The powers-that-be in Grenada would like to make everyone believe that things are now good and the island has the fastest growing economy in the sub-regional grouping known as the Organisation of Eastern Caribbean States (OECS).
This is clearly not true and only the figment of the imagination of some within the ruling New National Party (NNP) government of Prime Minister, Dr. Keith Mitchell.
Prior to Hurricane Ivan in 2004, the NNP propaganda machine sold the nation the notion that Grenada’s economy could be considered as the new tiger in the Eastern Caribbean and sought to compare it with economic giants in South-east Asia like Singapore.
The island soon became the new begging capital in the west as Ivan left the government scurrying to debt collectors asking for a relief as the Treasury was virtually bankrupt.
Very little is heard about a report from the Washington-based International Monetary Fund (IMF) that points to the volatile situation facing the island if the debt situation is not tackled and reform of the explosive public sector.
The report said the following: “Debt sustainability remains the medium term anchor of the home grown adjustment program, but is not yet secured. The recent debt exchange deal with Grenada’s private bond creditors and completion of the broader restructuring of public debt underway will help lower Grenada’s debt stock, but continued fiscal adjustment and prudent fiscal policy over the medium term are needed to restore debt sustainability.
“In this respect, a critical element for success with regard to long term fiscal prudence in Grenada remains outstanding: public sector reform. Progress to develop a strategy to improve public sector efficiency and effectiveness has been slow. With wage pressures rising, the government needs to place priority on this important reform in order to safeguard progress attained so far, ensure a sustainable reduction in the wage bill, and meet the requirements set out in the FR (2015 Fiscal Responsibility) Act”.
The above speaks for itself.
This is the dilemma that faces Grenada – whether it’s an NNP administration in office or the main opposition National Democratic Congress (NDC) of Nazim Burke.
There are many critical issues that need to be addressed as a matter of urgency to put the economy on a level playing field.
The NNP administration of PM Mitchell might be reluctant to address some of them at the moment since over the years its main pre-occupation has been winning general elections.
The sad truth is that Grenada’s finances were in a very precarious state of affairs for the past 10-15 years.
The collapse was prolonged by the advent of Hurricane Ivan in 2004 as the creditors were in no position to make demands for payments from an island that was left badly battered and wounded from a natural disaster.
The financial situation deteriorated to the point that by the time of the 2013 general election, the reality facing the country is that the winning party would have had to seek the intervention of the IMF.
It was not strange that within one month of coming to power, Prime Minister Mitchell had defaulted on payments due to mainly US bondholders.
The repayment deal worked out with the fund is due to resume round the middle of the year.
The IMF will be very mindful of the financial commitments to the creditors given the current construct of the Grenadian economy.
A key aspect of curtailing Government Expenditure is the monthly Wage bill.
There is enough in the report from the fund to suggest that the Mitchell-led government is dragging its feet – and for obvious reasons – on addressing in a critical manner the Public Sector reform agenda.
The economists have agreed that the current attrition policy is a drop in the ocean in addressing the huge monthly salary bill.
The situation calls for something more substantial but the government is very mindful of the upcoming general election.
Is it a situation of calling early general election with the hope of winning another 5 years in office and then implementing a more realistic policy on addressing the massive public sector wage bill.
It is the view of THE NEW TODAY newspaper that the only prudent thing to do is to embark on a retrenchment programme – similar to what was announced by Barbados in the earlier part of 2015.
The interest of the nation should come before anything else including the ambitions of anyone who is pre-occupied solely with legacy and wining general elections regardless as to the cost to taxpayers.
The IMF could not be more clear when it said that “recent indications suggest that wage and labour-related pressures are rising and the government needs to address them not only on the basis of fighting general elections.
No amount of propaganda about the fastest growing economy in the OECS will change the financial dynamics and deep hole that Grenada is still languishing in with its public finances.