Despite claims that Grenada’s Fiscal Responsibility Act (FRA) will not allow government to pay the 25% pension and gratuity to public servants, Prime Minister and Minister of Finance, Dr. Keith Mitchell has said that government’s intention to financially aid LIAT with a one-off payment of over one million dollars will not go against the legislation that came as part of the Structural Adjustment Programme (SAP).
The about turn on government’s position not to aid the financially-plagued regional airline was outlined Tuesday at the weekly post-Cabinet Press Briefing by Prime Minister and Minister of Finance, Dr. Keith Mitchell.
“Whatever we do, we must be able to do it in the context of the Fiscal Responsibility Law. That’s why I have been telling my colleagues in the Trade Union Movement, we cannot do anything to satisfy any group in the country that will break the Fiscal Responsibility Act. For me to do that is to say to the nation, to satisfy what one particular group in the country want, I have to destroy everybody else, I can’t do that”, he said.
“I don’t know which government, or which leader, or which Minister of Finance would want to be so desperate that he would want to meet the condition set by a particular group of workers as much as they might feel that they need it, but you have to think about the majority of people in the country”, he added.
According to Dr. Mitchell if the payment was just a million dollars to teachers he did not have a problem with that payment but “you (are) talking a lot of money and you’re talking continuously”.
Asked specifically where the money will come from to make the payment to Liat as agreed at the recent summit of Caribbean Community (CARICOM) Prime Minister in St. Kitts, he said there was money around in many budgets.
He said: “We have presented a budget and so far we are generating (the) estimated revenue. It’s the first time I have been in government … whether it’s government or opposition, the estimate revenue that we have projected at budget time, we have surpassed it. So, it (Liat payment) can be from Savings so far, but we also have funding that can (come from) the National Transformation Fund, from savings we have brought from other areas – last year savings and so on. So, there are room within our budget where money could be used for other things, but we are able to get the cash, but I will not be spending the cash just like this”.
Prime Minister Mitchell stressed that although Grenada agreed to make a financial contribution towards LIAT, his fundamental position on the airline has not changed.
The Grenadian leader has often called for changes to be made to Liat and to make the airline operate more as a business along private sector lines.
However, Dr. Mitchell said it would not be in the best interest of Grenada if LIAT ceases operations.
“If LIAT goes down, it would take some time before another airline emerges. It will damage our economy and damage our country and create tremendous hardship for our country. So, it’s not in our interest…”, he added.
According to the Prime Minister, he has detected “a trend of change within the regional airline and as such it is not in Grenada’s interest “to see LIAT go down”.
He said that agreement was reached among some Heads at the Caricom summit to “contribute 5 million dollars cash injection but it’s based on certain factors”.
A deadline of March 31st was given to regional countries to contribute the money with Grenada’s sum being $1.3 million.
Dr. Mitchell disclosed that an analysis is currently being done by government to determine if more of less of that money will be given to the Liat cause.
He said: “They have presented to us based on the analysis they have done, what Grenada’s contribution will be. While we agree to pay some cash, I cannot say at this point in time that the number they have presented, US $487,000 is what Grenada would have give.
“We are doing an analysis before I commit – it has to be before the end of the month. We will see, but I cannot say if it’s going to be something less or even something more, I can’t tell you, but we will inform the public because it’s the public money,” he added.
In addition, the Prime Minister told reporters that LIAT is asking for subsidies on flights that are not yielding benefits on some routes and Grenada has no problem with the suggestion.
Dr. Mitchell acknowledged that some Liat flights are not profitable and not yielding the load factor to break even.
“I have no problem – if we’re getting a flight and we need it and the flight is not profitable at a given time – we’ve done it for big airlines – we supported and continue to support, whether it’s marketing and other aspects, British Airways and other airlines coming in here. We did it with American Airlines, not now, because American Airlines is completely full. In fact, we can’t get space on American Airlines going to Miami, so we’re not paying right now but we used to pay.
“..So, if we used to pay and we need LIAT and LIAT is saying that flight is not yielding and they provide the proof to us, we will in fact, subsidise the particular flight, but if there is a flight that we don’t think that is as important for us, we won’t be subsidising something that is not optimal for us.
Prime Minister Mitchell also threw out the idea that there should be a decrease in the amount of taxes imposed on flight costs by some of the regional islands to help the Liat cause.
He said: “…I am not going to subsidise a flight from another country, which includes a massive amount of taxes from that country.
I won’t do it and I don’t expect another country to subsidise unnecessarily so if Grenada is going to impose a pile of taxes on a LIAT ticket.
“…So, I asked before we start the subsidy, there must be a rational of the taxes imposing (on) a LIAT ticket. So, the price of the ticket, I expect will drop considerably, which may mitigate against any subsidy and if we still have to subsidise, I have no difficulty whatsoever but it will not be under the present tax structure”, he added.