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IMF Country Report No. 20/161
GRENADA
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY—PRESS RELEASE; STAFF REPORT; STAFF STATEMENT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR GRENADA
May 2020
In the context of the Request for Disbursement Under the Rapid Credit Facility, the following documents have been released and are included in this package:
A Press Release.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on April 28, 2020, following discussions that ended on April 17, with the officials of Grenada on economic developments and policies underpinning the IMF disbursement under the Rapid Credit Facility. Based on information available at the time of these discussions, the staff report was completed on April 21, 2020.
A Debt Sustainability Analysis prepared by the staffs of the IMF and the World Bank.
A Staff Supplement updating information on recent developments.
A Staff Statement.
A Statement by the Executive Director for Grenada. The documents listed below will be released.
Letter of Intent sent to the IMF by the authorities of Grenada.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2020 International Monetary Fund
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GRENADA
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY
April 21, 2020
Executive Summary
Context. Grenada is a tourism-dependent economy that has been severely affected by the global COVID-19 pandemic. Tourism, which accounts for over 80 percent of Grenada’s total exports, has essentially come to a halt in March with ripple effects on other sectors of the economy. The economy is now projected to contract by over 9 percent in 2020. Local outbreaks of COVID-19 (with 14 reported cases) could cause yet deeper and more prolonged contraction in activity. Grenada’s solid fiscal position and strong macroeconomic performance prior to the COVID-19 crisis are key mitigants.
Request for Fund support. Due to the large financing gap arising from the sharp contraction of exports and the need to bolster spending to contain the pandemic and support the economy, the authorities are seeking financial assistance under the Rapid Credit Facility (RCF) exogenous shock window. Grenada is requesting a disbursement of SDR 16.4 million, equivalent to 100 percent of quota. Staff supports this request.
Macroeconomic policies. In March, the authorities announced measures to support the economy at a fiscal cost of 2 percent of GDP. They are considering further steps to address the shock and plan to invoke an escape clause under the Fiscal Responsibility Law (FRL). Going forward, and once the current crisis dissipates, the authorities intend to push ahead with a comprehensive Disaster Resilience Strategy (DRS) aimed at building resilience to natural disasters. They are also committed to further strengthening financial sector oversight to safeguard macro-financial stability.
Policy advice. Support measures should be effective, targeted, and temporary. They need to be embedded in a comprehensive fiscal plan with a robust financing strategy. Enhanced monitoring of financial sector vulnerabilities, including for AML/CFT to preserve correspondent banking relationships (CBRs), and capacity for prompt action to ameliorate the effects of the crisis is needed. The authorities should follow through on their plans to return to the FRL’s core parameters after the economy recovers and pursue a comprehensive strategy to build resilience to natural disasters (DRS) and other shocks.
Approved By
Krishna Srinivasan (WHD) and Craig Beaumont (SPR)
Discussions took place via conference calls on April 16–17, 2020. The team comprised Messrs. Lissovolik (head), Mitchell, and Salinas, and Ms. Perez Marulanda (all WHD) and Ms. Lariau (ICD). Mr. Sylvester (OED) joined the meetings. The IMF team held meetings with Minister for Public Utilities, Transport, Works, Infrastructure, and Implementation Hon. Gregory Bowen, Permanent Secretary of the Ministry of Finance Ms. Quinta Charles, Permanent Secretary of the Ministry of Health Mr. Charlton Henry, and other senior government officials. Mr. Landeta and Ms. Vishvesh supported the preparation of the staff report.
Contents
RECENT DEVELOPMENTS
IMPACT OF COVID-19
RISKS
AUTHORITIES’ POLICIES TO ADDRESS THE CRISIS
STAFF RECOMMENDATIONS
DEBT SUSTAINABILITY
MODALITIES OF SUPPORT
AUTHORITIES’ VIEWS
STAFF APPRAISAL
FIGURES
1. Real Sector Recent Developments
2. External Sector Recent Developments
3. Fiscal Developments
4. Financial Sector Developments
TABLES
1. Selected Economic Indicators and Financial Indicators, 2016–2025
2a. Operations of the Central Government (In millions of EC dollars)
2b. Operations of Central Government (In percent of GDP)
3. Balance of Payments summary, 2016–2025
4. Indicators of Capacity to Repay the Fund 2016–2025
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GRENADA
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY —DEBT SUSTAINABILIT ANALYSIS
April 21, 2020
Approved By
Krishna Srinivasan and Craig Beaumont (IMF) and Marcello Estevao (IDA)
Prepared by the staffs of the International Monetary Fund and the International Development Association.
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GRENADA
REQUEST FOR DISBURSMENT UNDER THE RAPID CREDIT FACILITY—SUPPLEMENTARY INFORMATION
April 27, 2020
Prepared By
Western Hemisphere Department
