Under fire from the opposition for its “Ease of doing business” track record in the past three years, the ruling New National Party (NNP) administration of Prime Minister, Dr. Keith Mitchell has outlined a list of measures aimed at rectifying the situation.
The issue was addressed by government in its dealings with the Washington-based International Monetary Fund (IMF) which is helping the island with a Structural Adjustment Programme.
THE NEW TODAY has obtained an 84-page document from the fund, which highlights some of the structural reform measures to be implemented by the Mitchell-led government to support competitiveness and growth in the local economy.
The document outlines the following in the area of “Ease of Doing Business” as Grenada has dropped significantly on the scale:
To improve the ease of doing business, the authorities intend to:
· Introduce new insolvency legislation.
A bill has been drafted to help establish an efficient and effective legal framework to address insolvencies and enforce contracts, a key factor pulling down Grenada’s position in the World Bank’s Doing Business Survey from 91 out of 183 countries in 2010 to 126 out of 189 countries in 2015.
The bill is expected to be approved by parliament by end-2015.
· Reform the Grenada Industrial Development Corporation (GIDC).
A recent assessment of GIDC, conducted with technical assistance from the IFC, recommended a strategic realignment and restructuring to reinforce GIDC’s executive capacity as an economic development corporation with investment promotion a priority function of GIDC’s broader mandate.
In response, the authorities plan to revise the GIDC act to align it with the recommended functions of the Corporation and have Parliament approve the revised act by end-June 2016 (proposed new structural benchmark).
The restructuring of GIDC is expected to reduce the time and cost of obtaining investment approvals and promote productive investment in Grenada.
· Create a credit bureau
The authorities, with their regional partners, are committed to the creation of a regional credit bureau for the ECCU.
The associated legislation will be presented to Grenada’s parliament once approved by the ECCB monetary council.
This should help to improve the functioning of the credit market, which has been considerably impaired in recent years.
The IMF document also indicated that the Mitchell government has given a commitment to reform labour regulations and strengthen competitiveness.
It said: “As a small open economy with a fixed exchange rate in a monetary union, a reduction in labour costs – related to both wages and labour regulations – is one of the key instruments available to strengthen competitiveness.
“With elevated structural unemployment, labour market reforms would complement the anticipated modernisation of the public sector and could promote employment growth.
“The authorities are finalising planned revisions to the labour code to improve labour mobility and reduce impediments to hiring that go beyond the accepted norms of protecting workers’ rights.
“The parliamentary approval of the new labour code is proposed to be a new structural benchmark for end-August 2016.
“The authorities are also committed to continuing the annual labour force surveys and strengthening the capacity of the statistical office to analyse labour market data.
“Improved labour statistics will serve as an input in policy decisions on how to improve skills matching and job search.
According to the IMF report, reforming the regulatory environment for the energy sector remains vital to lowering energy costs.
It indicated that a new Electricity Supply Act is expected to be approved by parliament in early 2016.
The new legislation, which underwent a series of public consultations during 2015, is designed to open the energy sector to competition, encourage development of renewable energy, and introduce an independent national regulator to set electricity tariffs.
The IMF also touched on plans afoot to give a boost to the key agriculture sector.
It said: “Efforts are underway to modernise the agriculture sector. In particular, policies aim to diversify into non-traditional crops, improve productivity, and strengthen the linkages between the agricultural and tourism sectors.
“In addition to its role in the purchase and export of local produce and sale of inputs to farmers, MNIB now acts as an effective service provider of information on market prices, production planning, product quality, and export standards.
“These initiatives are expected to strengthen sales to the tourism sector.
“In order to improve productivity, the authorities have commercialised two government-owned agricultural estates, with three additional estates to be commercialised by 2016.
“These efforts have already helped to expand agricultural production and strengthen diversification.