ST GEORGE’S, Grenada -- As the new Grenada government prepares its first budget since its election to office last month, many Grenadians are predicting that the fiscal package will contain drastic cuts in spending.
“We have to restructure and it’s going to take some sacrifice,” Prime Minister Keith Mitchell has said.
The statement of the prime minister, who is also finance minister, has been interpreted by economist Lennox Andrews and others as a suggestion of probable cuts.
“Sacrifice has to be part of a national economic recovery program,” Andrews told Caribupdate Weekly.
Andrews is a former permanent secretary in the ministry of finance.
He said the budget, which is expected to be tabled in parliament next month, will be a “holding budget” that would allow government to conduct the business of the state for the rest of the year.
For the longer term, Andrews proposes a home-grown adjustment program that will address fiscal stabilization, external payment and economic growth in Grenada.
“Money must come into the country and we need measures aimed at growing the economy,” Andrews is quoted as saying in the latest edition of Caribupdate Weekly.
“There are sufficient resources at home to develop our own adjustment program. It must be endorsed by the International Monetary Fund and the rest of the international community will support it.”
Grenada, whose national debt is US$2.2 billion, has called on creditors to restructure US$193 million of bonds ahead of a coupon payment that was due Friday, March 15. The government admits it could not make the payment.
According to Timothy Antoine, permanent secretary in the ministry of finance, restructuring would allow the country “to put its public finances on a more sustainable track”.
The paying off of the national debt, he said, has stifled opportunities at home and restructuring would enable the “freeing up of resources being used for debt to invest in the Grenadian economy”.
“Because there has been so little economic growth, revenue has not been buoyant and expenses have been increasing,” Antoine said. “As a result, Grenada has had difficulty paying its debt on time.”
Mitchell, in a Caribupdate Weekly interview, said the budget’s “pieces are being put together,” adding that his government wants to “grow the economy of the country and create more opportunities for those who were out of the mainstream of opportunities.”
He said: “I want Grenadians to note that we are focused on building the economy – not replacing anyone.”
Mitchell’s New National Party was voted into office February 19 after a 15 – 0 election sweep.