Dr Keith Mitchell speaking to reporters
Grenada, CMC – The Grenada economy is likely to grow by 2.6 per cent this year, Prime Minister Dr. Keith Mitchell has said.
Delivering the 2014-15 national budget on Wednesday, Mitchell told legislators that the preliminary economic growth figure is higher than the average 1.4 per cent given by the Eastern Caribbean Currency Union (ECCU).
He said it is also better than the 1.5 per cent projected when his administration presented the 2014 fiscal package.
Mitchell said that the sectors contributing to the economic growth are tourism; agriculture; and education.
Mitchell, who is also Finance Minister, said that the local economy is projected to grow by at least two per cent in 2015, adding that for the first 10 months of this year, Government’s fiscal situation has shown dramatic improvement over the previous year.
“We have seen strong growth in revenues. We attribute this improved revenue performance to a combination of factors including higher economic activity, new fi scal measures and improved tax administration,” he added.
Mitchell, whose New National Party (NNP) controls all 15 seats in the Parliament, said that when it came to power in 2013, the unemployment rate was over 40 per cent.
But he said that the final results of the 2013 Labour Force Survey revealed that the unemployment rate had fallen to 32.5 per cent.
“Despite some layoffs in the banking sector, the preliminary results of the 2014 Labour Force Survey indicate that unemployment has again fallen and is now 29.5 per cent. Among women, it is now 31.5 per cent. Among our youth, ages 15-24, it has fallen from 53.2 per cent to 45.4 percent,” Mitchell said.
He told Parliament that while the figures have fallen, “the rate of unemployment is still too high but we are encouraged that it is moving in the right direction.
“We expect a further reduction as some of the major private sector projects come on stream in 2015 and beyond.”
During his budget presentation, Prime Minister Mitchell said he wanted to “place on record our appreciation of the Bolivarian Republic of Venezuela for the excellent support Grenada has received from the PetroCaribe Programme since inception.
“This year alone, we will receive EC$23.3 million (One EC dollar =US$0.37 cents) in grants for critical social programmes. I have been assured that Grenada can continue to expect this critical support. “
Last week, the International Monetary Fund (IMF) said it was monitoring the potential impact any changes to PetroCaribe will have on regional economies.
Analysts say the initiative, which allows countries to pay for part of their oil import from Caracas over a 20-year period at low interest rates, will have to be modified or discontinued amidst a worsening economic situation in the South American country.
Several Caribbean Community (CARICOM) countries including Antigua and Barbuda, The Bahamas, Jamaica, Belize, St Kitts and Nevis, Grenada, St Vincent and the Grenadines (SVG), Guyana, and Suriname are members of PetroCaribe.
IMF advisor, Western Hemisphere, Elie Canetti, told reporters that the IMF’s main concern “is that we know Venezuela is going through increasing financial stress, and oil prices have dropped from around US120 dollars a barrel to mid 70s a barrel and Venezuela is hugely dependent on selling oils.
Prime Minister Mitchell said that in terms of budget support for the Homegrown Programme IMF programme his administration is implementing, “we have already received EC$75 million,” adding “we anticipate receiving another $23-28 million by the end of the year.
“Recurrent spending has been restrained allowing us to invest significantly more in our capital programmes, the growth side of the budget. Based on our performance for the first 10 months of the year, we are confident that we will meet our targets under the Home-grown Programme for the end of the year,” Mitchell added.
He said that one indicator of an improving fiscal situation is that Grenada is meeting more of its obligations to regional and international organisations, noting that so far this year, the government has paid six million dollars to creditors.
Prime Minister Mitchell said that as at December 31, last year, the total public sector debt stood at EC$2.56 billion or 107 per cent of gross domestic product (GDP).
He dismissed speculation that his administration was not paying any debts.
“This is simply untrue. In 2014, Grenada has already made debt payments of EC$245.6 million. This sum includes EC$207 million in principal repayments of which $120 million were Treasury Bill rollovers and $34.1 million were interest costs.”
He said that since June this year, negotiations with creditors have intensified and are close to being finalised.
“Upon completion, we expect to see a rise in Grenada’s credit rating.
“On the matter of the outstanding debt to Taiwan, I wish to report that the government has proceeded in a proactive and responsible fashion. Within four months of assuming office, Grenada and Taiwan reached agreement on a standstill of the legal proceedings in New York.
“Subsequently, we have negotiated debt relief consistent with the needs of the Homegrown Programme, endorsed by the IMF,” Mitchell said, promising legislators that “more details will be given when this process is completed”.
