Prime Minister and Minister of Finance Dr. Keith Mitchell has accused successive governments including his own New National Party (NNP) for contributing to Grenada’s current financial and economic woes.
Dr. Mitchell who appeared on a GIS television program last week Wednesday said that successive governments have spent more than the country has been able to earn.
However, he singled out the Tillman Thomas-led government of the National Democratic Congress (NDC) which governed the country between July 2008 and February 2013 for being “highly irresponsible” for increasing the size of the public service.
During its term in Office between 1995 and 2008, the Mitchell government borrowed heavily at high commercial interest rates to undertake a number of major projects such as the first National Stadium that was destroyed by Hurricane Ivan in 2004 and the Ministerial Complex.
Dr. Mitchell sought to defend the NNP and its heavy borrowing, saying that the money was needed for infrastructural work.
“In many cases we had to invest in the infrastructure of the country and borrowed quite a considerable sum (of money) to do so,” Dr. Mitchell said.
Opponents have also blamed the Mitchell government for poor financial management through the number of government guarantees given to projects like the failed Ritz Carlton hotel at Mt. Hartman and the Garden Group of hotels in the south of the island, and others like Call Centre and Levera in St. Patrick’s.
As a means of correcting the country’s fiscal imbalance, the one-year old Mitchell government has been forced to introduce a three-year Structural Adjustment Program (SAP) with support from the Washington-based International Monetary Fund (IMF).
Dr. Mitchell said the programme will result in close to EC$100M per year for the next three years.
In a question posed to him by the host of the program Andre Donald in which he told Dr. Mitchell that his critics are saying that with the SAP involving the IMF, it was a case of going back on his election promises to deliver jobs and a better day for the people on the Spice Isle.
He told the host, “They would have to quote what were these promises because it is absolutely false. I don’t blame any opposition for trying to create one impression but one must have facts to support that.’’
The New Today Newspaper obtained a recording of one of the speeches that Dr. Mitchell gave party supporters during the election campaigns which, in part, said, “Consistently, NNP believes that there is a threshold above which you tax the people and they would get less revenue not more revenue. Grenadians are already over taxed so a government that continues to pile on taxes on the people, literally ripping off people’s pocket will destroy the country’s investment climate and development climate.”
Since coming into office, Prime Minister Mitchell has lowered the income tax ceiling from $5000.00 to $3000.00 monthly, doubled property taxes and trying to get public sector unions to accept a three-year wage freeze for public servants, and a suspension of monthly increments.
In addition, Mitchell’s NNP had promised hundreds of jobs in the construction sector within the first 100 days of being elected into office, and a host of foreign investors who were lined up with projects as part of the building of a new economy.
Dr. Mitchell gave the assurance that his government has no intention on embarking on retrenching public servants as part of SAP, but indicated that the country has no choice but to reduce the monthly commitment to the public sector payroll.
He identified a number of areas in which government’s monthly wage bill can be reduced such as attrition in which only 3 out of every 10 workers who reached retirement will be replaced.
He also revealed that there are up to four hundred vacancies in the public service which will not be filled.
The Prime Minister said another area is growth in the economy to create opportunities for the private sector which would attract public servants to willingly leave the service and to seek better opportunities on the outside.
Looking on the horizon, Dr. Mitchell spoke of having high expectations in the economic fortune of the country.
“We expect to see a few of those projects on stream. We expect to see further development in the infrastructure of the country on roads… we expect to also see further development in more training opportunities and educational development. We expect to see further improvement in the health care sector of the country as a whole,’’ he said.
Meanwhile, Labour Representative in the Upper House of Parliament, Senator Raymond Roberts is convinced that government would indeed lay-off some public servants as a means of correcting the financial mess the country has found itself in.
Sen. Roberts who shared the same idea during his appearance on two different media outfits last week Wednesday feared that 35% of public officers may have to go home in order to address the huge fiscal imbalance.
He believes the Washington-based International Monetary Fund (IMF) will not settle for a situation in which the government is stating that seventy cents of every dollar collected by government in revenue is used to pay salaries and wages.
“…I am convinced there shall be retrenchment in Grenada, Carriacou and Petite Martinique, no matter what is said,’’ he remarked.
Sen. Roberts who looked at other regional countries which adopted IMF programmes over the years said he does not know that the fund will give Grenada any special treatment than they gave Jamaica that is currently under a fiscal stabilisation programme.
The Labour Representative challenged Government officials in Grenada to be truthful to the people of the country on SAP.
“Grenada needs truth. We have too many people saying things that we know cannot and will not occur in this period, so Grenadians needs truth from its leaders,” he said.
A top Grenadian economist who lectures at the Cave Hill Campus of the University of the West Indies in Barbados, Dr. Brian Francis has predicted that if the Mitchell government does not change course it would end up like the Frundel Stuart administration in Barbados which announced that 3, 000 government employees will be sent home in order to arrest a deteriorating fiscal situation.