With another general election looming, the state of the Grenadian economy will play a major role in how many Grenadians will cast their ballot on polling day.
The ruling New National Party (NNP) of Prime Minister Dr. Keith Mitchell has signaled its clear intent to ask the electorate to stay the course and continue to support the government for its handling of the economy and the Structural Adjustment Programme (SAP).
This period has been marked by the highest ever levels of taxes on the population and marked a drastic turn around from the philosophy of Dr. Mitchell of putting disposal income in the pockets of Grenadians to spend in order to spur economic activities especially in rural villages.
THE NEW TODAY is not aware of the exact approach that will be taken by the main opposition National Democratic Congress (NDC) of Nazim Burke on the SAP.
However, it is ironic that a Mitchell-led administration will resort to a SAP given its criticisms of the 1990-95 Congress government of late Prime Minister, Sir Nicholas Brathwaite which was forced to implement its own Structural programme in order to avoid a full blown programme with the International Monetary Fund (IMF).
The background to the NDC programme was adequately explained by Dr. Carl Mitchell, a Grenadian economist who was based in Canada and was invited back home by Sir Nick to help manage the programme.
Dr. Carl Mitchell was appointed to serve as Permanent Secretary in the Ministry of Finance to oversee the programme, which helped Grenada to emerge from a period of uncreditworthiness from the 1984-90 rule of NNP then led by H.A Blaize.
In a recent article, Dr. Carl Mitchell identified Sir Nick as Grenada’s best Prime Minister for the many tough political, financial and economic decisions that he had to make in just four years at the helm.
Dr. Carl Mitchell had the following to say; “…Sir Nick had the most difficult and challenging role of getting Cabinet support of the SAP and for selling the program to the people of Grenada, particularly since the economic scenario for the SAP was negative growth and increased unemployment for most of the three year period.
“This was no mean feat since to the NDC Party and Cabinet members implementing the SAP was committing political ‘hari kari’ which turned out to be the case. In the 1995 election, the NNP under Dr. Keith Mitchell came into power; its success in the polls mainly due to its opposition and criticisms of the SAP.
“The SAP brought about significant structural changes in the economy and established a firm foundation for growth in Grenada’s economy, one that the Mitchell administration was able to benefit from for 13 years.
“The most significant accomplishments of the SAP were:
(1) Once Grenada attained the first year goals of the Program, theWorld Bank/IMF reinstated its credit worthy status and assisted in the next two years of the Program in securing financial support internationally mainly from the EU, and other Governments and institutions;
(2) Fiscal reform by establishing a modern tax system based on indirect and direct (income tax) taxation including administrative reform of the Civil Service;
(3) Improving the infrastructure including the privatisation of GRENLEC. Unfortunately, the Keith Mitchell’s NNP Government, on taking office pursued a policy of dismantling the SAP over the thirteen year period 1995-2008 by abolishing the broad-based modern income tax structure, resorting more on indirect taxation, increasing the size of the Civil Service, and borrowing to finance development thereby massively increasing the national debt.
“These eventually created the same conditions that led to the SAP under the Brathwaite regime. These were inherited by the Tillman Thomas NDC Government in 2008, which strove heroically to avoid resorting to a World Bank/IMF SAP.
“However, PM Mitchell once again in office from 2013 and despite continuing his assault on the Sir Nick’s SAP by renegotiating the terms of the privatisation of GRENLEC, and attempting to dishonour the terms of other contracts with international investors had no other recourse but to ‘bite the bullet’ and resort to another SAP. A decision that I know gave Sir Nick a chuckle at its poetic justice.
“It is interesting that Keith Mitchell used the same strategy of a ‘home grown program.’ Grenadians instead of considering the World Bank/IMF as threats to their well being should be grateful to them for ensuring good economic management and governance”.
The above are not the words of THE NEW TODAY newspaper but an authoritative person on economics, finance and money – a Grenadian scholar in the person of Dr. Carl Mitchell.
What Dr. Carl Mitchell is telling us as Grenadians is that as a people we should praise the IMF and World Bank for coming in at this point in time and helping to “manners” the NNP of Dr. Mitchell on the issue of fiscal discipline.
It is this reckless management of the economy in the 1995-2008 period by current Prime Minister Dr. Keith Mitchell that is responsible for the hardships of the last 10 years.
The Congress government of Tillman Thomas also made errors in judgment and foremost was its failure to impose another Structural Adjustment Programme (SAP) as soon as it came into office in July 2008.
The economic situation in the country was such that it could not avoid the pitfalls that eventually caught up with it in the latter half of 2012 when the mounting debt payments as a result of what Dr. Carl Mitchell referred to as NNP “borrowing to finance development” drove up the debt stock and creating problems for the NDC such as late salaries to civil servants.
Today, the NNP of Dr. Mitchell has resorted to high levels of taxes in order to bring in money into the Treasury to pay salaries and do some of the things that any government is required to do in office.
THE NEW TODAY awaits the NDC programme that will specifically address the two major problems facing the Grenadian economy as mentioned by the IMF – high levels of debt and high unemployment especially among the youth.