reschedule the nation’s heavy indebtedness.
As another year comes to an end, it is becoming much clearer that the government is looking increasingly in the direction of its Passport selling scheme under the Citizenship by Investment Programme to bring in the extra dollars that are needed to help in building the much-talked about New Economy.
There is hardly anything left to be taxed in the country. The earlier move to touch the funds of the National Insurance Scheme (NISD) seems to have evaporated in the face of strong opposition from the Grenada Trade Union Council and moreso the Public Workers Union and Grenada Union of Teachers (GUT).
The next 12 months is critical for our government and its SAP that has the backing of the International Monetary Fund (IMF) and World Bank.
It’s a very delicate balancing act for the administration as it can ill-afford to tinker much with the structural adjustment measures now in place with the hope of trying to score some political points leading up to a general elections that is less than 3 years away.
The regime will have to go the full course or run the risk of feeling the wrath of the IMF and other major financial institutions.
Is there a need in any case to change course? The Mitchell government has been boasting of collecting more revenue under the current programme than in any other time in the history of the country.
Also, the government has informed the nation that the millions promised in grant funding as part of the programme from the likes of the European Union are beginning to hit the Treasury account.
So if the programme is working then there is no need to change it for election purposes.
THE NEW TODAY would like to extend the very best of Christmas greetings and wishes to all especially our readers, advertisers, contributors and sellers.