Grenada: Request For Disbursement Under The Rapid Credit Facility—Press Release; Staff Report; Staff Statement; And Statement By The Executive Director For Grenada
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International Monetary Fund. Western Hemisphere Dept.
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Publication Date:
13 May 2020
eISBN:
9781513543635
ISBN:
9781513543635
Language:
English
Keywords:
ISCR; CR; staff appraisal; request proceeds; IMF financing support; transparency obligation; Grenadian authorities; staff's assessment; COVID-19; Balance of payments need; Fiscal stance; Caribbean; Global; financing need; government financing situation; emergency spending; financing of balance of payments; financing requirement; debt forgiveness
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Request for Disbursement Under the Rapid Credit Facility; Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Grenada;

Abstract

Request for Disbursement Under the Rapid Credit Facility; Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Grenada;

Recent Developments

1. The Grenadian economy enjoyed a favorable multi-year macroeconomic performance prior to the COVID-19 outbreak. Growth averaged almost 5 percent in 2014–19, well above the 20-year historical average of 2¾ percent. Economic activity was supported by robust tourism inflows and solid expansion in construction and agriculture, though the latter was subject to high weather-related volatility. Employment creation picked up, although the unemployment rate (15 percent in Q1 2019) remained unacceptably high. An impressive fiscal adjustment of 9½ percent of GDP during 2014–17 anchored public debt sustainability, lowering the central government debt-to-GDP ratio from 108 percent in 2013 to 59 percent in 2019. The DSA in the 2019 Article IV report concluded that – if not for the remaining arrears to three official bilateral creditors – Grenada’s debt was sustainable. The emerging fiscal space under the FRL provided scope for a well-balanced scale up of public investment to build resilience to natural disasters and climate change within a comprehensive disaster resilience strategy.

uA01fig01

Real growth per sector, 2014–19

(Average annual growth rate)

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

Source: ECCB and IMF Staff estimates.
uA01fig02

CPI and Components

(In percent, year-on-year growth)

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

Source: ECCB.

2. The external current account is estimated to have recorded a deficit of 15¾ percent of GDP in 2019. While the current account deficit significantly reflects the recent, mostly FDI-financed, construction boom and the presence of an offshore (St. George’s) university, there remains a competitiveness gap. Grenada’s tourism costs are competitive within the Caribbean, but the World Bank’s Doing Business Ranking suggests extensive non-price competitiveness challenges, particularly in the non-tourism sector. Grenada’s fiscal reserves were around 8½ percent of GDP at the end of 2019 and remained broadly at these levels during Q1 2020.

uA01fig03

Week at the Beach Index 1/

(Index as of December 2019)

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

Source: IMF Staff Estimates1/ Measures average cost of a 7-day-tn'p in a country‘s beach destinations. Index is a composition of average hotel price (3–4 'bubble' rating) from TripAdvisor and over 80 million crowdsourced data on meals, taxi fares, water, coffee and beer. The database covers 155 beach destinations from 56 countries.

3. The domestic financial sector entered the COVID-19 outbreak with sizable buffers. In 2019, banks, which are regulated and supervised at the regional level, reported capital and liquidity that are significantly above regulatory norms and NPLs (2.2 percent of loans) that are the lowest in the ECCU region. Private sector bank credit growth has resumed since 2017 after a protracted deleveraging following the global financial crisis. There are, however, concerns that the domestically regulated credit union sector has been expanding excessively rapidly and that all financial intermediaries have significant and rising exposure to the real estate and construction sectors. In 2019, deposits and assets of credit unions increased by 14 percent and 15 percent respectively, while their NPLs remained steady at 5¼ percent of loans.

uA01fig04

Banks’ Capital Adequacy and Asset Quality1

(In percent)

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

1 Capital adequacy ratio is only for domestic banks Source: ECCB
uA01fig05

Credit Growth to Private Sector

(In percent)

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

Sources: ECCB and IMF Staff calculations.

Impact of COVID-19

4. The COVID-19 pandemic has severely affected the Grenadian economy despite proactive steps taken by the government aimed at containment and mitigation. Grenada has witnessed 14 confirmed coronavirus infections in the country, but thankfully no fatalities until now. Even before the first confirmed case, the government had ordered a closure of all educational institutions and cessation of non-essential economic and social activities, alongside measures focused on improving hygiene and social distancing. Broad-based consultations with key sectoral stakeholders in mid-March revealed plummeting hotel occupancy rates, mounting requests for moratoria on debt servicing, dwindling construction and investment activity, and other sharp adverse ripple effects of the outbreak across all economic sectors.

5. The economic outlook is challenging in the short term. Prior to the COVID-19 crisis Grenada’s key macroeconomic indicators were expected to remain broadly at 2019 levels. However, updated projections suggest that tourism exports could decline by around 50 percent year-on-year in 2020, with a near cessation of arrivals in Q2 and Q3. Most of the students at the St. George’s University have left the country and, even though the fees for the first semester were already paid and some courses continued to be delivered online, a resumption of classes is not expected for some time. While uncertainties are very large, growth is now projected to decline sharply to -9.2 percent in 2020. The projections assume a modest recovery beginning in Q4 2020 leading to a perceptible rebound in 2021, when the economy is projected to grow by about 6¼ percent.

6. The pandemic has resulted in a significant actual short-term BOP need. The sharp decline in tourism exports will be partially offset by a fall in imported inputs, particularly food and tourism-related services, and terms-of-trade gains from lower commodity prices. Additional BOP needs stem from an expected decline in FDI and remittances. Grenada’s projected BOP need in 2020, is around US$110 million, or 10 percent of GDP.

Grenada: Balance of Payments Financing Gap

article image
Source: MoF, ECCB, and Fund staff estimates.

7. Given the strong prior fiscal position, the government financing situation looks manageable if the fiscal liquidity is well-protected and extreme shock scenarios do not materialize. The primary fiscal balance is expected to decline to -0.7 percent of GDP in 2020 (from a surplus of 6.8 percent in 2019). Total revenue and grants are projected to fall by ½ percent of GDP, with a particularly sharp decline in import tax inflows, which would be partially offset by increased grants. Primary spending is projected to increase by around 7 percent of GDP due to enhanced support to the health sector and the broader economy. Reflecting these trends, the gross public financing need is expected to surge to around 12½ percent of GDP in 2020.1 Still, in this scenario, the government’s financing needs are well covered by (i) end-2019 government deposits of 8½ percent of GDP and (ii) expected 2020 disbursements, with some 3½ percent of GDP of external inflows and a part of domestic financing having been already secured as of early April.2 The assessment crucially hinges on that the more adverse risks from COVID-19 (as explained below) do not materialize and fiscal liquidity remains well-managed.

Grenada: Gross Financing of the Central Government

(In percent of GDP)

article image
Sources: Country authorities and Fund staff estimates.

Defined as the sum of the primary deficit and debt service (there are some methodological differences with the definition in the DSA.

Risks

8. Risks center around the possibility of a greater-than-expected depth and duration of the pandemic putting further pressure on economic activity. The outlook is subject to a large degree of uncertainty, with significant downside risks. The COVID-19 spread, both globally and locally, could evolve along a more negative trajectory than assumed by staff. A larger-than-expected global contraction and lingering weakness in leisure travel may create a more protracted halt in tourism. Also, an increase in domestic infection rates could extend supply- and demand-side disruptions across the domestic economy. In this light, staff’s projection of a solid economic recovery in 2021–22 is subject to significant downside risks. An additional major risk is Grenada’s vulnerability to natural disasters, whose interaction with the COVID-19 shock could be particularly challenging to address.

9. A more adverse economic scenario would accentuate Grenada’s financing vulnerabilities. The external and fiscal financing needs may be higher than expected, due to an underestimation of the impact of COVID-19, but also due to uncertainty over trade and tax elasticities, which may be different from those that apply in normal times and amplify fiscal and external liquidity risks. Furthermore, a greater contraction in imports could further undercut tax revenues. On the expenditure side, a weaker economy may increase the need to support the private sector, including support to the financial sector to address potential liquidity and solvency issues. Additional pressures would emerge should there be a sudden stop in government and/or private sector financing flows. The fiscal financing outlook could significantly deteriorate should a recent judgment over the government’s dispute with a foreign equity investor in the Grenlec electricity company result in a significant outflow of liquidity in the near term.3 Furthermore, AML/CFT vulnerabilities could put additional pressure on CBRs and affect remittances.

Authorities’ Policies to Address the Crisis

10. The government has announced fiscal support to the economy and is seeking to deploy its fiscal buffers for an effective response to the crisis. On March 20, 2020, the authorities announced a package of mostly fiscal measures to mitigate the impact of COVID-19, which envisions: (i) increased health care spending (with the initial increase in health spending estimated at 0.2 percent of GDP);4 (ii) government payroll support to the affected sectors and individuals; (iii) expansion of government employment programs and unemployment benefits; and (iv) reduced or deferred payment of some taxes and social contributions. The package’s cost is estimated at 2 percent of GDP, assuming that the measures are in place for 3 months, as announced by the authorities.5 The broader fiscal policy stance is reflected in the supplementary budget that was approved on April 17. In addition to internalizing the above package, the budget includes 2.2 percent of GDP in contingencies for health and related spending as well as social protection to address the fall-out from a possible worsening of the pandemic. Concurrently, the fiscal stance also includes a smaller but more realistic capital expenditure allocation that prioritizes numerous small projects geared at supporting employment at the community level for which funding was secured pre-2020.6 In this context, the authorities have temporarily invoked the FRL’s “public health epidemic” escape clause to accommodate the fiscal effects of the crisis, which would pave the way for additional measures should these be necessary. The substantial fiscal liquidity buffers will be key to backstopping a response should the shock be more prolonged and funding additional health care spending that will likely be needed.

Grenada: Estimates of health-related COVID-19 spending

(In million of EC$)

article image
Source: Grenada authorities and Fund staff calculations.

11. Financial sector measures to mitigate the COVID-19 crisis have been rolled out by both the ECCB and the government. The ECCB announced a program of relief available for commercial bank customers through: (i) loan moratoria for 6 months, extendable upon review; and (ii) a waiver of late fees and charges to eligible customers during this period. Several other measures are being considered by the ECCB. Given social distancing and possible changes in banking hall services without prior notice, the ECCB has also strongly encouraged banks to ensure the availability of all alternative banking services delivery channels and to reduce disincentives (e.g., fees) to customers using them. The government mirrored those measures by negotiating a conditional moratorium on principal and interest payments with financial institutions, initially for a 3-month period. The above measures are largely consistent with good practices on regulatory measures in a crisis.

Staff Recommendations

12. The government’s steps need to be well-targeted and temporary and embedded in a comprehensive fiscal plan with an effective financing strategy. The authorities’ announced plan is a step in the right direction, but additional fiscal support to the economy may be needed. Increased health spending needs to be allocated to areas that are most effective at containing the outbreak. Policy support measures and employment programs should ensure compatibility with the principle of social distancing. All the above-mentioned economic support measures need to be fully costed, minimizing off-budget fiscal operations. The Ministry of Finance should act as an effective gatekeeper for a centralized assessment of fiscal costs with accountability for monitoring, managing, and reporting actual and contingent liabilities. The fiscal response needs to rely on efficient cash flow and liquidity management. Contingency plans should be put in place should the crisis become more severe than currently projected, with prompt activation based on high-frequency monitoring of fiscal and financial data. The authorities’ fiscal liquidity buffers should be deployed to enhance social protection, particularly for the most vulnerable, including in the informal economy.

13. The prior action on the announcement of a robust liquidity strategy has been satisfied. Such a strategy is critical to backstopping risks from the COVID-19 outbreak. The liquidity strategy involves the following elements: (i) the government invokes the FRL’s escape clause, announces a costing of the March 20 measures in the supplementary budget, and outlines follow-up contingency steps for the COVID-19 emergency; (ii) in parallel, the Cabinet adopts a conclusion that outlines principles of management of fiscal liquidity until end-2020 or until the medical emergency is lifted (whichever is later); (iii) such principles would state that government liquidity would be used primarily to finance outlays envisioned under the 2020 budget, further steps on COVID-related emergency spending, or spending on additional significant adverse shocks (e.g., a natural disaster), deferring less urgent spending for a post-emergency period. The Prime Minister, who is also the Minister of Finance, announced a plan committing to these elements on April 17, in the context of his presentation of the supplementary budget to parliament.

14. The authorities need to intensify efforts to secure financial stability. In parallel with the ECCB’s measures to safeguard stability of the banking system, GARFIN, the national supervisor for non-banking institutions, should step up monitoring, identify risks, conduct stress testing, and develop contingency plans. GARFIN should also require high-frequency reporting, review the institutions’ plans for business continuity, and provide guidance on supervisory expectations. If the shock persists or risks materialize, GARFIN, while refraining from generalized forbearance measures, could provide temporary adjustments to capital and liquidity requirements and encourage financial institutions to reach out to distressed borrowers to offer temporary relief. Collaboration with the ECCB and national supervisors should be deepened to inform the monitoring and coordinated response. In tandem with the ECCB’s toolkit and resources, the government should be ready to use its fiscal buffers to backstop financial sector stability. Risk-based AML/CFT supervision should be enhanced to reduce pressure on CBRs and remittances.

15. Once the COVID-19 crisis dissipates, the government should return to the FRL core parameters and re-build its buffers. As economic recovery takes hold, the FRL’s escape clause should be withdrawn (with the timing of the withdrawal dependent on the duration of the shock), requiring that the primary surpluses return to, or rise above, the 3½ percent of GDP floor. This would permit a sustained debt reduction toward the 55 percent of GDP debt threshold. This strategy should be supported by fiscal adjustment measures, if needed, and a recalibration of the spending growth rule to internalize a withdrawal of the temporary outlays that were used to address the COVID-19 pandemic. Continued PFM improvements and efficient asset/liability management are needed to support budget processes and improved control of contingent liabilities, including through an operationalization of a broader definition of public debt under the FRL.

16. In parallel, the authorities should pursue a comprehensive strategy to build resilience to natural disasters and other emergencies. The draft Disaster Resilience Strategy (DRS)7 of March 2020, prepared with input from Fund staff and other stakeholders, envisions a 15-year plan around 3 main pillars: (i) a scale up of public investment in resilient infrastructure; (ii) adequate saving funds and insurance mechanisms within a layered framework to protect against natural disasters; and (iii) contingency plans and social protection programs to manage the post-disaster response. The three pillars would be imbedded in a sustainable macro-fiscal framework and underpinned by increased donor support. The DRS could be potentially augmented and re-balanced to deal with other types of major shocks such as medical emergencies.

Debt Sustainability

17. The Debt Sustainability Analysis (DSA) suggests that Grenada’s public debt is sustainable, despite the DSA’s “in debt distress” rating (see DSA). The latter rating results from the remaining unresolved arrears to official bilateral creditors of some 1.8 percent of GDP and is unrelated to the underlying debt dynamics, which are expected to be on a downward path. While the large contraction in output and the deterioration of the fiscal balance would cause an uptick in the debt ratio from 59 to 68¾ percent of GDP this year, the subsequent economic recovery should reverse this rise. The primary fiscal surplus is projected to increase above the FRL’s 3.5 percent of GDP floor as the economy normalizes, anchoring debt sustainability. On current projections, the FRL’s key 55 percent of GDP debt threshold would be reached by 2024. Risks to these debt dynamics include natural disasters, the possibility of a more prolonged impact of COVID-19, a one-off increase in debt from the Grenlec-related payment in case it is debt-financed. The authorities are working to strengthen resilience to natural disasters within an integrated DRS that should bolster Grenada’s economic performance and reduce the risks around the long-term path for the debt-to-GDP ratio.

Modalities of Support

18. Grenada authorities request financial support to Grenada of 100 percent of quota (SDR 16.4 million) under the RCF. Grenada meets the eligibility requirements for support under the RCF. It has an urgent balance of payments need which, if not addressed, will result in immediate and severe economic disruption. It is also not feasible at this stage to put in place an upper-credit-tranche Fund program due to the urgent needs facing the country as well as the high degree of uncertainty regarding the duration and scale of the COVID-19 pandemic. Grenada is assessed as having sustainable debt and capacity to repay the Fund (see Table 4). The authorities have indicated their intention to cooperate with the Fund and pursue economic policies that are appropriate for addressing the impact of COVID-19. Grenada owes arrears to Algeria, Libya, and Trinidad and Tobago. Algeria and Libya have requested more time to consent to the IMF financing notwithstanding these arrears. An update will be circulated to the Executive Board prior to the scheduled Board consideration.

19. The RCF access is motivated by Grenada’s actual and urgent BoP need of US$110 million. Staff considers access of 100 percent of quota under the RCF to be appropriate. Grenada does not currently have an IMF arrangement. Access of 100 percent of quota is within the applicable access limits under the PRGT. The proposed access of 100 percent of quota is 20 percent of the estimated BOP need (after accounting for the already disbursed World Bank’s Development Policy Credit operation of US$20 million of early-2020). It is expected to be filled by drawing on the authorities’ international reserves and support from donors. The latter would include World Bank’s emergency financing of $2.5 million for COVID-19-related spending. Additional support from the Caribbean Development Bank (CDB), the ECCB, the World Bank, and several other donors, whose extent and modalities are yet to be fully determined, is also expected.8

Grenada: Financing of Balance of Payments Need

article image

20. RCF disbursements will be made to the ECCB and transferred to the Grenadian government to provide for fiscal financing and support COVID-19 emergency spending.

21. The authorities are committed to collaborating with IMF staff in undertaking a safeguards assessment. The ECCB is subject to a safeguards assessment every four years. The most recent assessment was completed in 2016. The ECCB will provide Fund staff with the necessary central bank audit reports and has authorized the external auditors to hold discussions with staff. The authorities commit to holding all foreign exchange from the IMF disbursement at the ECCB, pending use.

22. Risks to Grenada’s capacity to repay the Fund are mitigated by the authorities’ good track record of policy implementation, firm resolve to adhere to the FRL, and a commitment to a continued close dialogue with the Fund. The government’s liquidity plan would be a key component of COVID-19 crisis containment that would mitigate the risks of a yet-more significant economic disruption creating fiscal sustainability concerns. The most recent DSA indicates that Grenada’s debt trajectory is sustainable. Including the proposed disbursement under the RCF, the total amount of outstanding credit from the Fund as of April 27 would amount to SDR 30½ million, equivalent to 186 percent of quota. Repayment obligations to the Fund would remain below 0.6 percent of exports of goods and services, and less than 2 percent of net international reserves. The authorities are committed to a proper targeting and management of the funds received from the IMF, including through providing accurate and timely information to the public on its use.

Authorities’ Views

23. The authorities emphasized the severity of the shock and the urgency of the BoP need facing Grenada. While broadly sharing staff’s views on the outlook, they thought that the decline in tourism in 2020 could be yet more pronounced and the subsequent recovery more gradual than that assumed by staff. They considered prudent fiscal management and adherence to fundamental rules as key factors that enabled Grenada to ease its policy stance in line with the FRL’s escape clause provisions, thereby assisting the people in times of greatest need. To this effect, a supplementary budget for 2020 was approved on April 17. In the context of presenting the supplementary budget, the authorities announced plans to use aid from development partners for essential spending related to the COVID-19 impact. They also committed to managing government liquidity tightly, maintaining adequate buffers for further shocks, and refraining from non-emergency spending in the remainder of 2020.

24. The authorities plan to comply with and further upgrade policy frameworks and support growth, while safeguarding macroeconomic stability. They highlighted recent progress in improving capacity to execute public investment, which would usefully underpin higher public investment during the 2020 economic contraction. They indicated that their significant fiscal reserve buffers would be used to backstop macroeconomic and financial stability. Once there is a significant economic recovery, the authorities envision a return to the core parameters of the FRL in line with the provisions that govern its escape clause, thereby rebuilding any used buffers. In the longer term, they pointed to the new 2020–35 national sustainable development plan as a strategic document laying the basis for sustained, resilient, and inclusive growth. They also planned to continue progress in elaborating a comprehensive disaster resilience strategy.

Staff Appraisal

25. Grenada faces significant policy challenges due to the COVID-19 outbreak. The pandemic has interrupted a positive economic trajectory. The financing need is urgent while the duration of the shock remains uncertain. Even after the pandemic recedes, there is a risk that tourism, education, and other sectors would take a long time to recover to the pre-pandemic levels. Grenada may also be negatively affected by the drying up of external financing sources given the ongoing disruption to global financial markets. The country’s high vulnerability to natural disasters adds to the growth, fiscal, and liquidity risks. At the same time, Grenada’s strong fiscal and macroeconomic position prior to the COVID-19 emergency significantly mitigates these risks.

26. The authorities are committed to maintaining macroeconomic stability and adhering to their rule-based fiscal framework. They stand ready to act, once the immediate health crisis moderates and the economy recovers, to take measures as needed to return to the parameters of the FRL. The government is also working to mobilize donor grants to fund investments in climate resilience and to address institutional and capacity gaps in its draft pilot Disaster Resilience Strategy.

27. Staff supports the authorities’ request for a disbursement under the Rapid Credit Facility in the amount of SDR 16.4 million (100 percent of quota). The request for a disbursement in the amount of 100 percent of quota is justified by the depth and severity of the COVID-19 shock that has created an urgent BOP need. Utilizing this disbursement as direct budget support is motivated by the pressing healthcare and social needs faced by the country. The proposed disbursement is consistent with Grenada’s debt sustainability and capacity to repay the Fund.

Figure 1.
Figure 1.

Grenada: Real Sector Developments

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

Sources: Country authorities and IMF Staff estimates.
Figure 2.
Figure 2.

Grenada: External Sector Developments

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

Sources: Country authorities and IMF Staff Estimates and Calculations.
Figure 3.
Figure 3.

Grenada: Fiscal Developments

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

Sources: Country authorities and IMF Staff Estimates.
Figure 4.
Figure 4.

Grenada: Financial Sector Developments

Citation: IMF Staff Country Reports 2020, 161; 10.5089/9781513543635.002.A001

Sources: Country authorities and IMF Staff Estimates.
Table 1.

Grenada: Selected Economic Indicators and Financial Indicators, 2016–2025

article image
Sources: Ministry of Finance; Eastern Caribbean Central Bank; United Nations, Human Development Report 2008; World Bank WDI 2007; and Fund staff estimates and projections.

The output gap is based on an HP-filter decomposition of actual and projected real GDP into cycle and trend (with lamda equal to 6.25) and end-of-period trend growth assumed at 2.7 percent. In some periods, including 2016, trend growth is higher than actual growth, causing the output gap to shrink even when the actual growth is above long-term trend growth.

Includes Citizenship-by-Invesetment (CBI) related non-tax revenue.

The Chart of Accounts for expenditure classification was revised in 2016 from GFSM 1986 format to GFSM 2014 format.

Includes the impact of the debt restructuring agreement for the 2025 bonds.

Table 2a.

Grenada: Operations of the Central Government

(In millions of EC dollars)

article image
Sources: Country authorities and Fund staff estimates.

The Chart of Accounts for expenditure classification was revised in 2016 from GFSM 1986 format to GFSM

The primary balances include non-tax revenue from the Citizenship by Investment program.

Table 2b.

Grenada: Operations of Central Government

(In percent of GDP)

article image
Sources: Country authorities and Fund staff estimates.

The Chart of Accounts for expenditure classification was revised in 2016 from GFSM 1986 format to GFSM 2014 format.

The primary balances include non-tax revenue from the Citizenship by Investment program.

Table 3.

Grenada: Balance of Payments Summary, 2016–2025

article image
Sources: Ministry of Finance and Planning; ECCB; and Fund staff estimates and projections.

Debt forgiveness as a result of debt restructuring.

Living expenses of international students at St Georges University. Increase in 2016 represents upward revision.

Comprises foreign liabilities of commercial banks and other liabilities under the “Other investment” item of financial account.

Table 4.

Grenada: Indicators of Capacity to Repay the Fund 2016–2025

(In millions of SDRs, year-end, unless otherwise indicated)

article image
Source: Staff estimates and projections.
1

Within the year, the fiscal financing needs are tilted toward Q2, which concentrates some 40 percent of full-year external amortization payments, but the end-2019 fiscal reserves provide a sufficient cushion.

2

The World Bank’s DPC was disbursed in February 2020 and the CAT DDO was approved in January 2020, though it remains to be triggered by the authorities in line with their emergency-related protocols.

3

The recently announced judgment by the World Bank’s International Center for Settlement of Investment Disputes requires the government to pay a foreign investor US$71.5 million or 6 percent of GDP for a 50 percent stake in Grenlec, although the timeframe and modality of payments would depend on several factors, including possible appeals, agreement between the parties, or any eventual enforcement proceedings.

4

The initial measures were to be allocated for the purchase of medical equipment and materials, including for testing, personal protective gear for hospitals, and securing suitable premises for quarantine and isolation. Additional, much more substantial, estimates for medical expenses are being worked out, such as for the need to increase Grenada’s limited Intensive Care Unit capacity.

5

A smaller part of the package involves temporary measures such as tax deferrals for Q2 of about 0.4 percent of GDP.

6

The higher capital expenditure relative to the 2019 outcome reflects improvements in capacity and staffing in late 2019, which has been removed due to constraints to implementation.

7

Grenada is a pilot case for preparing a Disaster Resilience Strategy, approved as part of the Board discussion on May 1, 2019 on Building Resilience in Countries Vulnerable to Natural Disasters.

8

The authorities indicated a preference to retain the buffer provided by the World Bank’s CAT-DDO operation for the event of a natural disaster shock, but they will continue to assess the situation during the year.

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Cover IMF Staff Country Reports
Grenada: Request for Disbursement Under the Rapid Credit Facility; Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Grenada
Author:
International Monetary Fund. Western Hemisphere Dept.
Volume/Issue:
Volume 2020: Issue 161
Publisher:
International Monetary Fund
ISBN:
9781513543635
ISSN:
1934-7685
Pages:
41
DOI:
https://doi.org/10.5089/9781513543635.002

Real growth per sector, 2014–19

(Average annual growth rate)

CPI and Components

(In percent, year-on-year growth)

Week at the Beach Index 1/

(Index as of December 2019)

Banks’ Capital Adequacy and Asset Quality1

(In percent)

Credit Growth to Private Sector

(In percent)
Figure 1.

Grenada: Real Sector Developments
Figure 2.

Grenada: External Sector Developments
Figure 3.

Grenada: Fiscal Developments
Figure 4.

Grenada: Financial Sector Developments