Mitchell facing the IMF guillotine!

by Grenadian Class

 

The Grenada Conference of Churches’ call for the Keith Mitchell NNP administration to resist the draconian measures to be soon implemented on the advice of the International Monetary Fund (IMF) is mere fantasy and symbolism than reality.

The hands of Prime Minister Mitchell, Permanent Secretary Timothy Antoine and his economic team of advisers are carrying a burden of 2.5 billion dollars, Grenada’s national debt.

Chairman of the Conference of Churches Dr. Raphael Osbert James in a letter sent to the government states, “We, the leaders of the member churches of the Conference of Churches in Grenada are deeply concerned about the hardship being suffered by so many of our people in Grenada, Carriacou and Petite Martinique. People are now finding it difficult to provide for the expenses of daily living, repaying mortgages taken out in more prosperous times and even, in some cases, providing food for their families.

“There are numbers of persons, even those with sound academic qualifications, who are unable to find jobs. The social problems have reached alarming proportions. It is against this background that we strongly urge our government to resist any pressure to increase taxes or to make further cuts to social, medical or educational services. We are convinced that further austerity measures are not the way out of Grenada’s debt crisis.

“We strongly support the government of Grenada in its resistance against austerity and we are actively mobilising support internationally towards this end. We are strengthened in this stance by a working paper produced by the personnel of the International Monetary Fund which suggests that such strategies have not worked in the past.”

The reality of the situation is that, with a national debt of over 2.5 billion dollars – 110% of GDP – Grenada is under an economic and financial guillotine that is ready to cut off the head of the country. It’s impossible for the country to walk on its own feet far less to resist the hydras of the IMF owing creditors billions of dollars.

How did Grenada arrive at this precarious position? Years of failed fiscal policies on the part of the Mitchell-led NNP administration for 13 consecutive years have plunged the island into severe debts and deficits. Uncontrolled spending on projects done by party cronies and sympathisers and gross mismanagement of the island’s resources also contributed to these deficits.

Millions were spent on the non-productive sector and today the country is producing very little for export or even local consumption. The food import bill is extremely high. Grenada imports over 70% of the food consumed locally. A recipe for disaster. With such a bad fiscal situation the Prime Minister doesn’t have the leverage to fight the IMF. He has to either accept the IMF package or continue to default on the country’s debt payments.




There is no good option: both are bad. His best option is to unite the country and get the population to buy into whatever his government believes is best for the island at this time. Despite all the rhetoric about unity and inclusion, he has polarised the country even further. Grenada is in a similar position to Greece.

Mitchell’s NNP, after defaulting on loan payments to the island’s creditors, has no choice but to face the music of the IMF if ever the debt restructuring he requested is to be successful.

Given the experiences of the creditors with the previous NNP administration following the passage of hurricanes Ivan and Emily, they are not willing to enter into any arrangement with the government unless it is guided by the IMF. Reverend James must be aware of the biblical quote, “Give unto Caesar what is due unto Caesar.” Creditors are not willing to forgive their debts under these difficult economic circumstances.

The ramifications for the island would be worse if PM Mitchell refuses to accept the IMF proposals, These proposals may include an increase in VAT, or having fewer items zero rated, introduction of personal income tax which was removed by the NNP in 1995, debt service levy, retrenchment of public servants, the sale of state properties, freeze on employment, among others.

IMF proposals for Grenada would be similar to that of Greece. Greece, however, is in a much better situation because the country is part of the European Union (EU).

The world is definitely a cycle. Former Minister of Finance, Hon. Anthony Boatswain predicted that the NDC administration will have to turn to the IMF but his NNP party won’t because they can manage the economy much better. What is Hon Boatswain saying now? Is he singing a different tune or he has placed his thoughts on pause.

Mitchell’s NNP is responsible for racking up the island’s massive national debt so it is right and proper for his administration to fix. If he can’t fix it then it would be time for a new captain.

Hon. Nazim Burke has proved that he can keep the economy stable. There are very few renowned economists in Grenada and one of them is the Hon. Nazim Burke. Bernard Coard is highly prestigious and it’s not surprising if Dr Mitchell seeks his counsel. Prime Minister Mitchell is a Statistician by training and a politician by profession and as such he isn’t the person best suited to negotiate with the IMF. He has to get a team of smart and well trained economists, including Dr Patrick Antoine.

Grenada can’t escape the IMF guillotine. The Conference of Churches suggestion may be welcome, but it is too little too late. The genie is already out of the bottle and it would take great skill, creativity, innovation and national unity to caution the effect of the IMF guillotine. The Conference of Churches played quarterback for too long and so trying to play striker now will prove very difficult. They have sat idly by when the country was grossly mismanaged and said nothing. They have quietly colluded with the powers-that-be to inflict pain and hardship on the poor and vulnerable. So, Bro James, it’s either the IMF medication or Grenada relegated to junk status and be blacklisted.

It would be more productive and progressive for the Conference of Churches to call for accountability, transparency and good governance and prepare their congregations for what is to come: the IMF Guillotine. Mitchell can’t hide, he can’t run. He just has to face it like a man and hope and pray that the masses don’t take to the streets. It will be the start of the Caribbean yellow revolution. Grenada is well known for making history.

 

Tagged . Bookmark the permalink.

Comments are closed.