Economics vs politics

It is not always the case for governments in the Caribbean to take wise and prudent economic decisions as opposed to the political ones, which they see as necessary in order to get re-elected in the vicious five year circles that is a hallmark of the Westminster parliamentary system.

The current government of Prime Minister Dr. Keith Mitchell in Grenada has been placed in such a situation in light of the current economic and financial crisis facing his nine-month old New National Party (NNP) administration.

As a consummate politician, the Grenadian leader is faced with the unique challenge of solving the myriads of problems plaguing the local economy and trying to secure his “legacy” so badly damaged by his earlier 13 years in office that was dogged by allegations of corruption and mismanagement.

The electorate fell for his promise of, “We will deliver” in the February poll and the National Democratic Congress (NDC) government of Tillman Thomas was blown out of office in much the same way that Hurricane Ivan ran through the island in September 2004.

The NNP administration has not been able to deliver on many of the important promises made to the electorate within the first 100 days in office and some persons have been arguing that things are now worse off in Grenada than when Congress was in office.

It is not a debate that THE NEW TODAY is prepared to engage in at this point in time since the more important issue at hand is whether or not the measures to be adopted by government will help cure the economic and financial ills of the country.

So far, the Prime Minister has addressed the nation on one particular measure to be taken as part of his so-called home grown Structural Adjustment Programme (SAP) – the lowering of the income tax threshold to bring in more persons into the tax net.

Dr. Mitchell also dropped hints that his government intends to make certain adjustments with the Property Tax in order to raise additional revenue to help deal with a major financing gap of 18 million E.C dollars every month.

There is talk in certain circles within the Ministry of Finance that the properties of homeowners will be re-valued and increased in order to extract more in taxes from them.

The sad thing is that the Prime Minister was the one who encouraged persons to put on additional rooms in their homes as the country needed more rooms for the thousands of persons who were expected to flock the island for the Cricket World Cup.

Several Grenadians fell for the idea and borrowed thousands from the local commercial banks to cash in on the promised opportunities from the World Cup.

The visitors never came but the homeowners were left with more financial commitments to the local commercial banks.




It is no secret that home owners in the country are under pressure as can be seen by the amount of properties on sale by the banks in the local newspapers.

Wouldn’t it be a travesty of justice if after encouraging property owners to build additional rooms for the Cricket World Cup that the Prime Minister and his government will now turn around in the midst of this crisis and seek to extract more in taxes from these persons?

As far as this newspaper is concerned the government should be thinking of striking a balance between raising additional revenue from an economy that is already distressed and engaging in actions that would realistically impact on the reduction of government expenditure.

Nothing so far as come out from the government side on tackling expenditure that would seriously impact on the 18 million dollar deficit.

Quite frankly, the additional funds expected from the income tax is a drop in the ocean, along with reducing government rental of office space from the private sector, moving in the direction of energy savings light bulbs,and pooling of resources among the various ministries within the Ministerial Complex.

THE NEW TODAY is doubtful that the re-introduction of the sale of Grenadian Passports to raise millions of dollars in revenue would bring in the kinds of dollars that are needed on a monthly basis by the Mitchell government to seriously impact on the grave financial problem.

In our view, the only viable options open to government is either retrenchment of some public officers or cutting salaries by a certain percentage point in order to reduce the monthly wage bill which is eating up most of the revenue collected by the State.

The trade unions will naturally be opposed to retrenchment and the NNP regime will be concerned about this option since the party would be thinking of remaining in office following the next general election.

It is our strongly held view that none of the options open to Prime Minister Mitchell and his government are good for him in terms of the politics.

Grenada’s economic future should be put first at this point in time and not the politics.

The government should be looking more and more in the direction of the International Monetary Fund (IMF) and the World Bank for a low-interest rate financial package to do what late Prime Minister Herbert Blaize did in the 1984-90 period with his “golden handshake” in order to bring the civil service in line.

There is just no way that Grenada can be hopeful of raising EC$30 million plus in revenue each month to meet the salaries and wages of an unproductive and bloated public sector.

This island is not a welfare State and economics must take centre stage over political expediency.

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