ANOTHER WASTED OPPORTUNITY

For Grenadians so desperately in need of some comforting words of assurances from the Prime Minister and Minister of Finance, Dr. Keith Mitchell about the intended plans by his Administration to implement an International Monetary Fund (IMF) aided “home-grown” Structural Adjustment Programme (SAP), his national address last week Wednesday night was a major disappointment.

The speech delivered in prime time on local television and radio and carried globally via the Worldwide Web, lacked substance and internal coherence; and was without any meaningful financial and economic content.

THE NEW TODAY believes strongly that in most part that National Address came across as being too disjoined – an increasing tendency on the part of Dr. Mitchell with his many public utterings since the February general elections that brought him back to power.

Many persons can argue that the NNP’s last coherent statement of economic policy was its election manifesto – arguably a sound document – except that nothing of substance from it has been implemented so far in the past eight months.

The most disappointing aspect of the National Address is that most Grenadians would have waited patiently for weeks and months to get their first real insights into some of the measures to be implemented as part of what is being called a “home-grown” structural adjustment programme – but instead, they were treated to a dose of what can only be described as typical “smoke and mirrors” propaganda in its purest form.

Our Prime Minister must know by now that 2013 is a far cry from back in 1995 when he first took control of the Government in this country and money was around because the previous Congress government had restored our creditworthiness.

And with the evolution of social media (Twitter, Face book, What’s App, etc.), information (good and bad) gets around rather quickly and it is nearing impossible for Dr. Mitchell and his NNP to fool the Grenadian people, since somewhere, someone will do the research and “call them out.”

For example, in his National Address, the Prime Minister told the nation that: “Currently, 70 cents of every dollar collected is spent on salaries and pensions with the remaining 30 cents spent on debt repayment.

As anyone can see from what the PM told the nation, there is just no money left for projects in health, education, roads and youth development or investments in the productive sectors – which are all so vital for the growth of our economy.”

In one of the other many contradictions contained in the Address, the Prime Minister then goes on to state that: “Eight months ago, you voted for hope, jobs and opportunity. Since the appointment of our Government, we have worked hard, each and every day, to deliver on our commitments to you, our people.

He went on to say: Eight months later, we have generated short term employment opportunities; improved basic health care; begun to repair our neglected roads; expanded safety nets; increased support to our farmers; delivered salary increases to our public servants for the first time in 5 years; created opportunities for small businesses and provided opportunities for our youth to acquire skills and jobs.”

Given the well-publicised fact that Grenada has and continues to be held hostage by a real fiscal and debt nightmare, where did the money come from for the Government to have done all the things the Prime Minister is now claiming?

Do we need to remind the Prime Minister that in his own speech, he told the nation that every dollar collected by government in revenue goes towards salaries, pensions, and debt repayment! Where did the money come from for the 6% increase in Ministers’ salaries?

This deception/miscalculation aside, The New Today is clear that the Prime Minister has again wasted a golden opportunity to come clean with the Grenadian public on the major policy issues in relation to his impending home-grown structural adjustment programme.

Indeed, besides a few hints of some of the actions to be taken on revenue and expenditure to try to correct the fiscal stranglehold facing the country, Grenadians are no wiser vis-à-vis the true nature of the medicine we are about to be asked to accept as part of our collective “sacrifice” to protect and save the country’s economy.

This newspaper makes this observation because in pursuing the “Letter of Intent” sent to the IMF by the Jamaican Government on April 17, 2013, it is quite obvious that the now inevitable home-grown programme in Grenada will have to involve much more than the simple tax policies and expenditure-reduction plans the Prime Minister has revealed in his National Address.

For example, on the fiscal side alone, in Jamaica’s case, the Portia Simpson-Miller government made clear to the IMF its intention to: “Apply a Customs Administration Fee (CAF) on all imports except for charitable organisations and the bauxite sector. Amendment to the fee structure and gross profit tax of betting, gaming, and lottery sector. Increase property tax rates to take effect for fiscal year 2013/14 and initiate measures to improve the relatively low property tax compliance rate”.

The Jamaica government also committed to the following with the IMF: “Include the special telephone call tax (TCT) as part of the GCT base. Include all fees and taxes paid at the port (Environmental levy and Customs administration fee) as part of the GCT base. Increase the tax on dividend to 15 percent. Impose a surtax of 5 percent on large unregulated companies. Increase the Education tax rate by 0.5 percentage points for employers and 0.25 percentage points for employees. Increase the Stamp duty and transfer tax rates (for properties) up from the current 3 and 4 percent rates to 4 and 5 percent, respectively.”

Do we need to remind Prime Minister Mitchell, that the above fiscal policies which Jamaica had to commit itself with to get the blessings of the IMF for its programme are authentic and unambiguous measures?

The PM’s national address did not provide Grenadians with such specifics and this should have been done if only for clarification purposes? Is the Prime Minister hoping to do this on December 6 in the 2014 budget?

Finally, Mr. Prime Minister, if indeed someone said to you as you indicated in the address: “Mr. Prime Minister, elections are over. My party lost but my government won,” then for the sake of Grenada and Grenadians, please come clean and let the Nation know what precisely are your plans by way of major macro-economic policies to reconfigure the socio-economic landscape of our beautiful country through your imminent home-grown structural adjustment programme.

In the NNP Manifesto, Dr. Mitchell promised that he and the NNP will deliver and it is high time that they come clean and tell the Grenadian Public if this is no longer possible under his leadership. But, then again, Dr. Mitchell and NNP did promise many things during the campaign including a highly competent technical team of Grenadians to handle the economy.

Dr. Mitchell, where is your Chief Policy Advisor Dr. Patrick “Jagan” Antoine, the Architect of the New Economy? It is time to find him and the rest of the competent team that was promised to us during the campaign for the February polls.

This missing team is badly needed if Dr. Mitchell and NNP are hoping to have any real and serious chance of delivering on the many promises made to get back into office.

The team is needed more than taking a 6% hike in the salaries of Ministers.

PSC put cart before horse

Assistant Commissioner of Police (ACP) Smith Roberts

Assistant Commissioner of Police (ACP) Smith Roberts

The Public Service Commission (PSC) wrote Assistant Commissioner of Police (ACP) Smith Roberts a letter dated 28 October 2013 telling him that PSC ‘has decided to retire you’; and inviting him to make representations on the matter if he wished.

PSC thereby put the cart before the horse. So says Counsel for ACP Roberts, Dr. Francis Alexis who pointed out that PSC should have first afforded ACP Roberts a hearing on whether he should be retired from the Royal Grenada Police Force before he reaches the compulsory retiring age, 60 years of age.

Only after giving him an opportunity to be heard should PSC have decided the matter, says Alexis.

Dr. Alexis points out that the PSC must bear in mind that the highest Courts insist that a PSC has a constitutional duty to protect public officers from the Executive power of the State.

He indicated that ACP Roberts is the last Grenadian police officer to pass out with flying colours from the very prestigious Bramshill Police College in England.

Dr. Alexis also said that the embattled senior police officer has a quite outstanding professional record in the Force.

As such, the island’s noted constitutional expert is contending that by forcing ACP Roberts into premature retirement in the face of that PSC letter, this would be unjust, unfair and unconstitutional.

Another ACP Dowlin Bartholomew is believed to have received a similar letter like that given to Roberts by the commission.

Prime Minister and Minister of National Security, Dr. Keith Mitchell has publicly endorsed the actions taken against the two senior police officers.

Speculation is rife that moves are afoot to replace ACP’s Roberts and Bartholomew with officers believed to be closely aligned to Mitchell’s governing New National Party (NNP) which won all 15 seats in the February poll.

Dr. Alexis has in the past successfully defended civil servants against questionable decisions taken against them by the commission.

Two of the more celebrated cases involved former Permanent Secretary in the Ministry of Finance, Dr. Brian Francis, now a lecturer in Economics at the University of the West Indies and Richard Duncan, the one time Accountant-General in the Ministry of Finance and currently Manager at Grenada Co-operative Bank Limited.

 

Act to take care of Socially Displaced Persons

Minister for Social Development, Housing and Social Security, Delma Thomas

Minister for Social Development, Housing and Social Security, Delma Thomas

Minister for Social Development, Housing and Social Security, Delma Thomas is warning Grenadians that the soon to be instituted Socially Displaced Persons Bill, 2013, will not be used as a dumping ground for family members.

The Act provides for the assessment, care and rehabilitation of socially displaced persons and for related matters in response to public concern over a growing population of displaced people frequenting public places particularly in the town of St George.

The Act, piloted by Minister Thomas, was passed through all its stages in the House of Representatives last week Wednesday and will soon be tabled in the Senate.

A Socially Displaced person is characterised as any idle person habitually found in a public place whether or not he or she is begging and who by reason of illness or otherwise is unable to maintain himself or herself, or has no means of satisfactory account of himself or herself and causes or is likely to cause annoyance or damage to persons frequenting that public place or otherwise to create a nuisance.

The draft legislation provides for the establishment of a Social Development Unit within the Ministry of Social Development for the assessment, relocation, care and rehabilitation of socially displaced persons.

As part of the legislation, it is proposed that a Social Displacement Board as well as a Socially Displaced Fund be established.

The legislation also provides for the establishment of assessment centres and makes provisions for voluntary admission to assessment centre, involuntary admission to assessment centre, as well as applications to law Courts for a removal order and involuntary removal of persons.

Under the planned regulation, socially displaced persons will be subjected to an assessment within 14 days of their admittance, during which time it will be determined if the individual should be discharged from the centre and admitted to a mental institution, a medical institution, a detoxification or drug rehabilitation centre or a care centre.

A unit to review the case of residents at the centres on a monthly basis will also be established and the Unit will have the power to recommend that any resident may be discharged from a care centre conditionally or unconditionally.

According to the draft document, any socially displaced person found guilty of leaving an institution without permission and returning to street life commits an offence and is liable on summary conviction to a term of imprisonment not exceeding one month.

There is also a sanction in place to deal with disorderly behaviour.

It is proposed that a person residing in a care centre who takes part in an assault on any officer of the care centre, aggravates or repeatedly assaults any other person residing in the care centre, or willfully destroys or steals any property of the centre, or of the staff or other residents of the care centre can be found guilty of committing an offence and sent to the Richmond Hill prison to serve a term not exceeding three months.

According to the legislation: “A person who has completed serving a sentence imposed on him or her under section 28 or 29 shall be returned to a care centre and the Unit shall have the power to grant admission to such person after he or she has served his or her sentence.

“A person who fails to comply with the provisions of section 20 (3) or 20 (6) or any regulations made under this Act commits an offence and is liable on summary conviction to a fine not exceeding $5,000.00 or to a term of imprisonment not exceeding one year”.

Former Social Development Minister now Parliamentary Representative for St Andrew South West, Yolande Bain-Horsford, supported the Act and voiced her concern over the growing number of displaced citizens particularly young people frequenting the communities and towns.

She said that the problem is becoming a risk to residents and visitors’ alike and historical sites such as the Carenage are threatened with the influx of these individuals.

Bain-Horsford believes that society has an obligation to find the root cause of these problems and address them but warned that tackling these problems will require serious financial support and qualified personnel for the success of this project.

Minister for Agriculture, Roland Bhola also gave support to the Act but feared that families can see this as an opportunity to remove persons from their homes and send them into the care of the state.

However, Minister Thomas made it clear that these centres will not be used as a place to dump family members.

 

Statement by the National Democratic Congress on the increase in salaries of government ministers

The National Democratic Congress(NDC) condemns as despicable and abhorrent, the decision by the NNP Cabinet of Ministers to give themselves an increase in salaries at this time.

In this period, when close to 40 percent of all Grenadians are living in poverty; when over 30 percent of the Grenadian labour force are unable to find work to support their families and the entire population is bracing itself to face the unprecedented government-imposed austerity program, Dr. Mitchell and his Ministers are secretly increasing their salaries and benefits on top of all the benefits they already enjoy.

 

While publicly calling on the People of Grenada to make sacrifices to support a Structural Adjustment Program, reports coming out of the Ministry of Finance indicate that at the end of October, the Ministers were given a lump sum cheque to cover a 6 percent increase in their salary retroactive from May 1st, 2013 to October 31st 2013.

Furthermore, effective November 1st the Minsters will enjoy a 6 percent in their salary going forward. This move by the Mitchell administration cannot be defended, even by NNP supporters. It is simply too callous and insensitive.

The increase in salary of the Ministers is reportedly taken to match the following increases in public officers’ salaries that were negotiated last year for the period January 1st 2009 to December 31st 2012 by the Government Negotiating Team (GNT):

 

2009 – 4% (cumulative)

 

2010 – $500.00 one off

 

2011 – $ 500.00 one off

 

2012 – 2% (cumulative)

 

Based on the above, public workers are entitled to a back pay for the monies that they were entitled to for the years 2009-2012, inclusive, as well as an increase of 6 percent in their salary effective January 1st 2013.

So far, the public officers have only received their back pay for 2009. They have not yet received their back pay for 2010, 2011 and 2012.

The increase in their salaries only took effect in September 2013. Public officers are therefore also entitled to some back pay for 2013, representing the 6 percent salary increase for the months of January to August.

Today, we are being told that the Government Ministers have taken the stand that since the public officers got their 6 percent salary increase from September 2013, then the Ministers are also entitled to take the same increase of 6 percent in their salaries.

It must be noted that Ministers of Government are not members of the unions and the unions do not negotiate for the Ministers of Government. There is therefore no basis for the Ministers to claim that they HAVE to take the increase because public workers are taking it. As leaders, they can show us by their example what is meant by “sacrifice”.

Moreover, it appears that rather than waiting for their back pay for January to August, 2013, as they are asking the public workers to do, the Minsters are going ahead and taking their back pay for the months of May to October 2013.

Should this really be the case the Ministers would be jumping ahead of the public officers, taking their back pay while asking the workers to hold strain.

This action by Dr. Mitchell and his Ministers demonstrates that despite all the talk about the need for sacrifice, they do not understand the meaning of sacrifice and they themselves are not prepared to make any.

If Dr. Mitchell truly believes that we have a national problem that requires a national effort to solve it, then our leaders must lead by example.

Last year, when the NDC Government passed the 2012 Budget, the Ministers took a 5 percent cut in their salaries. When the NNP Government came into office in February 2013, they reinstated the 5 percent on their salaries. Now they are heaping a further 6 percent on top of the 5 percent they reinstated.

And while treating themselves to these additional salaries, Dr. Mitchell is telling the nation “we must control the expansion of the wage bill”.

 

In his address to the nation, Dr. Mitchell told the nation this:

 

“Government cannot proceed with significant wage increases and fringe benefits at the same time it is seeking significant debt relief from creditors, and significant financial resources from countries which are themselves facing their own economic challenges.

Let me reiterate, the success or failure of the home-grown programme is directly linked to the issue of the Government wage bill”.

Worse yet, reports coming out of the fire station suggest that even though Ministers of Government collect a Travelling Allowance and a Gas Allowance every month from the Treasury, some Ministers are engaged in the obscene practise of going to the fire station and filling up their vehicles with gasoline from the gas purchased for use by the fire trucks and police vehicles.

These developments constitute a total lack of compassion, respect and regard by the Mitchell Administration for the plight of the people of Grenada, Carriacou and Petite Martinique. These developments are consistent with the track record of the New National Party(NNP).

Grenadians have been fooled far too often and for far too long by the New National Party leadership. We must not allow this to continue!!!!

Mason: The middle class will bear the brunt of the ‘sacrifice’

George Mason is not happy that the working class is always the ones to shoulder the bulk of sacrifice

George Mason is not happy that the working class is always the ones to shoulder the bulk of sacrifice

President of the Commercial and Industrial Workers Union (CIWU), George Mason says Grenada’s debt situation is a political one.

In response to the national address delivered last week Wednesday night by Prime minister and Minister for Finance, Dr. Keith Mitchell, Mason voiced his frustration over Grenada having to return to yet another structural adjustment/home-grown programme.

Prime Minister Mitchell told the nation that the latest homegrown programme will be for a period of three years – 2014, 2015 and 2016.

The last homegrown programme took place in 1990-95, under the Nicholas Brathwaite-led National Democratic Congress (NDC) Administration in which a Debt Service Levy (DSL) was a major cornerstone of the plan.

The last restructuring of the national debt took place under the New National Party (NNP) government of Dr. Mitchell following the passage of Hurricanes Ivan and Emily in 2004 and 2005.

Speaking to reporters at a press conference in St. George’s last Friday, Mason stated that it was the politics that was responsible for the current predicament of the country.

“Not even eight years later … we have to go back to another programme asking for debt restructuring”, he said,

“The message fellow Grenadians is clear: Is either we have a philosophical problem about how we go forward, we have an economic problem or we have a political problem, and I want to suggest, is a political problem”, he added.

Mason argued that if the country continues to accept short cuts measures for expediency and political posturing in dealing with the island’s fiscal problem then “we will continue to repeat what is happening now.”

He described as not “accidental” the measures being taken by the Mitchell government on what he referred to as the backs of the middle class.

“It is deliberate and pointedly so”…. said Mason whose union represents mainly white-collar workers in the country.

Speculation is rife that Prime Minister Mitchell is not levying income tax on the poor and disadvantaged in the country, widely suspected to be the main political support base of his NNP regime.

Mason also specifically addressed government’s plan to lower the income tax threshold to $36,000 per year, or $3,000 per month and reduce the income tax rate by half to 15% for persons earning less than $60,000 per year in addition to the rate of 30% remaining for persons earning more than $60,000 per year,

The CIWU President said that the trade union movement is concerned with the measures taken notwithstanding the fact that it is necessary.

He told the media that while he appreciates the fact that there is no easy way out for Grenada’s financial debacle, he believes that politicians should be honest, sincere and forthright with the people.

The trade unionist said that he is not convinced that the NNP administration is concerned about the interest of all persons in the country.

“When you talk about shared sacrifice, shared sacrifice to me means everyone paying their way too … but when you ask one section of people to bear the brunt with no identifiable path or roadmap it means we are giving the (political) directorate a blank cheque,” he added.

Dr. Mitchell repeatedly referred to the need for “shared sacrifice” in the national address.

According to Mason, the TUC as the only organisation in Grenada leading the struggles of workers, they are not opposed philosophically to the harsh measures being implemented “but we think we are 19 years late.”

“Had we used good sense and forget political expediency we would not have been in this position today”, quipped Mason.

Mason said the CIWU is very concerned for the work force as 10 companies they represent as the bargaining agents for employees, are already asking for wage freeze with no sign on the horizon that things are getting better while prices continue to increase.

“It is a journey that has just started and if we do not trod through the right gate with proper direction we may repeat where we are today, and it may even be worse, but this is not the time for blaming, time for complaining …”, he added.

“I hope that while we continue to pay the price for the economic morass, that the result doesn’t go to capitalists getting free work, free work by the Imanis”, he said.

 

Why the World Bank and IMF provide too little debt relief too late – and what can be done about it

IMF/World Bank Annual meetings 2013, Civil Society Forum held Saturday 12th October 2013

 

Panelists

 

*Jürgen Kaiser, Erlassjahr

 

*Matthew Martin, Development Finance International

 

*Gail Hurley, UNDP

 

*Anna Gelpern, Professor of Law at Georgetown University

 

*Timothy Antoine, Permanent secretary of finance, Ministry of Finance, Grenada

 

Hosted by Friedrich Ebert Stiftung, EURODAD and Erlassjahr

 

Presentations

 

Anna Gelpern

 

The paper produced by the IMF paper on Greece, from June, had a striking admission that the loan was driven not so much by concerns for Greece, but outside of Greece, and the concern that those outside Greece – via contagion – could not handle a Greek default.

This is a parallel all the way back to the Brady era, and the lost decade, as loans then were driven by the risk to banks.

Hence not much has changed – decisions are not driven by the imperatives of debtor countries, and in Greece’s case perhaps more so due to the EU and Eurozone context. This is also a reflection of the fragmentation of decision-making, where decisions are taken anywhere but the debtor country.

The paper reveals that the Greek authorities made the fewest decisions in determining the restructuring.

The other factor is how the debt migrates away from private creditors, mostly migrating in Greece’s case to sovereigns and to the domestic banking system, which doubles down on the problem, and makes the patient you are trying to cure gets sicker (using the medical metaphor of contagion).

This does make the mechanics of resolution far easier, as the debt is in one place, but meanwhile the country condition has gotten far worse, as the decision making locus moves away.

What the paper does not do – and the Fund is not structurally positioned to answer – is ask what can be done to slow done, stop or reverse the dynamic of making debtor countries’’ problems worse by saddling its own banks with that much debt, and how can we displace the decision-making process so that a debtor country can meaningfully participate in its debt crisis management.

It’s hard to imagine that any crucial decisions were made anywhere but Greece, as is evident in the paper. A defense of the argument is that Greece gave up its sovereignty not in the debt agreement but ex ante via its membership of the Eurozone. However, for anybody who is trying to improve this process, it’s a very troubling development and would query how this argument is valid defense of the Troika.

This is because we know more or less how reviews work, whom to call who to challenge and so on. Introducing the Troika means worrying about local elections in Finland, adding instability and opacity and the process becomes extremely difficult to manage due to the further fragmentation of decision-making. Added to that is the institutional pull of the ECB with its own prerogatives: who designs conditional?

Is it geared to local elections in Austria? IS Greece decision-making contingent on strategies for Portugal or Ireland. These are concerns for anyone who cares about the transparency of these processes, and their accountability.

In addition, the complication of the debt restructuring process makes what are normally conflicting views within domestic governments means that the evolution of the debt restructuring system has made this more difficult.

 

Matthew Martin, DFI

 

Three issues: lessons from HPIC, where are we now for HPIC countries, and what do we need to do to reignite interest in debt issues?

 

Lessons from HPIC

 

The IMF’s recommendations are rather pathetic given what their paper acknowledges. The pre-HPIC process for LICs was a disaster, huge arrear accumulation and massive damage to development in those countries, and Paris-club only debt relief.

HPIC was a step forward in terms of principles; fairness, transparency, speed.

E.g. non-OECD creditors became more involved, IFIs’ superiority was yield, and vulture funds remain a problem. In terms of transparency we went from basically none, to a situation where at least there was debt sustainability analyses and board papers were published.

Speed also improved. Impartiality was done objectively, at least partially, where the discussion moved a bit beyond the views of creditors and usually the most-inflexible creditors’ views.

One area where little progress has occurred is the unholy coalition of creditors ganging up and joining conditionality on their countries. For all of that, $100 billion of debt cancellation seems a lot but is in reality peanuts.

So, now where are we? We’ve abolished that process.

From my perspective, there is a fundamental justice issue out there, and if there isn’t a fully responsible debt resolution problem then the problem remains unresolved.

We still work with countries that are stuck in a process of massive over-indebtedness, and the arguments have not improved.

In the HPICs themselves, there are quite a few that given borrowing levels a debt crisis could soon return. There are huge other risks, such as the pressure to move investment to public-private partnerships, countries accessing bond markets that bears the risk of the end of quantitative easing, and the move from increasingly grant-based and/or concessional finance, to loans.

The key lesson is that we didn’t’ get a ‘Jubilee’ due to a sudden acknowledgement by financial institutions, but due to popular pressure. There was a strong coalition of everyone, and institutional interests were set aside. This is evident in tax issues at the moment.

Another important factor – as the new Global Financial Governance report by New Rules – is the increasingly marked influence of the private sector in having a say in how the official sector designed the process, beyond a resistant approach.

To get back to where we were we needed more popular mobilization and key leaders to address this. It’s perfectly understandable that debt relief, given the hurdles currently discourage debt relief- is not sought by states but they are pushed to damage their peoples. The real moral hazard, at least within the official sector – is that people suffer because governments’ fear the potentially worse consequences of relief.

 

Gail Hurley, UNDP

 

The question of debt in the Caribbean and the fiscal consolidation programmes imposed there provoke a sense of déjà vu. The government in Grenada is engaging very positively with many stakeholders. Debt service currently consumes 41% of current expenditures of the budget, where 16% is consumed by health and education combined. The situation is bleaker in Jamaica, with a much higher debt ratio and debt service consumes over 50% of budget revenues. Jamaica has restructured its debt twice.

For both countries the situation is not new.

The number of debt restructurings in Caribbean countries since 1990 is 30+, thus it is a systemic, persistent and unresolved problem for countries in the region including in particular small island states.

The Caribbean average debt to GDP ratio last year was 71%, and for the eastern Caribbean was over 90%, but specific cases are hidden by that such as St Kitts and Nevis where it is over 200%.

 

Why?

 

There is a culture of blame and counter blame. Citizens will often argue that government made poor decisions and borrowed non-wisely and non-transparently, and things need to be done better. Governments respond that they have conformed to a number of requirements and policies, while IFIs demand that governments get their houses in order.

There is truth in these arguments and counter-arguments. As such, it is inescapable that some form of insolvency and resolution arbitration mechanism is necessary.

The current approach – the strategy to look at portions of debt in isolation – is combined with fiscal austerity measures, has a dismal record notwithstanding the social consequences including alarming increases in violence and insecurity. Given the poor track record of fiscal consolidation and piecemeal restructuring efforts, this is now crucial.

A numr of groups and institutions recently met with the government of Grenada of alternative approaches, and the pros and cons of an alternative or independent debt sustainability analysis of what might be needed to restore sustainability for the island, from arbitration, to creditor conferences and a number of other ideas.

Minister Joseph’s letter was published in the Guardian yesterday arguing for debt forgiveness and the need in the region for what would be – in terms of the scale of forgiveness needed – would be a drop in the ocean.

There is an opportunity for the Caribbean to be a beacon of innovation and evidence that alternatives are possible.

(To be continued)

GUT boss not happy with PM Mitchell

President of the Grenada Union of Teachers (GUT), Lydon Lewis, has warned Prime Minister and Minister of Finance, Dr. Keith Mitchell, that he will not be rushed into signing any possible wage freeze deal despite an apparent deadline by government with the Washington-based International Monetary Fund (IMF).   Lewis’ statement came against the backdrop of a national address by the Prime Minister in which he informed the nation about the impending homegrown programme of fiscal adjustments and structural reforms and plans to increase income tax.  Lewis told reporters at a press conference that the GUT will only sign documents when it feels it is ready to do so.  “No one will rush the GUT into signing anything, not the Prime Minister, not anybody else. We would do what we have to do and do it within the passage of time and we feel that we’re ready”, he said.  “So the Prime Minister has his deadlines, fine, we understand that, but the GUT would not be pressured into making any hurried decision by the Prime Minister or anybody”, he added.  The main highlight of the Prime Minister’s speech was the announcement that government will lower the income tax threshold to $36,000 per year, or $3,000 per month as part of its structural adjustment programme.  As part of the changes to income tax, Prime Minister Mitchell disclosed that government will reduce the income tax rate by half to 15% for persons earning less than $60,000 per year.  The rate of 30% will remain for persons earning more than $60,000 per year. These adjustments will take effect from January 2014.  The GUT President is concerned that government’s new tax measures will directly affect the middle class in the country who are already burdened with mortgages, car loans and those persons about to build or purchase land.   Lewis feared that this additional deficit from their income would lead to additional stress for these workers.   “A loss of $200.00 from anyone’s salary in these though economic times is a lot,” he said.  The Prime Minister told the nation that his eight month old administration has been appealing to labour unions to be understanding of the fiscal challenges facing the island and to be moderate in their demands for salary increases especially during the period of the home-grown programme.   In September, Government wrote to all unions requesting that salaries for public officers for the period 2013 to 2016 be settled in time for the presentation of the 2014 Budget in December.  According to Lewis, his biggest concern lies with the utterances of the Prime Minister in the address in which he stated that the success of the programme to be instituted borders on the cooperation of the trade unions.  “My biggest concern in the Prime Minister’s address has to do with the fact that the Prime Minister is attempting, deliberately so, to put the populace against the trade unions by intimating that if we do not accept a paltry offer made by the government it would loose substantively from the IMF and the World Bank”, he said.  “This statement borders on being blackmailed  and we cannot as a trade union movement accept that,” he remarked.  The GUT leader stressed that there are other factors that must be taken into consideration when dealing with the IMF, and attempting to blame the trade union movement for Grenada’s possible loss of more than US$100,000.00.  He banded as “grossly unfair” the attacks on the trade unions by Prime Minister Mitchell who controls all 15 seats in Parliament.  “I take serious objection to the statement made by the Prime Minister ... we have always worked with government in a sprit of harmony and collaboration,” he said.  Lewis accused PM Mitchell of trying to make the trade union movement look like a “big monster” in hindering the country’s progress.  “I do not accept that”, said Lewis, a teacher by profession.  The outspoken trade union leader urged the Prime Minister to remember that the two sides needed to work together to build the economy, but warned that negotiations can be soured in light of the statements now being made by the Grenadian leader.  “If you want us to work with the government or with the Prime Minister then he has to be more considerate with his utterances because we are currently around the table and all that would do is lead to a situation where there will be serious vexness going forward with the negotiation process,” Lewis said,  “It (his utterance) questions whether or not the unions are willing to go forward in good faith when the Prime Minister intentionally sets up the nation against us  ... the trade union movement”, he added.  Lewis believes that in the spirit of conciliation something must be said by GUT so that the nation would not form the opinion that the trade unions are to be blamed if the deal signed by government with the IMF fails.  The GUT boss said that they are yet to broach the subject of increase taxes with workers but have taken a principled position to sign off on fringe benefits first before discussing salaries.  Lewis told reporters: “That attempt made by government to get us to sign off on salary and ignore fringe benefits is not going to work, it would not sit well with us. It’s not good industrial relations practice, it’s not good negotiations practice and we would not go that way.  “No one will rush the GUT into signing anything, not the Prime Minister, not anybody else. We would do what we have to do and do it within the passage of time and when we feel that we’re ready.   “So the prime minister has his deadlines, fine we understand that, but the GUT would not be pressured into making any hurried decision by the Prime Minister or anybody”.  In making passing remarks to the Prime Minister’s statement that he was in dialogue with the commercial banks and other lending institutions to be flexible with creditors, Lewis said that he was very skeptical.  Relating to the interest rates in banks, he reminded government that they have no say in that, and pointed out that the state-owned National Insurance Scheme (NIS) interest rate is in some instances higher than local commercial banks.  Lewis said he does not see anything coming out of it except the Banks will issue a statement outlining their positions.

President of the Grenada Union of Teachers (GUT), Lydon Lewis

President of the Grenada Union of Teachers (GUT), Lydon Lewis, has warned Prime Minister and Minister of Finance, Dr. Keith Mitchell, that he will not be rushed into signing any possible wage freeze deal despite an apparent deadline by government with the Washington-based International Monetary Fund (IMF).

Lewis’ statement came against the backdrop of a national address by the Prime Minister in which he informed the nation about the impending homegrown programme of fiscal adjustments and structural reforms and plans to increase income tax.

Lewis told reporters at a press conference that the GUT will only sign documents when it feels it is ready to do so.

“No one will rush the GUT into signing anything, not the Prime Minister, not anybody else. We would do what we have to do and do it within the passage of time and we feel that we’re ready”, he said.

“So the Prime Minister has his deadlines, fine, we understand that, but the GUT would not be pressured into making any hurried decision by the Prime Minister or anybody”, he added.

The main highlight of the Prime Minister’s speech was the announcement that government will lower the income tax threshold to $36,000 per year, or $3,000 per month as part of its structural adjustment programme.

As part of the changes to income tax, Prime Minister Mitchell disclosed that government will reduce the income tax rate by half to 15% for persons earning less than $60,000 per year.

The rate of 30% will remain for persons earning more than $60,000 per year. These adjustments will take effect from January 2014.

The GUT President is concerned that government’s new tax measures will directly affect the middle class in the country who are already burdened with mortgages, car loans and those persons about to build or purchase land.

Lewis feared that this additional deficit from their income would lead to additional stress for these workers.

“A loss of $200.00 from anyone’s salary in these though economic times is a lot,” he said.

The Prime Minister told the nation that his eight month old administration has been appealing to labour unions to be understanding of the fiscal challenges facing the island and to be moderate in their demands for salary increases especially during the period of the home-grown programme.

In September, Government wrote to all unions requesting that salaries for public officers for the period 2013 to 2016 be settled in time for the presentation of the 2014 Budget in December.

According to Lewis, his biggest concern lies with the utterances of the Prime Minister in the address in which he stated that the success of the programme to be instituted borders on the cooperation of the trade unions.

“My biggest concern in the Prime Minister’s address has to do with the fact that the Prime Minister is attempting, deliberately so, to put the populace against the trade unions by intimating that if we do not accept a paltry offer made by the government it would loose substantively from the IMF and the World Bank”, he said.

“This statement borders on being blackmailed and we cannot as a trade union movement accept that,” he remarked.

The GUT leader stressed that there are other factors that must be taken into consideration when dealing with the IMF, and attempting to blame the trade union movement for Grenada’s possible loss of more than US$100,000.00.

He banded as “grossly unfair” the attacks on the trade unions by Prime Minister Mitchell who controls all 15 seats in Parliament.

“I take serious objection to the statement made by the Prime Minister … we have always worked with government in a sprit of harmony and collaboration,” he said.

Lewis accused PM Mitchell of trying to make the trade union movement look like a “big monster” in hindering the country’s progress.

“I do not accept that”, said Lewis, a teacher by profession.

The outspoken trade union leader urged the Prime Minister to remember that the two sides needed to work together to build the economy, but warned that negotiations can be soured in light of the statements now being made by the Grenadian leader.

“If you want us to work with the government or with the Prime Minister then he has to be more considerate with his utterances because we are currently around the table and all that would do is lead to a situation where there will be serious vexness going forward with the negotiation process,” Lewis said,

“It (his utterance) questions whether or not the unions are willing to go forward in good faith when the Prime Minister intentionally sets up the nation against us … the trade union movement”, he added.

Lewis believes that in the spirit of conciliation something must be said by GUT so that the nation would not form the opinion that the trade unions are to be blamed if the deal signed by government with the IMF fails.

The GUT boss said that they are yet to broach the subject of increase taxes with workers but have taken a principled position to sign off on fringe benefits first before discussing salaries.

Lewis told reporters: “That attempt made by government to get us to sign off on salary and ignore fringe benefits is not going to work, it would not sit well with us. It’s not good industrial relations practice, it’s not good negotiations practice and we would not go that way.

“No one will rush the GUT into signing anything, not the Prime Minister, not anybody else. We would do what we have to do and do it within the passage of time and when we feel that we’re ready.

“So the prime minister has his deadlines, fine we understand that, but the GUT would not be pressured into making any hurried decision by the Prime Minister or anybody”.

In making passing remarks to the Prime Minister’s statement that he was in dialogue with the commercial banks and other lending institutions to be flexible with creditors, Lewis said that he was very skeptical.

Relating to the interest rates in banks, he reminded government that they have no say in that, and pointed out that the state-owned National Insurance Scheme (NIS) interest rate is in some instances higher than local commercial banks.

Lewis said he does not see anything coming out of it except the Banks will issue a statement outlining their positions.

 

 

Economy vs Society?

Brian FrancisAn important issue that emerged in economic discussions in Barbados in the past few years is whether as a Government one ought to focus on the economy or society. The Democratic Labour Party (DLP) has been advancing the argument that it is interested in building a sound Barbadian society as opposed to simply paying particular attention to the economy.

Furthermore, the DLP has asserted that the Barbados Labour Party (BLP) has, for most of its thirteen years in office; and, may I suggest, even in the current environment, always emphasised the maintenance of a vibrant economy, overlooking in the process, the broader and more important goal of creating a just society in which all can live and work comfortably.

Admittedly, this debate comes as no surprise to me. However, I have to confess that the pronouncements that I am familiar with do make for interesting deliberations. What is even more alarming is the notion that somehow there is a separable and distinct parallel that can be drawn between the economy and society.

Put differently, if one follows closely the inferences drawn and the ideas as presented by both sides, he or she may very well come to the realisation that there is, after all, a clear distinction between the economy and society that merits significant attention and illumination. Is that so? What about other Caribbean countries?

I would be amazed if anyone in Grenada actually believes that a debate that is based on the “economy versus society” is really meritorious at this critical juncture in our country’s financial and economic history.

To put it mildly, there is no real or practical distinction between the economy and society. In other words, to think of the economy and society as being separable is to be living like the proverbial ostrich and bury one’s head in the sand.

The reason I suggest that there is no practical dichotomy in the conceptualisation of the economy versus society is because the achievement of societal goals – whether those goals relate to the creation of social safety nets to protect the poor and vulnerable among us or to the provision of good education and health – does require a solid economic foundation. Social engineering cannot be accomplished without getting economic fundamentals right!

But what phenomenon consents to inseparability between the economy and society? The answer is quite simple: economic growth and development. Therefore, whether as a Government its developmental targets remain the reduction or elimination of poverty; the enlargement of the country’s human resources; improvements in life expectancy, infant or adult mortality, and nutrition; or even diminutions in income and wealth inequality across society; only a sustained strategy to grow and develop the economy will allow for the accomplishment of these broad socio-economic goals.

In essence, then, the moral of the story is that a Government cannot focus on building a strong society without a solid economic platform!

On the other hand, one can ask: Why would a Government seek to get the economic fundamentals right if it is not interested in creating a society that brings justice and equity to all and sundry?

To conclude, therefore, there is no meaningful distinction between the economy and society. Hence, any debate that can be categorised as “economy versus society” has to be misguided and adds no value in terms of altering the status quo vis-a-vis the current and/or future state of the country’s financial and economic health.

If you do not believe me, then, just wait to see what measures the Keith Mitchell-led Government eventually implements as part of the impending home-grown structural adjustment programme and the consequent effects on the Grenadian economy and society!

 

Dr. Brian Francis, the former Permanent Secretary in the local Ministry of Finance, is a Senior Lecturer in the Department of Economics at the Cave Hill Campus in Bridgetown, Barbados of the University of the West Indies).

Congress extends sympathy

The main opposition, National Democratic Congress (NDC) has extended to family members of former Minister of Sports in the 1970’s under the labour party government, Roy St. John who recently passed away.

The message on behalf of Congress came from Patrick Simmons who served in the Sports portfolio in the Congress government of 2008 to 2013.

Following is the full text of Simmons’ statement:

 

Roy St. John

Roy St. John

The National Democratic Congress is deeply saddened to learn about the death of former Minister of Sports, Hon. Roy St John.

On behalf of the NDC, I would like to express deepest sympathy to the family and loved ones of the late former Minister.

The life of this former athlete, administrator and minister will be remembered for the positive impact it had on the development of sports in Grenada.

Foremost of his achievements was the construction of the Tanteen Recreation Ground which has been renamed the Roy St John Recreation Ground in his honour by the NDC administration.

Additionally, his advocacy for the development of a national sports policy, which became a reality in 2010, should be recognised.

Against this background it may be an opportune time for the Ministry of Sports to continue the implementation of the National Sports Policy, with special emphasis on the establishment of the Sports Hall of Fame.

Marilyn Monroe once said, “With fame, you know, you can read about yourself, somebody else’s ideas about you, but what’s important is how you feel about yourself – for survival and living day to day with what comes up.”

These words are irrelevant to the ears of Hon. St John at this stage of his journey. However, it would resonate well with the likes of Eros Rapier, Junior Murray, Trevor Modeste, Fitzgerald Joseph, Veda Victor and Walter St John along with many more of our great athletes, coaches, officials, administrators and journalists who are still in the land of the living.

Income Tax net widened

A wider cross section of the Grenadian population will now have to pay Personal Income Tax from as early as January 2014.

The much anticipated lowering of the Income Tax ceiling was revealed last week Wednesday by Prime Minister Dr. Keith Mitchell during a national broadcast.

Dr. Mitchell disclosed that the ceiling, which currently stands at $60.000.00 per annum, will now be lowered to $36,000.00 as part of what he termed a “Home-Grown Programme”.

The Income Tax rate will be reduced to 15 percent for persons earning less than $60,000,00 per annum.

The rate of 30 percent will remain for persons earning more than $60.000.00 per year.

Dr. Mitchell declared that there will also be some adjustments to property taxes, details of which he did not provide.

Speculation is rife that most of the austerity measures will be announced by the Prime Minister when he delivers the 2014 budget on December 6.

In his address that lasted almost 30 minutes, Dr. Mitchell said the structural adjustment programme will be for a period of three years beginning in 2014 and runs up until 2016.

The Prime Minister indicated that the “Home-Grown Programme” being introduced by his ruling New National Party (NNP) administration should be seen as a time for “shared sacrifice” and that it was not being instituted by the Washington-based International Monetary Fund (IMF).

“We do not need the IMF to tell us that we are spending more than we collect… However, we do need the support of the IMF and members of the international community to provide financial and technical support to secure Grenada’s public finances,” he told Grenadians.

According to Prime Minister Mitchell, each month the government has been spending more than it is collecting in revenue.

He said the single largest government expenditure is the wage bill.

“The success or failure of the “Home-Grown Programme” is directly linked to the issue of the government wage bill,” he added.

It was pointed out that seventy cents of every dollar collected are used for salaries and pension.

Dr. Mitchell who also holds the portfolio of Finance said this imbalance is the factual basis for the country’s high debt and high level of unpaid claims in the Treasury.

Grenada has not been servicing its national debt of EC$2.3 billion dollars, since April with most of its raked up during the earlier period of NNP rule from 1995 to 2008.