The monitoring committee for Grenada’s Home Grown Programme aimed at helping to stabilize the island’s ailing economy held its inaugural meeting last week Tuesday at the Ministry of Finance.
The six member team is made up of officials of the Grenada Trades Union Council (GTUC), Civil Society, Conference of Churches of Grenada (CCG), Private Sector, Eastern Caribbean Central Bank (ECCB) and the government.
Among the tasks of the committee are to monitor the implementation of the Structural Adjustment Programme (SAP), as well as receive and review monthly reports from the Ministry of Finance on performance criteria and structural benchmark as set out in the letter of intent signed with the Washington-based International Monetary Fund (IMF).
The group has been given the added responsibility of assisting government to achieve agreed targets and benchmark and to recommend corrective actions as deemed necessary.
According to Chairman of the Committee, Permanent Secretary in the Ministry of Finance, Timothy Antoine, three major financial institutions have already endorsed the structural programme.
The IMF on June 26 at a meeting of the Board of Directors endorsed the programme and approved an extended credit facility to support the programme.
Four days later on June 30, the World Bank, which is affiliated to the IMF, endorsed the programme and approved a soft loan to Grenada to support its implementation of the programme and on July 17, the Caribbean Development Bank (CDB) endorsed the programme and approved the first of three soft loans for the island.
In speaking to reporters, PS Antoine pointed out that the government is committed to reducing the national debt of EC$2.4 billion and improving the economy and intends to put a Cap on public spending.
“The key expenditure item is the pay roll – that’s the single largest expenditure item in government. Roughly we spending $25/28 million a month with pay roll including Pension it’s about 70 cents on every dollar, so clearly we have to put a cap on that – a cap means that it doesn’t grow every year and over time it reduces which is what the attrition policy is intended to do,” he said.
The attrition policy will seek to replace only three out of ten workers who have reached retirement age in the public service.
Antoine stressed that the government will seek to further reduce its monthly expenditure by cutting back on non-personal expenditure, utilities, telecoms, water, and fuel.
“The Home Grown Programme is a comprehensive programme, it is not simply about a revenue here or an expenditure, it’s about looking at the entire government operation and getting back into some responsible and effective management fashion…”, he said, adding that right now, “we spend more than we earn”.
The senior civil servant who has been involved in the management of the country’s finances fpr over the past 15 years, also commented on a commitment given by government to the IMF in the signed letter of Intent, which hints at the possible removal of tax rebates for manufacturers by 2016;
Antoine explained that it was more of a reduction rather than a complete removal.
“This is a period of shared sacrifice, what it means is that concessions are being cut, not eliminated but reduced, the private sector will have to take less concessions”, he said.
“…On average I think it is costing us about $9-10 million a year (in concessions granted) – that’s a lot of money, so obviously we want to tighten that up which is what we’ve done now with the programme,” he added.
Antoine disclosed that any concessions given by government will now have to be used in the most efficient way to get the best out of the manufacturers.
Despite this, Antoine said government is still encouraging manufacturers to export, invest, create jobs and raise productivity in the country.
“We also recognise that it is not just VAT, you have to deal with things like electricity, which is a big issue for the manufacturers so when we say we want to reduce the cost of electricity it’s more than just the government spending $20 million in electricity”, he told reporters.
“…It’s also about how manufacturers could better survive and thrive and compete by having a lower cost of electricity for manufacturers or indeed for hoteliers or indeed for households and that is why it is so comprehensive. Everybody will benefit from this programme but I will admit that in the short term it is sacrifice,” he said.
Government has also announced its intention to place a tax on small businesses but Antoine said it will be aimed at helping the business enterprise to grow.
“… The idea is to encourage them by giving them a low rate but bringing them in so that they can get the benefits of being in, whether it is in technical assistance or concessions, whether it is in soft loans but if they’re not organized, they can’t benefit but you also have to give them a low rate,” he said.
The Antoine-led committee will be meeting on a monthly basis to review the performance of the programme.