The economic revival plan

With the Throne Speech and first sitting of Parliament finally behind us, the focus of attention now shifts to the much-anticipated 2013 budget.

This will give the first real and clear indication of the plan that the newlook Keith Mitchell-led New National Party (NNP) administration intends to roll out to get the country moving and out of its current dire financial and economic straits.

THE NEW TODAY is convinced that the model which the government is promising to unveil – the building of a new economy – to help solve the island’s problems will be looked at closely by the rest of the small states in the English-speaking Caribbean as something worthy of consideration for possible implementation.

The reality of the situation is that all of us face similar problems. As a matter of fact, Grenada, St. Kitts/Nevis and Antigua are the three OECS countries that are battling with severe financial woes to the point of being forced to enter into debt restructuring with their creditors.

The 2013 budget will most likely give some idea as to the road map which the new rulers in St. George’s would be following in order to tackle the debt situation and to make it more sustainable for our overall development.

It would be interesting to see the details of the agreement that would be worked out with the creditors by Prime Minister Mitchell in concert with his economic advisor, Dr. Patrick Antoine, a specialist in trade matters and the Permanent Secretary in the Ministry of Finance, Timothy Antoine.

If Dr. Mitchell and NNP manage to deliver on the promises made in Campaign 2013 and to fix the problems faced by the country, no one can deny that his legacy would be forever etched in the annals of Grenada’s history.

As a leader, he would have risen heads and shoulders above others in the region like Dr. Denzil Douglas of St Kitts/Nevis, Fruendel Stuart of Barbados and Baldwin Spencer of Antigua who all appear to be stuck in an economic quagmire with no clear road in sight for them to travel on how to get out of their current economic predicament.

In the case of Barbados which was once considered as the most stable country in the region, the people are now reeling under mounting unemployment, rising crimes and an ever increasing cost of living.

It is no secret that the Government of Grenada is broke. The former Finance Minister, Nazim Burke repeatedly told the nation that it was a struggle for the then Congress government to find the funds to do the things that the people expected due to unsustainable debt repayments.

Ironically, Dr. Mitchell has returned to centre stage to tackle the nation’s severe financial problem that was largely created during the reign of previous NNP administrations that he headed for 13 years.

Our Prime Minister has sent a clear message that unlike his predecessors in office, the National Democratic Congress (NDC), he would not resort to the state-run National Insurance Scheme (NIS) to find monies to pay salaries of public sector employees.

It would be interesting to see where the monies will be coming from to finance the much-talked about New Economy that was promised in Campaign 2013.

On top of that, the new Grenada Government has seen Taiwan adopt new legal strategies to recuperate nearly 80 million E.C dollars owed to it for loans extended to the island before diplomatic ties were severed in favour of Mainland China.

If Dr. Mitchell does the magic and turns around the Grenadian economy and successfully tackles the high indebtedness of Grenada then the NDC can find itself becoming a part of history and with no real chance of getting a shot at running the country for many years.

Even the NDC as a party would have to pay careful attention to the Model that has been promised by Dr. Mitchell with support from the likes of Patrick Antoine and Timothy Antoine to “rescue” the struggling Grenadian economy.

The plan will definitely be scrutinised closely by institutions like the International Monetary Fund (IMF) and World Bank, and the credit rating agencies like Standard & Poor’s and Moody.

Over the years both the IMF and World Bank have tended to impose policies that are fashioned in favour of the Developed countries like the United States and those in Europe.

And these policies often tend to protect the interests of the lending agencies and Creditors in those parts of the world. Most of the foreign debts owed by Grenada and most countries in the Caribbean have been contracted with creditors from the international community.

The reports in the international community indicate that Grenada’s external debt is almost US $500 million. Of the debt, just over 40 percent is owed to private creditors, 40 percent to multilateral institutions (including $100 million to the IMF and World Bank), and under 20 percent to other governments.

Grenada still owes a few millions to UK Export Finance, primarily for loans related to the Maurice Bishop International Airport project under the then People’s Revolutionary Government (PRG) back in 1982.

The island’s government is also thought to owe money to the governments of Belgium, France, Russia and the United States.

That is why it is important for the nation to get to see as soon as possible the plan that is to be unveiled by Dr. Mitchell and NNP to tackle Grenada’s problem and the reaction from the international community especially the IMF quarters.

As one known Economic and Policy Researcher noted recently, the most important question is : How much should a country sacrifice in order to keep paying off its debt?

The expert answered it this way himself: “Unfortunately the people making these decisions — the European authorities, the IMF, the Paris Club and allied institutions — look at this issue from the point of view of the creditors. But a responsible government will make its decisions on the basis of the needs of its people – for employment, economic growth, and better living standards. It is this conflict of interest that underlies the debt crises we are looking at in most over-indebted countries”.

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