The four-month old New National Party (NNP) government of Prime Minister Dr. Keith Mitchell has warned Grenadians for the first time to expect to face some “pain” as it seeks to implement a homegrown structural adjustment programme to deal with the problems facing the cash-strapped island.
Appearing on a local television programme last week Wednesday night, Dr. Mitchell who is the country’s Minister of Finance spoke of measures his government would have to take in cushioning the country’s economic woes.
The island was forced in March to default on an EC$19 million debt payment due to U.S bondholders.
Prime Minister Mitchell announced then that Grenada would seek to engage all creditors in talk aimed at rescheduling the island’s huge national debt estimated at EC$2.3 billion.
The Prime Minister told the host of the programme that his government has not accepted any programme “at this particular time’ from the Washington-based International Monetary Fund (IMF) but is developing “our own local, home-grown programme.”
He did not give any hints about the “painful” measures which Grenadians might have to undergo as the island continues to struggle with its massive public sector wage bill in the region of EC$30 million a month.
According to Dr. Mitchell, the NNP administration has the backing of the IMF in the restructuring process, which he said, “is good business” for the island.
The international creditors have already told St. George’s that any restricting of the debts would have to be done in collaboration with international organisations like the Fund.
Dr. Mitchell warned that through the local homegrown programme the medicine will be a bitter one for the population.
“What I cannot promise… is that there will not be any pain. I cannot promise that because I made the point over and over that we made some terrible decisions in time. We have bloated our public sector and we’ve not done what we supposed to do in developing our productive sectors,” he said.
During its earlier period in government between 1995 and 2008, Mitchell’s NNP was often accused of embarking on a borrowing spree in which it spent millions secured through high interest-paying loans for non-productive projects like the first national stadium at Queen’s Park, the Call Centre project and the so-called Garden Group of hotels in the south of the island.
Dr. Mitchell told the programme he is confident that the IMF which met with his government last month understands the country’s situation and was adamant that the fund will not be able to tell them what his government has to do.
“We have told all the Institutions including the IMF and others that any programme, any advice that is given to us and does not include serious growth in the economy will not be taken seriously,” he said.
During the campaign for the February 19 general elections, Mitchell’s NNP promised to “deliver” thousands of jobs for the electorate as part of its commitment to build a “new economy” for the island.
The last time Grenada instituted its own home grown Structural Adjustment Programme (SAP) was under the 1990-95 National Democratic Congress (NDC) government of Sir Nicholas Brathwaite in order to avoid entering a formal programme with the IMF.
The NDC was forced to deal with Grenada being declared as uncreditworthy by financial institutions following an earlier rule of the NNP under its first leader, the late H.A Blaize.