Grenadians might have to make more financial sacrifices as the one-year old Keith Mitchell-led government moves ahead with the implementation of its 3-year Structural Adjustment Programme (SAP) and to get the approval from the Board of Directors of the Washington-based International Monetary Fund (IMF).
Permanent Secretary in the Ministry of Finance Timothy Antoine told reporters at last week’s post-Cabinet press briefing that a number of prior actions must be met by the island before the IMF Board of Directors meeting to decide on the programme being implemented by Grenada.
Antoine said that the much-talked about “letter of intent” with the fund will be signed by Grenada’s Prime Minister and Minister of Finance, Dr. Mitchell close to the date set aside for the meeting of the IMF Board of Directors.
“It is the practice of the IMF that the letter of intent be signed closer to the board date and it be disclosed after the board date”, he added.
According to the top official in the Ministry of Finance, once the IMF Board has signed off on the programme then the letter of intent would be formally released.
THE IMF has already announced that it has reached a “staff level” agreement with Grenada.
Financial sources told THE NEW TODAY that the Board of Directors and not the staff members of the IMF are the ones who will agree on the programme that is to be given to Grenada to address its severe fiscal imbalance.
PS Antoine told reporters that one of the measures still to be implemented by the cash-strapped Mitchell administration is the lowering of concessions by about 50% to companies and organisations on imported goods into the country.
This move could result in consumers having to pay higher prices for goods and services.
Government also plans to reduce on concessions given to returning nationals on the grounds that everyone is expected to contribute and make sacrifices as part of the homegrown programme.
Antoine said the aim of government is to tighten up on concessions and statutory bodies have already been told that they would also be affected.
He said government is not looking to totally eliminate concessions and is trying to work with all sectors of the economy in keeping with its commitment to collect more revenue.
He said the Customs Department alone gave up in excess of $131 million in concessions in 2013.
Some of the measures already undertaken by government as part of SAP
are the lowering of the Income Tax threshold, increases in Property Tax and an increase in the Custom Service Charge.
Prime Minister and Minister for Finance Dr Keith Mitchell who was part of a panel of seven ministers addressing the media announced a positive development in the talks between government and the trade unions representing public workers on a wage freeze agreement over the next 3 years.
He said that government has received a letter from the unions asking it to put aside a previous communiqué in which two of the bodies had signed off on a document indicating their support for the programme.
The Grenada Union of Teachers (GUT) did not join with the Public Workers Union (PWU) and the Grenada Technical & Allied Workers Union (TAWU) in signing on the initial Memorandum of Understanding.
According to PM Mitchell, the effect of the actions of the three unions “is that they don’t expect to be seeking increases in salaries during the period of the Home-grown Programme, and that to me is a major plus”.
The Grenadian leader also responded to a press release issued last week by the IMF in which it described as “ambitious”, the programme being implemented by Grenada to correct its fiscal imbalances.
Some economic analysts believe that the IMF was sending a warning signal that it might be too ambitious in scope.
However, Prime Minister Mitchell said that he was proud of the statement issued by the fund which agreed to provide the island with a US$21.9 million package over the next three years.
He is confident that once agreement is signed with the IMF, other institutions such as the World Bank will provide at least US$30 million in soft loans, the Caribbean Development Bank (CDB) US$30 million and the European Union is committed to giving significant support in grant aid.
Dr. Mitchell reiterated that he is not enjoying the implementation of the austerity measures but there is no other alternatives available to him.
“Asking them to make further sacrifices at this time is tough for anybody particularly a politician, but we ask the question – what is the alternative?
The Prime Minister restated earlier pronouncements that if the programme is successful Grenada could realise in excess of US$100 million to be used to stabilise the country’s financial challenges.
“If we perform well, if we meet our targets in the programme …..the total amount of money (government will get) will be above US$100 million. But it depends on all of us in government, the public service that is supposed to help us to implement the programmes, the press, you providing the necessary information to the public so they can be engaged in the entire process”, he said.
He said he believes that every Grenadian who cares about Grenada and wish to see the best for citizens of the country would be extremely happy and proud of the IMF statement highlighting positive signs for fiscal stability, growth and job creation.
The final decision regarding Grenada’s Homegrown Programme hinges on a meeting by the IMF Board of Directors as the Grenadian Government continues it promise that the “letter of Intent” will soon be signed.