Prime Minister Tillman Thomas has given Grenadians an insight into the grave financial situation inherited by his two month old government from the previous administration of Keith Mitchell.

In an address to the nation last Friday night, the new Prime Minister said that the nation's debt now stands at 1.73 Billion dollars which "places us as a country in a very difficult situation".

He stated that both Standards and Poors and the Washington-based International Monetary Fund (IMF) have pointed to the "fiscal indiscipline" of the previous New National Party (NNP) regime of ex-Prime Minister Mitchell for the terrible state of Grenada's debt.

According to Prime Minister Thomas, the IMF has offered Grenada technical assistance in the area of fiscal management. In addition, he said that the new government intends "to speak to friends in the international community to seek debt forgiveness and/or debt restructuring".

Following are some of the highlights in the speech delivered by Prime Minister Thomas to the Nation:


I am delighted to update you on a number of critical national issues. This is consistent with our stated commitment to keep you informed of our activities, actions and progress as we lead our country to a brighter day.

Over the past few weeks we have been holding meetings, receiving status reports, articulating our policies and getting familiar with our various ministries and staff.

Given our policy focus, we have found  it prudent to reorganise various ministries and reposition some members of our senior management team. It is hoped that these changes will accelerate the implementation of our government's plans.

SCHOOL BOOKS PROGRAMME

Ladies and Gentlemen, I can report with pride that one of our flagship programmes is now up and running. Here I refer to our much publicised School Books programme. This programme represents a major investment in our youth and we are very pleased that we were able to keep our promise to you, despite the constraints.

I wish to congratulate our Minister of Education for her leadership role in the implementation of the programme and the entire team of dedicated persons who have been working overtime to ensure the success of this important initiative.  

I also want to recognise the many persons who have provided books and other resources to the programme. We were indeed gratified by the number of persons who have called, gave, and enquired about how they could become involved. We wish to thank all for this outpouring of support.

I wish to remind you that while the core objective of this programme is the enhancement of educational opportunities for our young, it also has the direct impact of enabling families to now  spend on other critical needs. In so doing, their ability to manage their finances is enhanced.

Ladies and Gentlemen, while there may be a perception in some quarters that we are moving slowly with our work, we believe it is necessary to lay a proper foundation for success.

REVIEW OF OPERATIONS

Our review of government operations has revealed several areas of concern. The management of contracts is one such area. We have found many and I repeat many anomalies that amounts in our view to a serious abuse of power.

Could you imagine a person, hired to undertake party political work being paid a salary of over 4000 U.S or 10, 840 EC dollars a month, 1000 U.S dollars a month for housing and given a government transport all from your tax dollars?

Or another person hired on a three year contract, which can only be terminated if the government pays that person for the entire length of the contract, whether they are doing a good job or not.

What is also unique about this particular contract, is the fact that the individual only has to give the government one month's notice if they desire to terminate the contract.

However, if the government so desires, it has to pay out the entire duration of the contract. Ladies and gentlemen this defies logic, good governance and common decency.

Our review has also shown that Vote 340 was severely abused. In fact that vote, which was established to pay for specific services, is now paying in excess of 22 million dollars annually. It was used to pay service providers, temporary staff, party consultants, and a group called Outreach, which undertook all the political work of the New National Party in the various constituencies.

In effect ladies and gentlemen, it is no wonder then that our finances are in such a bad state. When the general election was called, the debushing programme which was budgeted to spend 10 million dollars, was over spent by an additional 12 million dollars.

This ladies and gentlemen means, that while budgeting to spend seven million dollars, the NNP government actually spent 22 million dollars on debushing alone prior to the elections. This is a colossal  abuse of government resources. Much of this reckless spending was done in the last two weeks prior to the general elections. And this is only the tip of the problem.

In addition we have inherited a high level of Unpaid Claims in the Treasury amounting to  $54.1 million. These are cheques in the Treasury which cannot be released because Government has limited cash.

In a recent Cabinet briefing by the Ministry of Finance, the situation facing government finances was described as being very challenging. The general conclusion was that Government is facing a major cash crunch.

To further illustrate the magnitude of the problem, Cabinet was advised that 90 cents of every dollar it collects goes to recurrent expenditure such as salaries, pensions and debt repayment. This leaves only 10 cents for development projects in agriculture, health and education. A direct consequence of the NNP's reckless actions and failed economic policies.

Given these challenges, several recommendations were presented for Cabinet's consideration. Cabinet has accepted some of these recommendations which include:

(1). To review some of the major projects to ensure that Government can meet its obligations as it falls due. These include, for example, the St. George's Market Square.

(2). The immediate commencement of preparation for the 2009 Budget.

(3). The establishment of a Waste Reduction Task Force consisting of persons from the public and private sectors to make recommendations for immediate implementation, in the 2009 Budget and for the next 2-3 years.  
I believe the public could also play a useful role in this exercise.

Between 1995 and December 2007, our debt increased by over one billion dollars to 1.73 Billion dollars. This places us as a country in a very difficult situation.

Standards and Poors and the IMF have both pointed to fiscal indiscipline by the last government for the state of our debt. We recently met with the IMF who offered technical assistance in the area of fiscal management.

We intend to speak to friends in the international community to seek debt forgiveness and/or debt restructuring. Cabinet will also redouble efforts to secure undisbursed grants from friendly governments to ensure certain projects promised by government can be implemented in the next few months.

THE WAY FORWARD

Ladies and gentlemen, fortunately it is not all bad news. We have seen some exciting opportunities to transform Grenada, particularly through some of the new tourism related projects.

We believe the tourism industry holds the key in the short term for employment generation and immediate impact on our economy. My government believes and has consistently said that the private sector is the engine of growth for our economy.

Consequently we have committed to working to provide the favourable environment for the expansion and growth of the private sector. We therefore will work with the Chamber of Industry and Commerce, the Employers Federation, the trades union council and civil society to build and strengthen this frame work. We all have a stake in this country and we all must work together to develop it.

CARRRIACOU

Fellow Citizens in a recent visit to Carriacou I met with the business community to discuss government's priorities. As you might be aware the process to implement local government in Carriacou has started.

We recently received a report that will guide the process. The special opportunities and challenges that form part of life in the sister islands are high on our agenda and we are working to address them.

We also appreciate and understand the tourism potential of Carriacou and Petit Martinique. While there, I was taken on a tour of an archeological site in Grand Bay. It was a wonderful experience. The sad reality however, is that sand mining is endangering the site and our important heritage. This site has uncovered artifacts that are found no where else in the world. It has great potential for the development of the tourism product. However, if this trend continues we will lose much of the history Carriacou.

Of tremendous concern however, is the fact that sand mining is eroding the Grand Bay area by one meter per year. This is unacceptable and sand mining must stop, not just in Carriacou but in Grenada as well.

There are better alternatives available for use in the construction industry and we will pursue them.