The Upper House of the Grenada Parliament has given approval to the Fiscal Responsibility Amendment Bill as introduced by the Keith Mitchell-led New National Party (NNP) administration.
The amendment seeks to set up a committee to oversee the operations of the Ministry of Finance to make sure that government keeps within spending limits.
The bill was piloted by Leader of Government Business, Senator Simon Stiell and received full support from both sides at a sitting of the Senate at the Grenada Trade Centre.
The Bill seeks to specifically amend the Fiscal Responsibility Act No. 29 of 2015 to improve the efficiency and independence of the Fiscal Responsibility Oversight Committee which was established under section 14 of the Fiscal Responsibility Act, 2015.
In addressing the sitting, Sen. Stiell said that the Fiscal Responsibility Act is basically a rules-based fiscal policy framework that sets out very prescribed do’s and don’t’s for government in terms of how the financial matters of the country are managed.
He gave an insight into the rationale for bringing in this piece of legislation in Grenada.
“The accompanying pieces of legislation is to ensure that we do not make the repeat, the missteps that we have done historically and that we don’t go back to those days of significant financial mismanagement that we are able to lock in all of the gains that we have seen through the successful completion of the Home Grown Structural Adjustment Programme,” he said.
Grenada had raked up a massive national debt in recent years as the NNP during its rule from mid-1995 to 2008 moved the figure from 373 million E.C dollars to over EC$1.8 billion.
The Mitchell-led government was accused of embarking upon a massive borrowing and spending spree on a series of controversial non-productive projects.
Within months of returning to power in 2013 after defeating Congress, Prime Minister Mitchell announced that Grenada was not able to pay millions in debts owed to creditors and was forced to introduce a Structural Adjustment Programme (SAP) to deal with a severe fiscal problem.
The programme saw sweeping austerity measures including huge increases in property tax, a widening of the income tax net, a freeze on wages, and increases in most government user fees.
The NNP regime also turned to the Washington-based International Monetary Fund (IMF) for assistance in helping to get the international creditors to come on board with the debt restructuring plans.
According to Sen. Stiell, the NNP regime does not want to put in danger the progress made over the years of SAP and as such the Oversight Committee was a critical component.
“We want to lock in those gains and we want to ensure that we continue on an economic growth path. We’ve moved from an economy that was in freefall, an economy that was in recession – they (NDC) was averaging 2% negative growth over the previous period 2008 to 2013 to move to a period of significant economic growth with an average growth rate of more than 5% – one of the fastest growing economies in the region”, he said.
“…When we came into office, we were spending on a monthly 10 million dollars more than we were actually earning and to bring that from a deficit to a surplus from a debt to GDP ratio that was in the range of 108% brought down by the end of this year to 76% and by 2020 the target is to bring that down to 55%…a significant improvement in our debt situation”, he added.
Sen. Stiell went on: “This is … a fiscal responsibility that we will adopt to become part of our normal operating procedures with regard (to) the management of our economy”.
He said the amended fiscal responsibility legislation will focus on strengthening and monitoring the oversight functions “to ensure the government and specifically the Ministry of Finance adhere to those rules to ensure that those gains are not lost”.
Giving support to the Bill was Parliamentary Secretary in the Ministry of Carriacou and Petite Martinique Affairs, Sen. Nolan Cox, who stated that it is a most important Bill for the government at this point in time.
I believe that we have demonstrated a clear responsibility on our part to ensure that we enact legislation that will aid us to be responsible in ensuring that we manage the country’s finances in a prudent and responsible manner”, he said.
“This bill clearly sets out that… this is also a clear demonstration of the responsibility on our part to ensure that we continue to improve this legislation to make sure that it does what it’s supposed to and function as its supposed to,” he added.
Private Sector Representative in the Upper House, Sen. Christopher DeAllie encouraged the government to move ahead with the establishment of the Fiscal Responsibility Oversight Committee.
He told the Senate: “From a Private Sector point of view, we support this amendment and the Oversight Committee for the fact that when we had introduced this legislation we had introduced it with the intention of ensuring that the government is responsible in ensuring that (it) carries out its financial transaction of the nation in regards to its debts and different things in regards to how they spend the money.
“The collections of their revenue and oversight is important from the point of view that we need to ensure whichever government is in power stays within the confines of the legislation and that they do what they’re supposed to do.
“…My only comment and it is not a criticism, we talk about putting these committees and we never put them in place and operationalise them. I know the amendment speaks to putting in Oversight Committee….
“…I’m hoping that when this Bill pass that the committee is operationalised and put in place as quickly as possible so that they can start their work’.
The Fiscal Responsibility Oversight Committee is expected to give a report to Parliament by the third month after the end of each financial year.