IMF and Grenada’s Debt Restructuring

The ruling New National Party (NNP) government of Prime Minister Dr. Keith Mitchell is seemingly no longer blameing the main opposition National Democratic Congress (NDC) for the economic and financial crisis now plaguing Grenada.

THE NEW TODAY has obtained a letter allegedly sent by a senior government minister to a major international funding agency.

The letter points to the ongoing global financial crisis for Grenada’s woos.

The letter was sent to the funding agency against the backdrop of moves being made by the Mitchell-led government in Sat. George’s to engage in debt restructuring with the hope of getting creditors to take a major cut in the millions of dollars owed to them for loans extended to the island over the years.

The letters reads as follows:


Dear Sir,


Our tiny island of Grenada, with not many more than 100,000 inhabitants, is saddled with a debt that cannot be sustained. We have been hard hit by the global financial crisis because it affected our cruise ship clientele in the US. A slow recovery from hurricanes in the last decade as well as the reduction in development assistance have also played a part. We are committed to bearing our share of the cost while finding a way out that is both equitable and sustainable.


First, we are seeking social consensus by listening to our people. The government has consulted the churches and other civil society organisations. The International Monetary Fund has just completed a two-week visit.

We have also become aware of new approaches:


(1) We are committed to reducing costs and waste and to enhancing revenue;


(2) We would explore options for a comprehensive solution: an independent debt sustainability assessment, external mediation and a creditor’s conference;


(3) We seek a substantial financial haircut to prevent getting involved in the kind of piecemeal process that has failed over the past two years;


(4) We will try to balance the legitimate interests of all our creditors with the interest of our country.


At this week’s meeting of the World Bank and the IMF in Washington, we have been discussing with stakeholders fairer and more efficient ways of dealing with sovereign debt crises. We are prepared to become pioneers of a new debt-restructuring model that would spare countries from protracted entanglement in the debt trap. Grenada urgently needs debt relief from all its creditors.

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