2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Grenada


2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Grenada

Fund Relations

(As of May 31, 2018)

Membership Status: Joined: August 27, 1975; Article VIII

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Latest Financial Arrangements:

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Formerly PRGF.

Projected Obligations to Fund1/

(SDR Million; based on existing use of resources and present holdings of SDRs)

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When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiatives: Not Applicable

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

Safeguards Assessment: The 2016 update safeguards assessment found that the ECCB continues to maintain a governance framework that provides for independent oversight. Transparency in financial reporting has been maintained and the external audit mechanism is sound. The ECCB has restructured the internal audit function and established an independent risk management unit in line with leading international practice.

Exchange Arrangement: Grenada is a member of the ECCB, which manages monetary policy and the exchange system for its eight members. The common currency, the Eastern Caribbean dollar, has been pegged to the U.S. dollar at the rate of EC$2.70 per U.S. dollar since July 1976. In practice, the ECCB has operated like a quasi-currency board, maintaining foreign exchange backing of its currency and demand liabilities of close to 100 percent. Grenada accepted the obligations of Article VIII, Sections 2, 3, and 4 in January 1994. It maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions.

Article IV Consultation: Grenada is on a 12-month consultation cycle (since mid-2017). The last Article IV consultation was concluded by the Executive Board on May 19, 2016 (IMF Country Report No. 16/133), Grenada’s current consultation was delayed due to elections in March 2018.

FSAP Participation: Grenada participated in the regional Eastern Caribbean Currency Union FSAP conducted in September and October 2003. The Financial System Stability Assessment is IMF Country Report No. 04/293.

Technical Assistance:

Caribbean Regional Technical Assistance Centre (CARTAC)

CARTAC has provided wide-ranging technical assistance (TA) to Grenada, the highest user of CARTAC TA over the FY15–16 period to date (100.7 weeks).

  • Public Finance Management. CARTAC TA in PFM has focused on reform of state-owned enterprises and statutory bodies, cash forecasting and commitment control, development and transition to a new chart of accounts consistent with GFSM2014, and a PEFA assessment. Assistance was also provided on strategic budget reform to modernize the budget preparation process. In SOE/SB reforms, in 2016 CARTAC provided some limited assistance on Public Service Pension Reform. In 2017 CARTAC provided assistance with a one-week training mission for the Grenada Fiscal Responsibility Committee and conducted a risk assessment of the their SOE’s. In April 2018, a mission was completed on assisting the AG on moving to IPSASA cash-based accounting and to bring their public accounts up to date. A roadmap on reforms to move Grenada to IPSAS Accruals was provided.

  • Tax Administration. TA has been provided to strengthen tax administration at both the Inland Revenue and Customs Departments. At IRD, support included establishing a Large and Medium Taxpayer Unit and a Design, Planning and Monitoring Section.

  • Financial Stability. Supervision and Regulation. Significant TA has been provided to the Grenada Authority for the Regulation of Financial Institutions (GARFIN) to implement risk-based supervision across the non-banking sector, including capacity building to review reinsurance contracts, and conduct review of retail lending portfolios at credit unions. TA was also provided, as part of the broader ECCU-wide initiative, to develop financial health and stability indicators for the insurance sectors.

  • Macroeconomic framework and statistics. To support the authorities’ efforts to put in place an annual medium-term economic framework to guide the annual Budget, CARTAC provided TA to strengthen medium-term macroeconomic projections. TA was provided during 2013 to 2015 to support dissemination of improved GDP by expenditure estimates; and during 2016 and 2017 to compile and disseminate quarterly GDP by economic activity at current and constant prices. In addition, TA is being provided to develop the Producer Price Index. TA was also provided to produce balance of payments statistics according to BPM6 and to initiate the production of IIP statistics, and review and improve upon the BOP and IIP statistics released in July 2017.

Other Technical Assistance (2014–17)

FAD and LEG have provided extensive assistance in tax policy and administration, public financial management and on public expenditure rationalization. In particular, TA was provided in the design and drafting of the PFM legislation and the Tax Administration legislation, reforms of the tax incentives system, and reform of the following Acts: income tax, property, VAT, excise tax. FAD provided TA on the public wage bill reform. FAD/LEG also provided comprehensive TA to draft the Fiscal Responsibility Act of 2015. MCM provided TA on formulating a medium-term debt management strategy and implementing institutional changes to strengthen debt management and, together with LEG, provided TA to draft the Public Debt Management Act of 2015.

Grenada: IMF Technical Assistance: 2016–present

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Source: Based on available TA reports and consultations with CARTAC: to be completed using the ICD RAP database

Relations with other International Financial Institutions

Statistical Issues

(As of May 31, 2018)

I. Assessment of Data Adequacy for Surveillance

General: Data provision has some shortcomings, but is adequate for surveillance.

National Accounts: A rebased GDP series (using 2006 as the base year) was released in October 2010 with assistance from CARTAC. The new series improved coverage, data sources, and methodology. However, some weaknesses still remain: data on GDP broken down by expenditure is not available at constant prices, while data at current prices is not reliable due to weaknesses in estimating gross capital formation. Private final consumption expenditure is estimated as a residual. There are significant delays related to both receiving and processing survey data for GDP series complication, for example with respect St. George’s University’s data provision to the CSO. Supported by the CARTAC mission, estimates of quarterly GDP by production approach has improved.

Prices and high frequency statistics: The authorities provide regular data on consumer prices, retail sales, agricultural production and purchases, motor vehicles registration, total cargo handled, fish production and exports, industrial production, imports of construction material, water and electricity production. The 2010 revisions of the CPI series assured that the new series met international standards. A new CPI basket, including several additional items, has been developed using data from the 2007/08 Household Income and Expenditure Survey (HIES), with a strong recommendation to conduct the HIES on a five-year cycle to ensure timelier future updates than the current ten-year period. The new series are re-referenced to January 2010 and historical CPI series back to 2001 have been recalculated based on the new structure. Producer prices, export and import price indices are not yet available but CSO intends to develop a PPI for certain sectors.

Labor statistics: Labor statistics are improving. The authorities introduced an annual Labor Force Survey in 2013, which was completed again in 2014 and 2015. The latest labor force survey was completed in 2017. The first labor demand survey was conducted in 2015, the Job Opening and Labor Turnover Survey, but these results have not been finalized or released, pending processing and verification. A population census was completed in 2011. Regular wage data are not available with the exception of partial data available from the National Insurance Scheme. The Central Statistical Office (CSO) conducted a Country Poverty Assessment in 2008, with assistance from the Caribbean Development Bank, and is working with the International Labor Organization (ILO) to improve the coverage of labor market statistics.

Government finance statistics: The reporting of central government data has improved in recent years, with monthly data being provided to the ECCB, IMF, and other users in Fund economic classification format with lags of about 4–6 weeks. However, some challenges remain with the availability of fiscal data: (i) receipts from the CBI program to the central government are not comprehensively reported in the fiscal accounts (ii) some donor-financed capital spending data are often not available until the end of the year, as they are not reported to or do not pass through the accounts of the central government. The new Chart of Accounts introduced in 2016 has improved the classification of public expenditure. The coverage of the rest of the public sector has improved, but remains limited, and there are no consolidated public-sector accounts. Financial information on selected public enterprises has been included in the budget documents since 2016. This is consistent with the requirement in the Public Finance Management (PFM) Act of 2015 that the Minister of Finance present a statement of the overall performance of all enterprises to Parliament alongside the budget proposals. The PFM Act also requires public enterprises to submit annual financial statements no later than three months from the end of the fiscal year to the Director of Audit and the Minister of Finance.

Monetary statistics: Monetary data are compiled by the ECCB on a monthly basis and reported regularly to the Fund. Specifically, on Grenada, the institutional coverage of other depository corporations is incomplete and valuation of interest-bearing assets and liabilities does not incorporate accrued interest. Also, source data for the commercial banks do not provide disaggregated information recommended by the MFS manual (ECCB is currently working on this issue).

Balance of payments: Balance of Payment (BOP) statistics are improving, but there is uncertainty on the stability of the data series. BPM6-compliant BOP and International Investment Position (IIP) were released in July 2017 for 2014–16 and 2013–16, respectively, as part of the ECCU-wide initiative. Efforts are being made to compile the 2017 statistics and review and revise the entire data series by improving data sources.

External and domestic debt statistics: The database for central government external debt is comprehensive, and can be used to provide detailed and reasonably up-to-date breakdowns of disbursements and debt service, including future projections. Capacity upgrades are however needed to improve reliability of the data and fully eliminate the possibility of errors. There is also a detailed database on domestic government securities maintained by the Regional Governments Securities Market (RGSM) that provides data on auction results, and outstanding securities of the central government. Although the stock information on privately placed domestic T-bills, loans, bonds, and overdraft facilities are available on a monthly basis, there is no reliable data on future projections. Data availability on government-guaranteed debt and debt of public enterprises is limited, and there is no data on private external debt.

II. Data Standards and Quality

While Grenada has participated in the Fund’s General Data Dissemination System since March 2001, most of the metadata have not been updated since late 2002.

III. Reporting to STA

The International Financial Statistics page includes data on exchange rates, international liquidity, monetary statistics, prices, balance of payments, national accounts, and population. The authorities do not report fiscal data for publication in IFS. The ECCB provides data to the IMF for publication in the Balance of Payments Yearbook. Grenada has not provided any fiscal data, either on a GFSM 2001 basis, or a cash basis, for presentation in the GFS Yearbook. The ECCB disseminates Grenada’s quarterly GFS data in its Economic and Financial Review.

Table of Common Indicators Required for Surveillance As of May 31, 2018

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Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

Grenada is a member of the Eastern Caribbean Currency Union, in which the common currency of all member states (EC dollar) is pegged to the U.S. dollar.

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank and domestic nonbank financing.

Including currency and maturity composition.

Public external debt only.