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Grenada to sign agreement with IMF

Published:Friday | September 20, 2013 | 12:00 AM

The Grenada government on Wednesday said it intends to sign an agreement with the International Monetary Fund (IMF) on measures aimed at dealing with the island's high debt level.

Prime Minister Dr Keith Mitchell, whose New National Party came to office in the February general election, said he would be addressing the nation on the issue. He gave no date for the address, but the accord with the IMF is likely to be signed in October.

An IMF delegation has ended a 10-day visit to Grenada, but there has been no official announcement regarding the outcome of the visit.

However, prior to the arrival of the team, the Mitchell administration issued a statement saying it had invited the Washington-based financial institution to assess the current economic situation in the country.

Grenada is discussing a formal arrangement with the IMF and while here the delegation, headed by Aliona Cebotari, focused on the fiscal performance of the country for 2013, as well as the proposed debt-restructuring programme.

"Government's plans and priorities for the New Economy, including growth and job creation and projections and reforms for the medium term 2014-2016," were also examined, according to the statement.

Mitchell, who is also finance minister, told reporters that government would inform the population about the IMF recommendations before his administration signs the agreement.

"Clearly, Grenada will have to make some sacrifices," he added.

The island has a national debt of almost EC$2 billion and Prime Minister Mitchell said "this has aggravated the severe debt overhang that continues to weigh down our economy".

The government has appointed the London-based White Oak Advisory, which describes itself as an independent financial advisory firm providing specialist, high-level and impartial advice to governments and other clients on matters relating to sovereign finances and sovereign debt, to advise it.

"It is now time for Grenada to confront the fact that it cannot continue to pay its debts on current terms, and that the restoration of growth requires the debt overhang to be resolved. We need a fresh start, and it is therefore imperative that we approach our creditors promptly to discuss an orderly restructuring of our liabilities,' Mitchell said.

Meanwhile, the Conference of Church Grenada, which last month urged the government to resist any attempt by the IMF to increase taxes and cut social services, said it would be holding a second debt-relief workshop next month.

It said the aim of the October 1-2 event would be to determine a sustainable debt level for Grenada and to raise awareness of the implications of any debt workout for citizens.

The workshop would be a follow-up to one held in May and would have input from international experts and support from the United Nations Development Programme.