Wed | Jan 16, 2019

IMF: Grenada's economy slowly recovering from recession

Published:Thursday | January 1, 2015 | 12:00 AM

The International Monetary Fund (IMF) said on Tuesday that Grenada's economy is "slowly recovering from a protracted recession" and that while growth will remain positive it will be "below potential" for the next two years as private and public balance sheets are repaired.

The IMF, which in June entered into a three-year US$21.7 million extended credit facility arrangement with St George's, said while the economy is slowly recovering domestic demand remains weak.

"Financial balance sheets are strained by non-performing loans, private credit continues to contract, and inflation has been negative or low," it said.

"Growth is expected to remain positive but below potential over the next two years, as private and public balance sheets are repaired."

The IMF said discussions with creditors on a comprehensive restructuring of public debt have intensified and that policy implementation is off to a good start.

"The fiscal consolidation is proceeding as programmed and all quantitative performance criteria for the first review were met. Progress has also been made on the structural reform agenda, with two structural benchmarks met or expected to be met, and two to be finalised soon," the IMF said.

"In particular, the authorities overhauled the public financial management framework, prepared an initial strategy to strengthen weak public institutions and are modernising the investment promotion framework."

The IMF said its first review of the local economy found "no substantive changes were made to the macroeconomic framework" and that discussions focused on the fiscal outlook for 2014-15, and on structural reforms going forward.

"No changes are proposed to the programmed fiscal targets. Proposed new structural conditionality focuses on a continued strengthening of the fiscal policy framework through implementing regulations, debt management and revenue administration reforms, as well as a framework for sustainable use of receipts under the new citizenship-by-investment programme. The programme is still in early stages, and implementation risks remain," the IMF added.