Grenada agrees to postpone IMF review

The Grenada government says it has agreed with the International Monetary Fund (IMF) to postpone the second review of the country's Extended Credit Facility, pending a thorough re-assessment of programme parameters and objectives.

The second review had been scheduled for consideration by the IMF Executive Board on June 27.

"Grenada's inability to recover quickly from the recent global economic recession has forced the Grenadian authorities and the IMF to re-examine the macroeconomic assumptions which underpin the Extended Credit Facility," said Timothy Antoine, permanent secretary in the Ministry of Finance. "Grenada now expects that the second review of the ECF will be completed as soon as our joint review and reset of these assumptions is completed."

Grenada's economy was devastated in late 2004 by Hurricane Ivan and, as a result, the island was forced to extend the repayment dates of most categories of its external debt.

"Grenada did not, at the time, ask any creditor to forgive any portion of the principal amount of its claims against the country," said a statement out of St George's, the capital.

"Although Grenada has made strenuous efforts to implement an ambitious economic recovery programme in the wake of Hurricane Ivan, the results have been mixed."

Several government buildings were damaged or destroyed by the hurricane, and nearly seven years later, most of these buildings remain inhabitable. Grenada's GDP has contracted by an average of 0.8 per cent each year since 2006. This year, the economy is forecast to expand by one per cent, but this is "well below the level of 7.1 per cent recorded in 2003", said the Douglas administration.

Unemployment is estimated at 29 per cent, more than double the pre-Ivan level of 12.5 per cent.

"The reasons for our inability to recover fully from Hurricane Ivan are easy to see in hindsight," said Finance Minister Nazim Burke.

"Only about two thirds of the US$150 million in reconstruction funding pledged by our development partners in 2004 has been disbursed. Items such as lumber and cement that are essential for the rebuilding programme have skyrocketed in price.

"Most importantly, the global economic recession that began in 2007 continues to depress levels of tourism, foreign direct investment and capital inflows. Hurricane Ivan devastated our island in just eight hours," said Burke.

"Notwithstanding the immediate boost in economic activity associated with reconstruction from 2005 to 2007, we have been walking into the strong headwind of a persistent global economic downturn ever since."

- CMC