A delegation from the Washington-based International Monetary Fund (IMF) in separate meetings with the Grenada Trades Union Council and Civil Society Organisations has painted a gloomy picture of the island’s economic and financial situation.
THE NEW TODAY understands that the IMF team likened Grenada to a cancer patient in need of urgent treatment, including chemotherapy.
According to trade union representative in Parliament, Senator Raymond Roberts who attended the meeting, the comparison to a cancer patient was made in relation to the country’s massive national debt now in excess of 2.3 billion dollars, which works to a debt of about $20,000 being owed by every living person in the State.
In a meeting lasting almost three hours, the IMF quizzed the trade union leadership on what supporting role they intend to play in working with the Keith Mitchell-led New National Party (NNP) government and the private sector to reduce the debt that is stifling economic activities.
Sen. Roberts said the IMF delegation made it very clear that government’s finances are in a poor state which cannot continue for any length of time and the members highlighted the fact that expenditure far exceeds revenue collection which is a recipe for disaster in the long term.
One of the members of the delegation was emphatic, stating that the IMF makes recommendations and that it is up to the country to determine whether it wants to take the medication or choose to implement alternative measures.
However, according to the IMF official, if Grenada does nothing to stabilise its economy, the consequences are that grants from other countries will be extremely difficult to access.
Sen. Roberts said the IMF did not specifically say what their medication would be but noted that increased taxes are necessary for the government.
Asked about Dr. Mitchell’s philosophy that workers who make less than $60, 000 a year be exempt from paying personal income tax, the IMF said that Grenada and St. Kitts – which have two of the most depressed economies in the world, are perhaps the only two nations with such a huge threshold.
The IMF delegation told Union Leaders that Grenada’s financial problem is colossal and one official reflected on Barbados in the 90’s under then Prime Minister Erskine Sandiford which resulted in a cut in public officers’ pay by eight percent among other revenue raising measures.
The official pointed out that Grenada is facing a similar situation and it is almost crisis time.
Sen. Roberts said the IMF also touched on the much talked about hair cut being proposed by the Mitchell government for its U.S bond holders and institutions that provided Grenada with commercial loans over the years.
The delegation said that the bond-holders are expecting to be treated fairly by government and do not expect them to accept zero.
Since assuming office in February, the cash-strapped Mitchell government has defaulted on its March payment of US $9million to the bond-holders.
The government was expected to make another payment of approximately $19 million in September but has not made any official pronouncement on whether it will make the payment or default once more.
Sen. Roberts noted that Prime Minister Mitchell has boasted that he was able to pay public officers’ salaries on time, but makes no mention that the government has not honoured its debt obligations to its creditors and that the interests on the debts continues to increase.
Much of Grenada’s debt was accumulated during the first 13 years of the Keith Mitchell reign from June 1995 to July 2008.
Several of the unsustainable debts came from commercial loans borrowed at high interest rates of around nine percent from a Merchant bank in Trinidad, in which the Ansa McCall Group is a dominant player.
One of the loans was taken out to refurbish the Maurice Bishop Internatoinal Airport at Point Salines.
Sen. Roberts pointed out that while the trade unions support the government’s desire to grow the economy and create jobs for workers, “we are all aware that IMF prescriptions include the pain of austerity measures – which mean job cuts in the public service, and cuts in social programs, among others”.
He said his greatest concern is that the population is not being prepared by the Mitchell government for the challenges that lie ahead for Grenada.
“When you listen the Prime Minister at his Town Hall meetings, the impression being given is that happy days are here again”, he remarked.
According to Sen. Roberts, some people still do not comprehend the reality that the country does not have any money and the situation is indeed deteriorating.
“And what is worse is that the hundreds of investors the Prime Minister boasted about who were lining up to come here to do business just can’t arrive; neither have the ten thousand jobs. “, said the outspoken trade unionist.