Revenue shortfalls delay payments to airlines, tourist board

The Grenada government says shortfalls in revenue are preventing it from meeting its budgetary allocations to the Board of Tourism and airlines.

The Tillman Thomas administration, responding to concerns raised by the Grenada Hotel and Tourism Association (GHTA), said it has been forced to carry out "even-handed" budget cuts because of a reduction in trade and business activity.

"The concern expressed that Government has not met its financial commitment to the GBT should be placed in context," Finance Minister Nizam Burke said in a response letter to the GBT.

"While it is true, in the case of the GBT that the sum paid out by government fell below what was budgeted, it must be borne in mind that the same is true for many government ministries and other government-funded agencies," Burke said in the June 3 letter.

Last month GHTA wrote to Burke warning of dire consequences in the tourism industry within a year because of the government's delay in paying outstanding subventions to the board and fees to the airlines.

The association had complained that debts incurred by the board of tourism were having an adverse effect on the industry.

"It is well known that Government's ability to meet these competing requests is constrained by revenue collection and cash flow. In recessionary times when trade and business activity is reduced, resulting in revenue shortfalls, the only practical response on the part of government is to carry out even-handed budget cuts," Burke said in his letter that was also copied to various stakeholders including the Grenada Chamber of Industry and Commerce.

"This response is not driven by malice, political mischief or a lack of will."

Burke included figures in his letter to show that since the ruling National Democratic Congress came to office in July 2008, the allocation to tourism has been increasing.

The budget for the board of tourism climbed from EC$27.4 million (US$10.14m) in 2008 to EC$29.8 million (US$11.03m) this year, including EC$17 million (US$6.2 million) for marketing and EC$10 million (US$3.7 million) for airlines flying the Grenada route.

As of May, only EC$3 million (US$1.1 million) has been paid to airlines although the budget has been increased to EC$10 million this year.

- CMC