Prime Minister and Minister of Finance, Dr. Keith Mitchell has given his strongest possible hint that his 18-month old New National Party (NNP) administration will have to resort to retrenchment to grapple with the high monthly wage bill.
Addressing a government exercise in preparation for the 2015 Budget of Revenue and Expenditure targeted for the end of November, Prime Minister Mitchell once again gave a strong warning to Grenadians that the public service will have to be significantly reduced.
He told participants that for Grenada to achieve sustained growth in the coming years, there would have to be a small and more efficient public sector in operation.
“There is no way the country can sustain (the) size and by implication the expenditure at the public service level if it has to meet its responsibility to all and sundry in our country,” he said.
The official launch of the 2015 Budget Review took place at the Grenada Trade Centre last week Wednesday with all Cabinet ministers and senior heads of all government departments in attendance.
The budget retreat was held to discuss government’s strategic priorities, as well as to assess the implementation of the 2014 budget, to provide an update to participants on the Structural Adjustment Programme and to provide specific guidance for the preparation and presentation of the 2015 Budget.
Dr. Mitchell who campaigned to win the February 2013 general elections on a platform of job creation said his government will have to find the mechanism to reduce the size of the public service.
He cited the attrition policy that was announced in the 2014 budget in which only three of every ten persons who retires will be replaced on the job.
The Grenadian leader warned that if government fails to stick to this policy the country stands to loose a lot of the resources promised by donor agencies and institutions under the Structural Adjustment Programme.
“We have little or no choice, this is not a Keith Mitchell thing, this is not any one individual thing, it is a all of us thing,” Dr. Mitchell said.
Former Permanent Secretary in the Ministry of Finance and now a Senior Lecturer in Economics at the University of the West Indies (UWI), Dr. Brian Francis has suggested that the only way to solve the fiscal crisis facing the country is to cut down on the high government expenditure particularly the wage bill and at the same time find ways to grow the economy and to provide alternative jobs.
During his speech, the Prime Minister said the 2015 Budget will focus on fiscal and debt sustainability, building the New Economy by investing in the productive sectors and improving the business climate and human development.
He said that while there has been significant positives under the Waste Reduction policy, Government needs to intensify these initiatives and urged every citizen to “be the keepers of our country – we have to guard the gate”.
Prime Minister Mitchell told the gathering that the first six months of office has been extremely challenging but he has begun to see “clear results” of positive growth due to the implementation of the three-year homegrown programme with help from the International Monetary Fund (IMF).
He spoke of government being able to meet its revenue targets each month, as well as reducing the monthly deficits from the projected $18 million to $10 million.
He said that unpaid claims in the Treasury have also been reduced from $100 million to $88.6 million, and almost $3 million has been spent on the debushing programme to provide some employment.
He also said that government has been able to make payments of $8.3 million to the Barbados-based Caribbean Development Bank (CDB) for outstanding monies owed, as well as $400,000.00 to the Grenada Development Bank for small businesses activities, $19 million to the Regional Security System (RSS), $227,000.00 to the Spice Mas Corporation,.
Other significant payments were made to the OECS Pharmaceutical Procurement Service ($429,000.00), $750,000.00 to other medical suppliers, $860,000.00 to school suppliers, $2.28 million to small suppliers and $1.1 million for gratuity.
“We are meeting a lot of our commitments we have not been able to meet for a long, long, long time … the situation is in fact stable,” said PM Mitchell who insisted that his administration has also begun delivering on its promises.
The Prime Minister highlighted the payment of $40 million in back-pay Government had to pay to civil servants on its entry into office after winning the February 19 General Election 9 (15-0) and increases in salaries to public officers.
Dr. Mitchell said the focus of his government in the 2015 Budget would be to increase economic growth and to stimulate job creation through specific projects, as well as fiscal and debt sustainability geared at building a new economy through investment in the productive sectors and enhancing the business climate and human development.
He stated that Grenada has tremendous potential but the people are yet to expend half of their potential.
Permanent Secretary in the Ministry of Finance Timothy Antoine who also addressed the gathering, outlined Government’s achievements within the first six months of the year – a feature being consecutive growth in the economy.
Antoine said the Grenadian economy grew for the second consecutive year by 2.7% and that revenue performed well with government collecting $256.5 million, which is in excess of the original target of $237.5 million.
He disclosed that only $27.5 million in Grants were collected while the target was $37.5 m.
Deputy Permanent Secretary in the Ministry of Finance, Mike Sylvester, warned that despite signs of positive growth, the country’s problems would not disappear immediately after the three year Structural Adjustment Programme.
August 27 is the date set for the first review of the IMF programme with Grenada.