The Washington-based International Monetary Fund (IMF) says that Grenada’s Structural Adjustment Programme is off on the right footing but that a number of challenges are preventing it from reaching its true potential.
The programme, which was initiated by the18-month old Keith Mitchell-led New National Party (NNP) administration, was approved by the Fund on June 26.
IMF Mission Chief, Aliona Cebotari was at the head of a delegation which last week concluded the first review of the programme to run three years in the first instant.
Speaking to reporters at a press briefing last week Thursday, Cebotari
said the IMF was encouraged by the findings but is a little disturbed by some of the challenges that will have to be undertaken under the programme.
According to the female official from the Washington financial institution, one of the key challenges is fiscal sustainability.
“There are imbalances both in terms of the debt stock, the debt is very high, the deficit is very high and not “financeable” so this is the main centre piece of the programme we’re trying to address – the fiscal imbalances and put the fiscal position on a sustainable foot,” she told reporters.
Cebotari identified the second major challenge for the Grenadian economy as growth, which, she said was down by 8%.
“It’s a very steep decline and Grenada has not recovered as fast as other countries have. So we are in a very deep crisis. We can say that the economy is recovering now but what we are looking for is to improve the potential economic growth of the country so that whilst all the challenges have been addressed and fiscal sustainability has been restored Grenada is well poised to resume a rapid growth”, she said.
“…There are a lot of issues that cling to the growth prospect, fiscal debt over hang is one of them, competitiveness is another one of them including price and structural competitiveness and this is what we are trying to address…”, she added.
Stating that the third major issue for the local economy was the stability of the financial sector, the female IMF official pointed out that this has weakened the balance sheet somewhat and is hampering the ability of the financial institutions to provide credit to support growth.
“…This is another area that is critical to our programme,” Cebotari said but was quick to add that “the intense commitment of the government gives her hope that the programme can meet its objectives.
“…The government acknowledged the challenges it faces and together we found solutions to what these challenges should be, how they should be addressed and the ownership in fact by the entire society.
“…We are seeing unprecedented support from Social Partners and involvement and engagement in the programme both in terms of their contribution. We’ve had numerous discussions before the programme was put together to find out what their views are and how the challenges should be addressed in terms of their support and in terms of their monitoring. It’s very encouraging and I think that they’ll provide a very strong support system”.