Grenada Today - The National Newspaper of Grenada, Carriacou & Petite Martinique

Grenada’s economic recovery in the aftermath of Hurricanes Ivan and Emily is going well. That’s according to the ruling New National Party (NNP) government of Prime Minister, Dr. Keith Mitchell.

In delivering the 2006 budget, Finance Minister Anthony Boatswain noted that the economic recovery is being spurned on by activities in the construction sector and to a lesser extent tourism.

However, he said that one of the worrying points for government is the rate of unemployment coupled with a growing fiscal deficit. Following are the remarks made by Minister Boatswain on the recent economic performance of the Grenadian economy:

Our economic recovery is well underway. With reconstruction activity proceeding well, the economy is estimated to have grown by 1 1/2% in 2005, after a contraction of 3% in 2004.

This recovery was primarily driven by activity in the construction industry, supported by a revitalized cruise tourism sector. Conditions in the main agriculture sector remain relatively subdued following the further reversals suffered as a result of Hurricane Emily.

The average inflation rate for the year 2005 was 3 1/2% driven mainly by the recent increase in fuel prices. Fiscal performance in 2005 was much better than in 2004, as revenue grew by 18.0 per cent to EC$355.3M, benefiting from one-off payments and increased collections from high levels of imports of reconstruction materials.

Current expenditure on the other hand fell by 10.6% to EC$294.7M largely on account of lower interest payments. Savings on interest payments amounted to EC$49.8M in 2005. Personal Emoluments (wages, salaries and allowances) amounted to just over 50.0% of total recurrent expenditure.

Outlays on wages and salaries reached EC$134.7M in 2005, and included a 4.5% increase related to the government implemented union-negotiated wage package. Mr. Speaker, even in difficult times this Government continues to meet its obligations to its workers on a timely basis.

At no time in the period following Ivan and Emily was Government unable to pay public officers on time. The Government of Grenada must be applauded for this. Unemployment, particularly among our young people remains unacceptably high, and as a concerned Government we are committed to addressing this problem.

Spending on goods and services rose by 31.1% as vital supplies and materials, lost or destroyed during the hurricanes, were replaced. Mr. Speaker, reconstruction and rehabilitation needs of the Country drove capital expenditure upwards by 118.8% to approximately EC$205.2 million.

The overall deficit before grants, stood at EC$144.2 million. With grants totaling $140.6 million, the overall deficit after grants amounted to $3.6 million. This balance was financed by loans from local and external sources.

Mr. Speaker, notwithstanding the slight economic recovery, and the measures taken to improve the fiscal situation in 2005, the people of this Country must know that the economic base of this Country is still weak and that substantial financing gaps exist for 2006 and beyond given the high development needs of the Country.

Last year I made it clear that rebuilding our economy and filling these large financing gaps will require burden sharing by the people of this Country, by our creditors and the international donor community. In particular, the Government and people have to continue to make sacrifices to address the fiscal imbalances and implement growth enhancing policies; our creditors have supported our debt restructuring exercise, while the donor community has expressed intent in continuing their financial support.

It is also clear that all three parties must work together and do their part in the fulfillment of the objective.

What is therefore left is for the people of Grenada to continue to demonstrate in a tangible way that we are doing our part in the reconstruction effort.

Of course, this Government empathizes with the harsh conditions under which many of our people still live and is fully aware of the sacrifices our people are making in putting their lives back together.

But Mr. Speaker, this is a special period in our economic history and the international donor community is saying to us that if we do not continue to demonstrate that commitment, then there is the likelihood that further grants and budgetary support would not be forthcoming.

Mr. Speaker, Grenada is not an international liability, no one owes this Country anything and therefore the task of rebuilding our nation lies first and foremost in our hands. And that is the case irrespective of the special circumstances created by Ivan and Emily.

As a proud and independent Nation, we have to show the world that we are ready and capable of managing our own affairs even though we are happy to have their assistance.

Mr. Speaker, the road to recovery is long and hard requiring sacrifice, fiscal prudence, perseverance and hard work by every Grenadian. It is vital that as a Country we send the right signal to the international community.

I therefore make a special appeal to all Grenadians to give full support to the programme of economic reform that this 2006 Budget addresses.