ST. GEORGE’S, Grenada – Grenada won the favour of the International Monetary Fund (IMF) on Friday (Apr. 2) as the international body approved a request for a new three-year arrangement under the Extended Credit Facility (ECF).
The current ECF for Grenada totals US $13.3 million and approval of this programme will make an initial disbursement of roughly US$1.9 million available immediately.
A statement issued by the IMF said that the new arrangement seeks to assist Grenada in cushioning the effects of the global economic crisis. While Grenada follows the Eastern Caribbean Central Bank’s (ECCB’s) Eight-Point Stabilization and Growth Programme, the new IMF arrangement will further support that country’s agenda of economic and financial sector reforms.
Boosting growth, reducing poverty, strengthening the private sector business climate and reducing vulnerabilities in the financial sector remain high-priorities for Grenada. In the words of Deputy Managing Director and Acting Chair of the IMF Executive Board Murilo Portugal, the new IMF arrangement under the ECF would support the Grenadian authorities’ efforts to continue their economic reform program.
“The global economic crisis has had a significant adverse impact on Grenada. Economic activity slowed, reflecting sharply weaker tourism receipts and FDI-financed construction, resulting in a deterioration of the fiscal situation....The authorities are continuing to focus on coping with the impact of the external shocks, while laying the foundation for fiscal consolidation and growth over the medium term,” Portugal said in an IMF statement.
The IMF official acknowledged that progress made by Grenada in structural reforms, including the introduction of a Valued Added Tax in February 2010 and the completion of its Country Poverty Assessment, would serve as a basis for preparing a new Poverty Reduction Strategy.
Progress made in strengthening the capacity for non-bank financial supervision and regulation and improving expenditure control to ensure timely debt service payments were also acknowledged.
The three-year ECF with Grenada was approved on April 17, 2006 and in July 2008 was augmented to nearly US$18.2 million to help mitigate the impact of food and fuel price shocks before being extended by one year to April 16, 2010.
The arrangement was augmented again to about US$24.9 million in June 2009 to help mitigate the impact of the global downturn and financial turmoil.
