In its latest report on Grenada, the Executive Board of the International Monetary Fund (IMF) is projecting growth in the Grenadian economy in 2018 and 2019.
Some of the main points in the concluding statement were:
- Grenada’s economy made important strides in recent years, achieving an impressive debt reduction of 37% of GDP since 2013, improving the framework for fiscal policy, strengthening the financial system, upgrading governance, and creating a better business environment.
- The Grenadian economy grew by an estimated 4.5% in 2017, driven by strong activity in construction, tourism, and education sectors.
- In 2018 and 2019, the economy is projected to grow by 3.5% benefiting from supportive global economic conditions and continued strength in construction and tourism.
- Thereafter, growth is expected to ease to the long-term potential rate of 2.75%. Inflation is expected to edge up in 2018 reflecting recent global energy price increases, but stabilise at 2 % in the medium term.
- The primary fiscal surplus is expected to remain high in the near term, supporting rapid debt reduction. Once the public debt ratio falls below 55% of GDP (projected for 2020), the fiscal surpluses and the pace of debt reduction are expected to moderate.
Executive Directors commended the authorities for implementing sound policies leading to a strong economic and fiscal performance and sustained debt reduction. While the outlook remains positive, Directors stressed that continued policy resolve and public support for reforms are critical to restoring debt sustainability, improving medium term growth prospects, and strengthening the financial sector.
Directors welcomed the continued fiscal adjustment in compliance with the framework of the Fiscal Responsibility Law (FRL), which has supported policy credibility. They noted that while there is scope to improve the FRL’s operational aspects, more substantive changes to the framework should be approached as part of a comprehensive plan that balances debt reduction with the need to create fiscal space for high quality infrastructure spending.