Press Release: IMF Executive Board Completes Second Review Under the ECF Arrangement for Grenada, and Approves US$2.8 Million Disbursement

The Executive Board of the International Monetary Fund (IMF) today completed the second review of Grenada’s economic performance under a three-year program supported by an arrangement under the Extended Credit Facility (ECF). The completion of the review enables the disbursement of SDR 2 million (about US$2.8 million), bringing total disbursements under the arrangement to SDR 6.04 million (about US$8.5 million).

The ECF arrangement in the amount equivalent to SDR 14.04 million (then about US$21.7 million, or 120 percent of Grenada’s quota at the IMF) was approved by the Executive Board on June 26, 2014 (see Press Release No. 14/310).

Following the Executive Board’s discussion on Grenada, Mr. Min Zhu, Deputy Managing Director and Acting Chair, said:

“The Grenadian authorities have achieved important results in the context of their Fund-supported economic program. Fiscal targets have been exceeded, important reforms of the fiscal policy framework have been put in place, and significant progress has been made in restructuring public debt. Stronger economic activity has supported program implementation, although unemployment remains elevated. Maintaining social cohesion and support from all stakeholders remains critical to completing the reforms and putting Grenada on a higher, sustainable, and more inclusive growth path.

“Grenada is well advanced in its ambitious fiscal adjustment and in restoring debt sustainability. Safeguarding the fiscal performance achieved thus far and carefully monitoring budget execution will help achieve this year’s fiscal objectives. A final round of adjustment will be needed, as planned, to achieve the program’s fiscal targets for 2016. An agreement on debt relief with the remaining stakeholders will be necessary to return public debt to a sustainable level.

“Recent reforms to the fiscal policy framework are a major step forward to promote durable fiscal discipline and support debt sustainability over the medium-term. The comprehensive reforms include the introduction of fiscal responsibility and public debt management legislation, and reforms of the tax incentive regime and of the framework governing state-owned enterprises and other parastatal entities.

“In the context of the exchange rate peg, continued structural reforms are needed to strengthen competitiveness and boost potential growth. These reforms should focus on lowering production costs, including in the energy sector, and improving the investment environment. Strengthening social protection programs should aim at promoting inclusive growth.

“Good progress has been achieved in advancing the regional strategy to strengthen the banking system, coordinated by the Eastern Caribbean Central Bank. Full implementation of the strategy will be essential to preserving financial stability.”