The Government of Grenada is reaping the benefits of introducing legislation to ensure fiscal discipline for the benefit of Grenadians.
The Fiscal responsibility Law (FRL), introduced in 2016, requires that the government exercise prudence in how it spends hard-earned taxpayers’ dollars. Grenada is the second of only three countries in the Eastern Caribbean, to introduce this self- imposed rule and the first country in the Caribbean to appoint an independent body, the Fiscal Responsibility Oversight Committee (FROC), to oversee its spending activities.
This decision, lauded by international agencies as the hallmark of good governance is creating tremendous economic opportunities for Grenada.
Through the enactment of the FRL, Grenada has attained a high level of fiscal stability with more than, US$100 million in concessionary loans and grants, from the World Bank, the International Monetary Fund (IMF), the Caribbean Development Bank (CDB) and other friendly governments and institutions, impressed with the country’s fiscal discipline. Grenada was able to significantly reduce unemployment from 32.2% in 2013 to 16.7% in 2018 (end of 3rd quarter) and the country’s debt to GDP ratio from 108.0% to 61.2%.
These gains also enabled the government to service outstanding debt claims; regularise local supplies; undertake major infrastructural improvement to the General Hospital; the construction of the state of the art Gouyave Healthcare Facility, and the renovation of many public schools across the country.
Grenada is presently a model for fiscal discipline and a magnet for local and international investment opportunities as evidenced in the consistent oversubscription of its treasury bills on the Regional Government Security Markets, at very low-interest rates.
As the benefits continue to roll in, the government must ensure that it maintains fiscal discipline by carefully deciding how best to utilise its resources, so that all sectors get a reasonable share of the “pie” despite competing priorities.
Breaching the fiscal rules has the potential to erode the economic gains and undermine Grenada’s credibility and as such, gravely hinder national development. If policymakers do not adhere to the fiscal rules, Grenada stands to lose access to extremely low concessionary loan and grant facilities for projects that will benefit thousands of ordinary citizens.
The government remains committed to building a society, where the needs and interests of all its citizens are met within legal budgetary limits.