Washington, United States (CMC) — The International Monetary Fund (IMF) Monday announced that Grenada would receive US$2.8 million after the island successfully completed the second review of its economic performance under a three-year programme supported by the Extended Fund Facility (ECF).
The IMF said that the disbursements brings to US$8.5 million, the amount of funds made available to Grenada since US$21.7 million ECF arrangements was approved in June 2014.
“The Grenadian authorities have achieved important results in the context of their Fund-supported economic programme. 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,” said IMF Deputy Managing Director Min Zhu.
He said stronger economic activity has supported programme 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,” the IMF official said.
He said 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 programme’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.”
The IMF said that 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 programmes should aim at promoting inclusive growth.”
Zhu said that 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,” he added.