There appears to be much celebration going on in some quarters of the country following recent statements made by the Team Leader of the IMF, Aliona Cebotari following the conclusion of a visit to Grenada in which she expressed satisfaction with the start of the 3-year Structural Adjustment Programme (SAP).
It is not surprising that the government has been able to collect more revenue from the sweeping tax measures introduced by the 18-month old government of Prime Minister Dr. Keith Mitchell in recent months.
The Tax Man is hitting hard at the pockets of most persons in the country especially the Middle Class.
Ms. Cebotari was very diplomatic when asked an important question by George Grant about the impact the higher taxes imposed by government will have on growth in the economy I the short term.
The question was – It is clear that the GOG intends to tackle the country’s fiscal problems by a combination of higher taxes and some cuts in expenditure. Given that these policies are contractionary by their
very nature, how would growth in the economy be affected, especially in the short term?
The IMF official found a nice way to avoid giving a direct and straightforward answer to this critical question.
The long and short is that no one should expect the IMF to give a failing grade to a programme that it is involved with and one that has just started as is the case in the Spice Isle.
During the press conference, it was quite noticeable that the lady from the IMF had shifted very far from her early prognosis when she met some months ago with the Civil Society Grouping and indicated to them that Grenada was a very sick cancer patient in need of urgent therapy.
It is quite possible that the medicine, which the Mitchell government is now administering, with those bitter pills on the taxpayers, is what Ms. Cebotari was thinking about in terms of being badly needed to deal with the very sick cancer patient.
However, a few things, which stood out at the press conference, was the reference to the unsustainable debt situation, the need to grow the economy and the existing high unemployment.
All three issues pose serious problems to the success of the Structural Adjustment Programme.
Quite frankly, nothing of substance has been said within the ruling party and government to give real hope that the authorities are getting on top of these thorny issues.
THE NEW TODAY is looking forward to the 2015 Budget Presentation from government and in particular the contributions from both the Minister of Finance, Prime Minister Dr. Keith Mitchell and the Minister of Economic Development, Oliver Joseph and their remarks on these three critical issues.
Mr. Joseph’s pet words during the campaign leading up to the 2013 general elections was “it is simple – just grow the economy” and the more business activities that take place in the country it would result in more revenue for government.
Did the increased revenue for government result from this “growing of the economy” or from the increased taxes placed on the backs of the people?
Where will the new jobs be created to deal with the high unemployment situation?
Maybe the 2015 budget might give some indication since the promised investors are yet to be seen on the streets of St. George’s.
The last major influx of direct foreign investment has come from The Sandals Group and that was under the former National Democratic Congress (NDC) government.
Even the Permanent Secretary in the Ministry of Finance, Timothy Antoine was very guarded in his statements at the press conference as he sat alongside the IMF official.
Mr. Antoine was asked a question about the start up of projects that were promised but the PS did not make any specific reference to any of the three or five 5-Star hotels that are being talked about for the south of the island.
The country is really without any information about what stage these projects are at this point in time.
Are the investors still at the stage of designs and drawing of the plans for the hotels? Have they tied up the funding to finance the project? When will the actual construction start?
The other issue of major concern to this newspaper and which no one in government is addressing in a holistic manner is the unsustainable debt situation.
No one knows for sure what position the major foreign creditors would adopt in their negotiations with government on the millions owed to them for loans extended over the years.
The government has been talking about a sizeable “hair cut” from the creditors in the order of 50 to 60% of the monies owed.
The creditors had indicated months ago that they would only engage Grenada in debt restructuring only when the island entered into some kind of meaningful agreement with the IMF.
With an IMF agreement now in place, the creditors will be anxious to hear from government. However, the critical question to be asked is where will Grenada get these additional millions to satisfy any agreement reached with the creditors?
Hopefully, the Minister of Finance might be able to address this and other burning issues in the 2015 Budget Presentation.