(L-R) Dr Keith Mitchell, Prime Minister and Minister of Finance and Energy of Grenada and CARICOM Development Fund CEO, Ambassador Lorne McDonnough after the Country Assistance Programme signing on Thursday
By Caribbean News Now contributor
ST GEORGE'S, Grenada -- As expected, the income tax threshold is being lowered in Grenada as the country prepares to usher in a home grown structural adjustment programme, part of broader plans to revamp the economy.
Meanwhile, the government of Grenada became the latest beneficiary of the CARICOM Development Fund’s (CDF) Country Assistance Programme (CAP) this week when an agreement for EC$15.74 million (US$5.83 million) was signed to provide support in the areas of tourism, agriculture and manufacturing.
In a national address on Wednesday evening, Prime Minister Dr Keith Mitchell announced that residents earning EC$36,000 dollars (US$13,333) will now have to pay income tax, but at a reduced rate.
At the moment, only those residents earning more than EC$60,000 pay 30 percent income tax on the excess.
Mitchell said this category of taxpayers will continue to pay the 30 percent rate.
However, the Grenadian leader said the income tax rate will be reduced by half to 15 percent on the excess for residents earning between EC$36,000 and $60,000 a year.
“As a consequence, government has asked all local banks to be sensitive to this situation. The banks have assured government that it will work with its customers where necessary. I hereby make a similar appeal to our credit unions. Our government is very concerned about job layoffs at this time,” Mitchell said.
“I hereby make a special appeal to all employers, especially in the private sector, to exercise restraint in this very difficult period. Retrenchment must be a last resort. We ask that you make a special effort to avoid further layoffs at this time. Similarly, I ask the labour unions to exercise restraint in respect of wage demands in government and in the private sector,” he added.
On Thursday, taking part in the CAP signing ceremony were Mitchell, Minister of Economic Development, Trade Planning and Cooperatives Oliver Josephs, and chief executive officer of the CDF, Ambassador Lorne McDonnough.
The agreement will focus on four areas including a line of credit to the Grenada Development Bank (GDB) for lending to small and medium size enterprises (SMEs); technical assistance to the GDB for the preparation of business plans for the SMEs and standards, metrology and certification to be implemented through the Grenada Bureau of Standards.
Funds will also go towards energy development with particular emphasis on energy efficiency in the tourism sector and will involve direct grant assistance for the implementation of energy plans for the hotel sector in partnership with the Grenada Hotel and Tourism Association (GHTA).
McDonnough pledged the CDF’s commitment to support the government of Grenada's programmes and told Mitchell: “We will work closely with your designated officials in ensuring that in implementing these programmes they receive all the assistance necessary for successful outcomes.”
He also explained that the CDF had a prescribed function established in the Revised Treaty of Chaguaramas – a function which the Less Developed Countries insisted must be effectively discharged as a pre-condition for the CSME.
“The CDF has made significant progress in executing this mandate but the work has just begun. The CDF is not a short term project. Going forward, there must be recognition of the advances made and the real potential to provide enhanced support to CDF member states.
“This requires a mutually reinforcing partnership in which member states not only recognise and fully appreciate the CDF‘s potential but advocate on its behalf. I do recognize your guiding hand during the formative stages of the CDF and, therefore, count on your personal advocacy as well as that of the government of Grenada,” Mc Donnough added.