The cash-strapped Grenada government of Prime Minister Dr. Keith Mitchell is not surprised that financial analysis agency, Standard and Poor’s did not give the island a creditworthiness rating in its latest bulletin.
The agency’s position was influenced because of Grenada’s 2013 default on its loans and continuing non-payment on its US $193 million bonds and EC $184 million bonds to international creditors.
In the wake of the development, the near two-year old Mitchell government said this comes of no surprise because Grenada’s international credit rating has been in Selective Default (SD) mode since the regime announced in March 2013 that it was moving to do a comprehensive restructuring of the public debt.
Speaking on the issue at the weekly post-Cabinet press briefing held at the Ministerial Complex, Minister for Economic Development Planning Trade and Cooperatives, Oliver Joseph said Government does not expect Grenada’s credit rating to change until the debt restructuring exercise is complete.
“Government acknowledges that there is genuine concern among some of our people about the status of the debt restructuring process, however, everyone must be reminded that the process of comprehensive debt restructuring especially where a hair cut is involved is complex and time consuming and patience is required by all concerned – debtors and creditors,” he told reporters.
Minister Joseph announced that the process of debt restructuring has intensified since the endorsement of Grenada’s 3-year homegrown Structural Adjustment Programme (SAP) in June by the Washington-based International Monetary Fund (IMF).
The discussions with creditors, he said is at an advanced stage and it is unfortunate that there are suggestions that the current rating is a demonstration of a lack of confidence in Grenada when it is widely known that the island’s fiscal situation has improved and continues along that trajectory.
“The IMF said so when it undertook its first review in August of this year. We are now in a position where we are making payments to various organisations and institutions that were not paid in four-and-a-half years – UWI, CDF, Commonwealth Secretariat, CARICOM Secretariat. All these organisations, payments have been made to them over the last two years so that we can benefit from the services provided (by them)”, he remarked.
“…We are now paying salaries on time every month, we have paid increases in salaries, paid forty million dollars in back pay – all this point to the improvement in the fiscal situation,” he said.
However, Minister Joseph noted that the island’s debt remains a major concern and government is trying to address the debt-restructuring situation.
In the 2014 budget presentation, Prime Minister and Minister of Finance Dr. Mitchell put the national debt at EC$2.4 billion.
Minister Joseph also used the occasion to address the downward slide of Grenada in the “Ease of Doing Business” rating by the World Bank, which, saw the island, slipped from position 107 in 2013 to 126 in 2014.
He said the ruling New National Party (NNP) administration is disappointed but not discouraged by the ranking.
According to the senior government minister, steps are already being taken to address the issue in light of the present fiscal situation in the country.
“We have inherited a situation that we had to take corrective measures on and we focused heavily in the last few years on the fiscal situation. However, we are aware that we have to introduce new legislation and so under the home grown programme there will be several initiatives to improve the business climate,” he said.
According to Minister Joseph, Government will first start with a new investment bill to be taken to Parliament, as well as move to address the issue of insolvency in Legislation.
“… Ever since the Doing Business started we are at the bottom because we have outdated legislation to deal with insolvency and we need to introduce new legislation because that can put down the ranking”, he said.
“…Institutionally, we have already signaled our intention to reorganise the Grenada Industrial Development Cooperation to make Grenada’s investment climate even better and more attractive,” he added.
The senior government minister is confident that the planned legislative reform in the first half of next year will result in an improved ranking when the next report is published.
“Cabinet has established a Task Force to look into the issues surrounding the ranking of Grenada and therefore work is continuing in that area”, he said.
The minister added the ranking given to Grenada is not a deterrent to investors but what the ranking demonstrates “is how easy it is to do business in a particular country”.
“…You have countries that have moved to improved technology (that) have a higher ranking because you can go online, fill out all the forms, submit the forms and get approval. So we have (to) take steps to make it easier for investors to do business in order to increase our ranking,” he remarked.