While admitting that the measures adopted by his one-year old government to stabilise the local economy are tough, Prime Minister Dr. Keith Mitchell has said there was no other alternative that could have been taken to address the severe economic and financial situation facing the country.
With Grenada having a sluggish economy, the one-year old New National Party (NNP) administration at the start of the New Year introduced a series of austerity measures as part of a Structural Adjustment Program (SAP).
Appearing on a recent edition of the “Beyond The Headlines” programme run by the Grenada Broadcasting Network, the Grenadian leader said, “I ask myself what is the alternative, can I do it differently or how would I do it and meet the objective of stabilising this country fiscally and putting it on a path for economic growth”.
He went on: “It was painful for us, all of us in the leadership of the country to ask many people, most people at this time to make sacrifices more than they have already had to make”.
Dr. Mitchell who is also the country’s Minister of Finance said he has heard many other suggestions about different things the government can do to tackle the problem but concluded that, “none of them can do any dent to where we want to go.”
The austerity measures aimed at finding more revenue for government includes a widening of the income tax base, a doubling of the Property Tax rate, and a one percent increase in the Customs Service Charge (CSC) on imported goods.
The main opposition National Democratic Congress (NDC) has suggested to the Mitchell-led government that it can put a freeze on prices of items that the State has some controls over like food items, and repealing the amendment to the Electricity Supply Act, which imposes a 50% duty on all fuel, lubricant and spare parts that are imported by GRENLEC.
During the programme, Prime Minister Mitchell sought to sugarcoat the effects of the decrease in the concessions that is given to GRENLEC on the wider population.
He said GRENLEC is known to be extremely profitable and as a responsible member of the business community, the lone power company on the island knows that it is not good business to increase the cost of electricity to consumers.
“If GRENLEC proceeds to increase rates in addition to what it has already done because of government’s decision to invest in the sustainable development of the country, GRENLEC in the end will not be better off… because a lot of people will drop off, more people will drop off from the use of the service. So I am saying I don’t believe it would be a smart business decision to increase prices,” he added.
The Prime Minister believes if GRENLEC does not increase its rates and instead invest more in renewable energy, this will result in a drop in the price of electricity and with more people doing business with the company then it stands to make more profits.
Meanwhile, new Political Leader of Congress, Nazim Burke has criticized the number of austerity measures as too harsh in trying to achieve the fiscal imbalance in the economy.
Sen. Burke, a former Finance Minister, said that with the government struggling to meet its monthly commitments of servicing loans and paying salaries, it is unable to maintain any short-term employment programmes that will create jobs for the lower income bracket.
He made specific reference to the debushing programme, which has not taken place since last December.
The former Finance Minister indicated that Grenada is now in a severe economic crisis under the Mitchell government.
“At a time when the economy is depressed, at a time when people can’t pay their bill, at a time when poverty is so high, at a time when unemployment is so high, at a time when the government is asking everyone to band their belly, cut back on their expenses, at a time when all of these things are happening …the government is now deciding that the solution to the country’s problems, the way to address the economic crisis that we are facing is by loading the tax on to the people,” Burke said.
The Mitchell-led government is awaiting approval from the Board of Directors of the Washington-based International Monetary Fund (IMF) on a programme of assistance to aid the ailing economy.
The fund has announced a loan package of US$21.9 for Grenada to be spread over a 3-year period.