2015 BUDGET OF EC$1.1 BILLION… 3, 500 new jobs promise

Prime Minister Mitchell as he was captured on Wednesday morning on his way to Parliament to present his government's 2015 Budget

Prime Minister Mitchell as he was captured on Wednesday morning on his way to Parliament to present his government’s 2015 Budget

Prime Minister and Minister of Finance, Dr. Keith Mitchell on Wednesday presented to Parliament a budget of EC$1.1 billion dollars to cover fiscal year 2015.

In a speech lasting approximately one hour and forty-five minutes the Grenadian leader told members of both the Lower and Upper Houses of Parliament that the budget is intended to fulfill the promises made by his New National Party (NNP) in the 2013 election campaign to provide jobs for the people.

He told legislators that some 3500 new jobs are expected to be created in the upcoming year from a combination of projects involving government and the private sector.

According to PM Mitchell, the Estimates of Revenue and Expenditure for 2015 provide for total expenditure including principal repayments of loans of one billion, one hundred and fifty-two million, two hundred and thirty-four thousand, two hundred and thirty-seven dollars (1,152,234,237).

The budget is made up of  Revenue of $545.4 million, Expenditure of some $482.7 million, and provides for a Current Account Surplus of $62.7 million, as well as Capital Expenditure amounting to  $312.3 million.

The budget is made up of  Revenue of $545.4 million, Expenditure of some $482.7 million, and provides for a Current Account Surplus of $62.7 million, as well as Capital Expenditure amounting to  $312.3 million.

The Prime Minister stated that the sources of financing for the capital expenditure of $312.3 million will come from $67.5 million in budget support and borrowing, $213.1 million from grants and the proceeds of the National Transformation Fund under the sale of passports programme and $31.6 million from external loan disbursements.

The 2015 budget makes provisions for Debt payments of $459.3 million, while the Ministry of Education and Human Resources is earmarked to receive  $114.1 million, Ministry of Finance and Energy ($90.3 million), Ministry of Youth and Sports ($67.5 million), Ministry of Health ($64.0 million), Ministry of Works ($58.8 million), and a further $48.4 million is being set aside for Pensions and Gratuities.

Prime Minister Mitchell told Parliament that the Grenadian economy is expected to grow by 2.6 per cent this year, higher than the average of 1.4 percent within the Eastern Caribbean currency Union (ECCU).

This, he said is actually better than the 1.5 percent growth that was projected when he presented the 2014 Budget.

The lead sectors identified as the main contributors to the projected economic growth are Tourism; Agriculture and Education.

He also boasted that the near two year old NNP administration has significantly reduced the unemployment situation in the country.

He said: “Mr. Speaker, on arrival in office, the unemployment rate was over 40 percent. The final results of the 2013 Labour Force Survey revealed that the unemployment rate had fallen to 32.5 percent. Despite some layoffs in the banking sector, the preliminary results of the 2014 Labour Force Survey indicate that unemployment has again fallen and is now 29.5 percent. Among women, it is now 31.5 percent. Among our youth (ages 15-24), it has fallen from 53.2 per cent to 45.4 percent.

“Mr. Speaker, we are the first to recognise that the rate of unemployment is still too high but we are encouraged that it is moving in the right direction. We expect a further reduction as some of the major private sector projects come on stream in 2015 and beyond”, he added.

In his speech, the Prime Minister disclosed that work is about to start on the much-talked about hotels projects – Silver Sands and Riviera.

He also said that 690 jobs will be created in 2015 through the Citizenship by Investment Programme (CBI) which involves the sale of Grenadian passports to non-nationals in exchange for investments.

He sought to assure Grenadians that positive steps are being taken to ensure the integrity of the sale of passports especially in light of sanctions taken against St. Kitts/Nevis by Canada over a similar sale of passports programme.

“Mr. Speaker, in order to safeguard Grenada’s image and insulate us from criminals, we have engaged the services and support of private due diligence service contractors, international governmental partnerships and our own Financial Intelligence Unit”, Dr. Mitchell told Parliament.

However, he said that given the importance of CBI as part of the Structural Adjustment Programme (SAP) and the expectations for the 2015 Budget, additional marketing agents have been appointed and additional projects will be undertaken with funds generated from the proceeds.

He listed the projects as:

*NOIL, Inc. Alternative Energy – a US$10 million Project will see the construction of industrial and residential solar energy systems to help reduce the cost of electricity for Grenadians. This project is expected to create 20 construction jobs and 35 permanent jobs on completion.

* The US$60 million Levera Resort Development project which has been talked about in the past is back. The project is expected to generate 50 construction jobs and 60 long term jobs.

*The Point at Petite Calivigny, billed as a US$8 million investment into a world class residential club, is listed to  generate 100 construction jobs and 40 permanent jobs.

*The Sanctuary at Fiji Beach – a  US$6 million project in L’esterre, Carriacou that is estimated to provide 60construction jobs and 40 permanent jobs.

* Grand Harbour Waterfront – valued at US$40 million. This self-styled luxury waterfront apartment project will generate 100 construction jobs and 95 long term jobs.

The speech as read out by PM Mitchell did not make reference to any new taxes to be included in the 2015 fiscal package.

However, the speech that was handed out to Parliamentarians and later submitted to the media for publication did indicate that some persons might face financial losses due to a New Tax Administration Act that will take effect in the upcoming year.

The document indicated that Government will soon introduce a Tax Administration Bill in Parliament to be governed by the Inland Revenue Department (IRD) of the Ministry of Finance to ensure that traditional
loopholes in the system are closed.

It pointed to several amendments that will be made “to effectively close some current loopholes”

*Limit deductions for motor vehicle operating expenses and travel expenses to restrict them to business use

*Pool and ring-fence unincorporated business income and rental property income so that losses in each of these categories cannot be set off against other types of income such as personal income tax

*Require that deductions for interest and other overhead expenses incurred to earn foreign-source income be deducted only against foreign-source income

*Introduce accelerated depreciation allowances as the main income tax incentive for investment.

The document said that these adjustments will be effective for tax year 2015, which is assumed should begin on January 1.

“The current regime will be maintained for income tax returns for 2014. However, these announcements are being made now to give the business community ample time to adjust”, it added.

The Prime Minister did not give much details about the plans by government to reduce significantly the massive monthly wage bill that has been identified as the main expenditure item for Grenada.

He said that some 422 posts within the civil service have been removed under a Cabinet-approved Attrition programme aimed at cutting down on staff levels in the civil service.

He said: “As a first step, in the implementation of this Policy, Government committed itself to abolish 90% of all truly vacant posts. Cabinet has now formally abolished these positions. As a consequence, the 2015 Budget provides for 5,181 positions (4,917 permanent; and 264 unestablished) compared with 5,603 in 2014 (5,339 permanent; and 264 unestablished) – a net reduction of 422 posts”.

He said the following:-

*For the first 10 months, Government saved $4.6 million broken down as follows: Electricity ($2.5 million); Mobile telecommunications ($901,000);
Fuel ($365,654.66); Water ($554,714.86); Overtime ($218,874.84); and International Travel ($554,714.86).

PM Mitchell also indicated that government was looking to realise further savings in the area of telecommunications.

He said: “We are now moving to implement new arrangements for fixed line and internet communications. The Unified Communications System utilising the Internet Protocol phones will significantly reduce the cost of telecommunications services to the Government. This savings could be as high as 70% (about $4 million per year). We will also pursue more energy efficient initiatives”.

Other highlights in the 2015 budget included

• Continuation of the New Imani Programme to a ceiling of three to four thousand young people

• Implementation of the National Youth Policy Action Plan and a continuation of a number of projects aimed at youth development.

In respect of sports, the priorities will include • Lighting of the National Cricket Stadium

• Lighting of La Sagesse Playing Field, and other facilities around the island

• Upgrading of Cuthbert Peters Park (already started)

• Upgrading of the Alston George Park, St. Mark’s (already started)

• Expansion of the Youth Development Centre (already started)

The lighting projects will be done with support from the National Lotteries Authority.

Prime Minister Mitchell also outlined a series of measures to grapple with the severe housing problem on the island.

He said government has decided to roll out four major initiatives “to satisfy the housing challenges of our people”

These include:

• an increased allocation from $5.35 million to $6 million for Grenada Home Improvement Scheme

• an increase from $2 million to $ 4 million in the allocation for the Soft Loan programme managed by the Housing Authority

• the agreement with the Chinese to provide more low income housing, following the distribution of homes to 350 families in Soubise, Frequente and Mt. Gay.

The second phase of the Chinese Housing Programme will provide homes for 650 families, and will be constructed in Beausejour and Frequente in St. George’s, Black Bay in St. John’s, Diamond, St. Mark’s, St. Patrick’s and Dumfries in Carriacou.

Prime Minister Mitchell also told Parliament that in fiscal 2015 several major infrastructural works are planned for  the Maurice Bishop International Airport (MBIA) at Point Salines.

These include:*Upgrading of the Runway, Lighting System, Procurement of Air Traffic Control Equipment, and Airport By-Pass Road.

On the sister isle of Carriacou, Government has also decided to relocate the new airport to Dumfries from Lauriston in order to provide for night landing and to accommodate the LIAT’s ATR 72 aircrafts.

He also listed a number of major projects to be implemented by the administration in the next 12 months that will create an impact on the unemployment situation in the country.

He said the Budget provides for $312.3 million in Capital programmes in 2015 and they will be able to “put thousands of our people back to work; thus helping them to provide for their families”.

He identified them as

* National Athletic and Football Stadium that is being done primarily by funds provided by the People’s Republic of China (PRC) at a cost of $65 million.
The project is expected to be completed by August 2015.

*The House of Parliament: . It is estimated that 50 jobs will be created through this project, which should be completed at the end of 2016.

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