IMF Mission Chief: Unemployment remains high

The Washington-based International Monetary Fund (IMF) has raised eyebrows over the high level of unemployment that is affecting the country.

Nicole La Frambrase – the female IMF Chief for the region

Nicole La Frambrase – the female IMF Chief for the region

The observation was made by IMF Mission Chief, Nicole La Frambrase to members of the media last week Thursday while presenting the Mission’s findings coming out of the fourth review of the Extended Credit Facility (ECF) Supported Programme as part of the three-year Structural Adjustment Programme (SAP).

Although La Frambrase reported that Grenada has made major strides toward restoring fiscal and external sustainability, with economic activity having picked up, and the balance of payments external position strengthened since the ECF Support Programme began in June 2014, she said that unemployment remains high, and credit growth is weak.

According to the IMF official, the fund hopes to see these two areas improved this year so as to help broaden the impact of the growth seen so far in the economy.

La Frambrase believes more Grenadians are now actively seeking work thus the labour force participation rate rose.

The IMF Mission Chief pointed out that SAP is at an important juncture, and described the economy as fairly strong fuelled by agriculture, tourism and construction.

She said that in 2015 real Gross Domestic Product (GDP) expanded by 4.6 percent, but the country again experienced deflation last year by approximately 1.3 percent.

La Frambrase believes this was mostly due to the lower energy prices since a lot of the economy is affected by imported prices.

She said that fiscal performance under the programme was strong in 2015 with government having met all of the quantitative performance criteria at the end of December, and also cleared all budget expenditure arrears.

The IMF Mission Chief also disclosed that the external current account deficit fell to an estimated 15 percent of GDP owing to strong tourism receipts and lower international oil prices.

She said the outlook for this year remains positive with growth expected to be moderate at approximately three percent.

Grenada now heads into the final year of the ECF-supported Programme, and the Mission Chief said that the policy resolve and commitment demonstrated so far need to be continued in order to secure the lasting benefits of the progress that has already been made.

La Frambrase said with Grenada now being into the final year of the SAP and significant amount of progress achieved, she warned that there is still some work to do, and some pressures arising that will need to be managed carefully.

She said for this year, a projected primary surplus on the budget is forecasted to meet the nominal target under the Fund-supported programme.

The ECF-supported Programme calls for the IMF to provide US $20M as a loan disbursement to Grenada over the life of the programme.

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