IMF looking for positive signs

The Washington-based International Monetary Fund (IMF) has sent strong signals to the Keith Mitchell-led New National Party (NNP) government in Grenada that it would not be “business as usual” if the island received funds from the lending institution to help solve its grave financial and economic problems.

According to a well-placed source, a visiting IMF delegation met with members of the Social Partners last Friday and outlined the road map that the fund intends to take in its future dealings with Grenada.

The source said that the leader of the delegation pointed out that Grenada was delinquent on promises made to take certain concrete action in the two previous IMF programmes for the island.

The IMF mission spent two days on the island meeting with the hierarchy within the Ministry of Finance including Permanent Secretary, Timothy Antoine to assess Grenada’s performance with the two previous IMF programmes.

Well-placed sources told this newspaper that the delegation that was sent to Grenada came on a specific mission and is not involved with the one that came a few weeks earlier to discuss the Letter of Intent that Prime Minister Mitchell has agreed to sign by month-end with Washington.

The source said the visiting IMF official pointed out that the “IMF reserves the right to withhold funds from Grenada if the island does not do what it has agreed to do in order to deal with its problems.

He spoke of the leader of the team indicating that Grenada would have to start taking positive steps to get the fund to start disbursing financial assistance to the agreed programme of fiscal measures that are needed to stabilise the Grenadian economy.

He said the IMF is looking forward to the type of measures which the Mitchell government would commit to undertake in order to deal with a significant deficit on the budget.

The administration has publicly admitted that it was spending on a monthly basis approximately 18 million more than it was earning in revenue.

The Prime Minister has announced his intention to sign by month-end a letter of intent with the fund to get its blessings for a self-styled Structural Adjustment Programme to address the fiscal deficit on the budget.

Speculation is rife that Prime Minister Mitchell is bent on going in the direction of the traditional IMF prescription of seeking to raise taxes and cut expenditure to try and balance the budget and put him in a position to start paying some of the creditors.

The source said that the visiting official from the fund noted that over the years Grenada borrowed millions of dollars and did not use the monies wisely.

Most of the borrowing took place during the June 1995 to July 2008 period of Dr. Mitchell when the national debt moved from approximately $EC 373 million to EC$1.8 billion.

The Mitchel government also borrowed funds on the international commercial market at very high interest rates.

The source said that the IMF intimated that it intends to put systems in place to monitor the progress of the upcoming programme to be signed with Grenada.

He stressed that the IMF official is confident that the financial institution has the means to tap into the computer system within the Ministry of Finance to monitor the daily financial transactions of government.

He said it is clear that the Mitchell government would not have much breathing space.

“We heard that in the past, Bernard Coard (Finance Minister of the People’s Revolutionary Government) used to keep two books with figures, one for the IMF and another one with the real thing. The IMF did not get to see the real thing and did not know exactly what was happening in Grenada.

“I can tell you that this kind of thing cannot happen with the IMF now. They would be on top of things and will know everything that is happening in Grenada. So Mitchell can’t try anything funny with the IMF. He would be put in a straight jacket”.

To date the Mitchell government has signalled its intention to lower the income tax threshold from persons earning $5000.00 a month to $3000.00 a month to try and pick up more funds from the tax, as well as raise some user fees for services provided to the public by government.

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