What is the best approach to the economic challenges likely to face Grenada in 2014-2016?

Brian FrancisPrior to the February 2013 general elections, the latest CADRES’ polls identified the high cost of living, the economy, and unemployment as some of the key national issues of concern to most Grenadians. When these issues are compounded with high oil prices, increasing cost of food, and an impending home-grown Structural Adjustment Programme (SAP), a clear picture of the economic challenges likely to face Grenada in 2014-2016 and beyond emerges.

What approach should the government adopt to confront these challenges? Clearly, the Keith Mitchell-led Administration must unequivocally concede that the reconfiguration of the socio-economic landscape of our small, open and highly vulnerable economy requires a robust partnership among labour, domestic capital, foreign capital, employers’ association, the broader private sector, civil society and the government.

This extensive partnership is critical because it is clear that swift changes in the global financial and economic setting will absolutely present major challenges to Grenada given the characteristics of the local economy.

In response, our government has to focus all of its creative energy and talent to the creation of a macro-economic atmosphere that facilitates fiscal prudence, reflects serious efforts at debt reduction, and lays the foundation for employment generation within the private sector.

On the basis of what has been happening on the ground in recent weeks in relation to the SAP, it appears as if the government has already fully surrendered to the fact that the most feasible option going forward to tackle the country’s economic woes in 2014-2016 and beyond is one based on national consultation involving as wide a cross-section of social partners as possible.

If that is so, then, logically, the government must lead the process! An institutional arrangement must be effected through which this collaboration can be facilitated. All parties to the social partnership have to be utterly comfortable with the institutional arrangements in place and must trust each other.

How exactly should this entire process of rescuing the Grenadian economy unfold? I would think that a three-pronged strategy is required. First, the government needs to identify priority areas for intervention. Those areas ought to be consistent with the national concerns identified by the CADRES’ polls and critical issues documented in the NNP’s 2013 Manifesto.

Second, given the complexity of many of the issues, confronting them will require short, medium, and long term solutions. The government needs to focus initially on short term solutions and policies over which it has direct control. These should include, for example, the implementation of several of the recommendations made in a recent VAT Study done on behalf of the manufacturers in the country.

If the Mitchell led Administration continues to turn a blind eye on those recommendations, then, it will have to be held accountable for the fate of those enterprises directly affected in a negative manner and the fallout there from.

Third, due recognition must be given to the fact that virtually all economic policies create both intended and unintended consequences. Economic policies often generate expenditure or revenue implications which will alter the government’s fiscal position.

Hence, it is extremely important to undertake not only careful analysis of all of the measures being contemplated as part of the SAP, but also to carry out a comprehensive audit of government’s finances to determine the true state of the country’s fiscal position. Only then can a government committed to fiscal prudence begin to implement measures with serious expenditure-reducing potential and revenue-enhancing implications.

Everything said, thus far, we as a people must accept that our government’s ability to successfully overcome many of the challenges confronting the economy depends to a large extent on the creativity of the human resources available to it.

Against this backdrop, solemn consideration should be given to the establishment of an Economic Advisory Council consisting of serious minds drawn from all across the various sectors of the society (but not too large to render it ineffective by design) to spearhead the assault on the economic challenges coming in 2014-2016 and beyond.

Such intervention is, sadly, the only real strategic option left to our government to bring desired relief to those most affected in society and place the economy on a path towards sustained economic growth and development. I say this because the NNP, as have been unmistakably displayed since taking office in February this year, is truly bankrupt of serious ideas to transform the Grenadian economy and society!

Incidentally, the Chief Policy Advisor, who has exhibited a puzzling commitment to silence, did advocate for a vintage of the Economic Advisory Council and a “Franchise Technical Team.” Could it be that the Chief Policy Advisor (who was the main Architect of the “New Economy”) in the Ministry of Finance, now finds himself unable to break the entrenched stranglehold of the few causing the downward spiral at the Ministry of Finance?

The NDC administration erred in its refusal to embrace his ideas and that of other competent and well accomplished Grenadian economists.

Astonishingly, the NNP appears to be proceeding along the same path of exclusion with the same effect. Politics and Policies, the Chief Policy Advisor who is also a visiting Lecturer at the UWI, Cave Hill Campus; once taught many of those now opposing him in the Ministry of Finance.

The truth is that Dr. Patrick Antoine begins and ends with ideas and a vision for the development of the Grenadian economy. Shockingly, the NNP, which he defended and ardently promoted during the pre-election period and on the election campaign trail, is lacking in both. For these reasons I have no confidence in this NNP Administration to deliver many of the promises on the financial and economic front! And that is the plain truth!

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