|Letter: Grenada's Mitchell facing the IMF guillotine!|
|Published on September 11, 2013||
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The Grenada Conference of Churches’ call for the Keith Mitchell NNP administration to resist the draconian measures to be soon implemented on the advice of the International Monetary Fund (IMF) is mere fantasy and symbolism than reality. The hands of Prime Minister Mitchell, permanent secretary Timothy Antoine and his economic team of advisers are carrying a burden of 2.5 billion dollars, Grenada's national debt.
Chairman of the Conference of Churches Dr Raphael Osbert James in a letter sent to the government states, “We, the leaders of the member churches of the Conference of Churches in Grenada are deeply concerned about the hardship being suffered by so many of our people in Grenada, Carriacou and Petite Martinique. People are now finding it difficult to provide for the expenses of daily living, repaying mortgages taken out in more prosperous times and even, in some cases, providing food for their families. There are numbers of persons, even those with sound academic qualifications, who are unable to find jobs. The social problems have reached alarming proportions.
“It is against this background that we strongly urge our government to resist any pressure to increase taxes or to make further cuts to social, medical or educational services. We are convinced that further austerity measures are not the way out of Grenada’s debt crisis. We strongly support the government of Grenada in its resistance against austerity and we are actively mobilising support internationally towards this end. We are strengthened in this stance by a working paper produced by the personnel of the International Monetary Fund which suggests that such strategies have not worked in the past.”
The reality of the situation is that, with a national debt of over 2.5 billion dollars -- 110% of GDP -- Grenada is under an economic and financial guillotine that is ready to cut off the head of the country. It's impossible for the country to walk on its own feet far less to resist the hydras of the IMF owing creditors billions of dollars.
How did Grenada arrive at this precarious position? Years of failed fiscal policies on the part of the Mitchell-led NNP administration for 13 consecutive years have plunged the island into severe debts and deficits. Uncontrolled spending on projects done by party cronies and sympathisers and gross mismanagement of the island's resources also contributed to these deficits. Millions were spent on the non-productive sector and today the country is producing very little for export or even local consumption. The food import bill is extremely high. Grenada imports over 70% of the food consumed locally. A recipe for disaster. With such a bad fiscal situation the prime minister doesn’t have the leverage to fight the IMF. He has to either accept the IMF package or continue to default on the country’s debt payments. There is no good option: both are bad. His best option is to unite the country and get the population to buy into whatever his government believes is best for the island at this time. Despite all the rhetoric about unity and inclusion, he has polarised the country even further. Grenada is in a similar position to Greece.
Mitchell's NNP, after defaulting on loan payments to the island's creditors, has no choice but to face the music of the IMF if ever the debt restructuring he requested is to be successful. Given the experiences of the creditors with the previous NNP administration following the passage of hurricanes Ivan and Emily, they are not willing to enter into any arrangement with the government unless it is guided by the IMF. Reverend James must be aware of the biblical quote, “Give unto Caesar what is due unto Caesar.” Creditors are not willing to forgive their debts under these difficult economic circumstances.
The ramifications for the island would be worse if PM Mitchell refuses to accept the IMF proposals, These proposal may include an increase in VAT, or having fewer items zero rated, introduction of personal income tax which was removed by the NNP in 1995, debt service levy, retrenchment of public servants, the sale of state properties, freeze on employment, among others. IMF proposals for Grenada would be similar to that of Greece. Greece, however, is in a much better situation because the country is part of the European Union (EU).
The world is definitely a cycle. Former Minister of Finance Hon Anthony Boatswain predicted that the NDC administration will have to turn to the IMF but his NNP party won't because they can manage the economy much better. What is Hon Boatswain saying now? Is he singing a different tune or he has placed his thoughts on pause. Mitchell's NNP is responsible for racking up the island's massive national debt so it is right and proper for his administration to fix. If he can't fix it then it would be time for a new captain.
Hon Nazim Burke has proved that he can keep the economy stable. There are very few renowned economists in Grenada and one of them is the Hon Nazim Burke. Bernard Coard is highly prestigious and it's not surprising if Dr Mitchell seeks his counsel. Prime Minister Mitchell is a statistician by training and a politician by profession and as such he isn't the person best suited to negotiate with the IMF. He has to get a team of smart and well trained economists, including Dr Patrick Antoine.
Grenada can't escape the IMF guillotine. The Conference of Churches suggestion may be welcome, but it is too little too late. The genie is already out of the bottle and it would take great skill, creativity, innovation and national unity to caution the effect of the IMF guillotine. The Conference of Churches played quarterback for too long and so trying to play striker now will prove very difficult. They have sat idly by when the country was grossly mismanaged and said nothing. They have quietly colluded with the powers that be to inflict pain and hardship on the poor and vulnerable. So, Bro James, it's either the IMF medication or Grenada relegated to junk status and be blacklisted.
It would be more productive and progressive for the Conference of Churches to call for accountability, transparency and good governance and prepare their congregations for what is to come: the IMF Guillotine. Mitchell can't hide, he can't run. He just has to face it like a man and hope and pray that the masses don't take to the streets. It will be the start of the Caribbean yellow revolution. Grenada is well known for making history.
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very interesting article,it certainly lays out some of the economic problems gda faces.However to suggest that former MOF is a renowned economist is wishful thinking,Mr.Burke is an attorney and from many reports not a very good one.He had his chance and in my view the worst MOF in gda's short history.On the other hand the expertise of former MOF Bernard Coard is well documented and I agree he could be helpful to gda in this period.The question is does Dr.Mitchell possess the humility to ask him and has the Grenadian people come to the point where they are willing to forgive him for past mistakes and put the country's interest and future as priority one.It would helpful for Mr.Coard to begin to produce a series of papers as to his answers to some of the economic issues facing my beloved country grenada.Please Dr.Mitchell invite all parties to the table to map gda's future,for your legacy is at stake.
I was wondering myself who, apart from the writer, designated or considers Nazim Burke a renowned economist. Certainly, not the people of St George North East and not the voters of Grenada.
Jimmy the voters of St.Georges North East and those throughout Grenada who voted against the previous government are not having nightmares knowing fully well that the country have to drink the IMF medicine. They were fooled into voting for false and pie in the sky promises. Hon Burke didn't try to hoodwink the populace. He made it clear to every one that things are rough and the country was experiencing a severe cash flow problem. He was accused of servicing the debt , a debt he inherited at the expense of capital development. It was virtually impossible for him to do otherwise. Given the situation he inherited, such as a broken economy, huge debts and deficits, a political PS , internal division within the government , a vicious character assassination campaign etc he did a good job in stabilising the economy and keeping the country afloat. We need to appreciate that. The reason why the country is in such a state today it is because the voters didn't appreciate what Burke was doing in their interest. Just imagine where the country would have been if Hon Burke didn't stabilised the economy and just continued to barrow madly as was the case from 1995-2008. The voters are no always right and sometimes make mistakes especially in those poor third world countries where money influences the outcome of elections. Sadly Grenada has a very dirty history in this rum and corn beef politics and that is why the country continues to spin top in mud. No one can deny the part that rum and corn beef politics play in the outcome of many elections since the days of Gairy. That mentality is still in many people including the young unemployed and uneducated. As for Coard maybe he can assist Grenada as path of his community service to the country for the pain he has cause the country.Can you imagine how much progress Grenada would have made if the Revolution had survive and Maurice Bishop was still Prime Minister. Can you imagine how united the country would have been the key to national development. Bernard Coard like his pal Pedro failed the people of Grenada miserably. Their are anti- progressive in their deeds. You have t give Burke the benefit of the doubt. His tenure as MOF was not normal times. Jimmy and Anthony you guys have to be honest and fair. Burke made his mistakes but he made a gallant effort to keep the country afloat. He didn't have to take Grenada to the IMF. An outstanding accomplishment. Bernard Coard and George Brizan were also able to keep the IMF out of Grenada. Burke is in good company. He will only learn and become better as he learn more about the economies of the world.
Okay, Leslie. If I get you, what you saying is 32,000 Grenadians - many who voted NDC in 2008 - got stupidee in 2013 and voted NNP. They should smarten up now and extend gratitude to Mr Burke, return him not just as Finance Minister but as Prime Minister.
But I want to know if there is any lessons the NDC learnt from their experience between 2008 and 2013. You and other NDC blaming the election loss on stupidee Grenadians who were fooled and voted for pie in the sky; all you blaming the rum and corn beef mentality of Grenadians; all you blaming Peter David; and blaming everybody you could find. Is there any blame the NDC should take, especially the people who led them into the election, such as Tillman Thomas and Nazim Burke?