On Budget Alert 6.3, Government Finances and the Economy, and Budget Alert Volume 3, by Ms. Laurel Bain
Grenada’s public finances are better served when they are examined by more than one pair of eyes, and Ms. Laurel Bain’s Budget Alert series is a welcome and increasingly important contribution to that examination.
Budget Alert 6.3, published on 18 September 2026, brings Eastern Caribbean Central Bank data and a practitioner’s command of the fiscal accounts to the 2026 Mid-Year Review and the EC$310.9 million Supplementary Budget.
This commentary engages with those submissions in the spirit in which they were offered: crediting what they establish, and identifying, respectfully, where the analysis stops short of the questions the country most needs answered.
What the Budget Alert Establishes
The most valuable element of Budget Alert 6.3 is its financing decomposition of the enlarged 2026 budget, reproduced here.
Table 1: Financing of the 2026 Budget (EC$ Millions)
This table settles several facts that should now be treated as common ground in the national conversation. Parliament has authorised an overall deficit, after grants, of EC$617.1 million for 2026. Its financing rests principally on the drawdown of Government reserves of EC$373.8 million.
That figure is virtually identical to the deposit drawdown of approximately EC$374 million that Dr. Patrick Antoine set out for viewers of The Bubb Report, derived independently from the budget documents, and the same is true of the debt and deficit arithmetic that follows.
Two analysts working separately, from different starting points, have arrived at the same numbers, which is the strongest corroboration the public can be offered.
Dr. Antoine brought to the discussion the scholarship for which he is known, as he does whenever he engages in the economic debate. The country is the better for his articulation, because it helps Grenadians understand their own finances and their own economy.
Budget Alert 6.3 further establishes that financing the Supplementary Budget raises Central Government debt by EC$190.8 million to EC$2,457.3 million, and its budget-time figures, Central Government debt of EC$2,266.5 million equal to 53.4 per cent of GDP, imply a GDP of roughly EC$4.24 billion, consistent with the denominators used in Dr. Antoine’s computations.
The submissions also fix the legislative record, approval by the House of Representatives on 2 September and by the Senate on 10 September 2026, and Budget Alert Volume 3 presents an instructive trajectory: in 2023 Grenada realised a higher than budgeted surplus, while three years later Parliament authorised an EC$617.1 million deficit.
Two further contributions deserve notice, because they concern the quality of the numbers on which all fiscal analysis stands. Budget Alert 6.3 asks whether the Marketing and National Importing Board remains a representative data source for agricultural production, and it calls for the activities of the creative economy to be properly classified within the assessment of GDP.
Both are sound measurement critiques, and both imply that the statistical foundation beneath the Government’s projections deserves more scrutiny than it receives.
Issue 1: What the Growth Chart Itself Reveals
Ms. Bain judges the projected 2026 growth rate of 3.3 per cent to be very conservative in light of the expansionary fiscal policy being pursued. Ms. Bain’s own chart, however, points in the opposite direction.
It shows growth of 6.2 per cent in 2025 falling to 3.3 per cent in 2026, and it shows this as having occurred in precisely the year of maximum fiscal stimulus and, as Ms. Bain notes, no major economic shock.
If an expansion of this scale coincides with growth cut in half, the reasonable inference is not that the forecast understates the economy but that the fiscal multiplier is weak, which is what economic theory would predict when the expenditure overrun is concentrated in goods and services, recurrent consumption with a high import content, rather than in capital formation.
Each additional borrowed dollar appears to be buying less growth than the dollar before it. The description of the forecast as conservative therefore sits uneasily with the evidence Ms. Bain herself presents.
Issue 2: The Missing Comparison with the IMF’s Projections
Ms. Bain reports the Government’s medium-term growth path of 4.3, 3.6 and 3.1 per cent for 2027 to 2029, drawn from the Medium-Term Economic and Fiscal Strategy Report, without setting beside it the IMF’s 2025 Article IV path of 3.1, 3.0 and 2.7 per cent. That comparison is not incidental.
The revenue projections that must finance the promised fiscal consolidation of 2027 are built on the higher path, and the gap between the two paths, roughly 1.2 percentage points in 2027 alone, translates, on a revenue base near a quarter of GDP, into revenue on the order of EC$12 million that may never arrive in that year.
An assessment of fiscal resilience that adopts the Government’s projections without testing them against the Fund’s own leaves the central forward-looking risk unexamined.
Issue 3: Reserves, Adequacy Is Not Resilience
Ms. Bain asks whether there are reserves to finance the deficit and concludes, on the evidence of Central Government deposits and high commercial banking liquidity, that there are. That answers the question of stock adequacy. It does not answer the question that matters for a hurricane-prone small island, which is what remains after the deficit has been financed while the next shock looms on the horizon.
Ms. Bain states the governing principle, with perfect accuracy, that reserves adequate to safeguard against shocks must be balanced against the use of savings for development but does not apply that principle to a year in which, by Ms. Bain’s own table, EC$373.8 million of reserves is being consumed, with the drawdown proceeding through the height of the hurricane season.
Nor can high liquidity in the commercial banking system substitute for the Treasury’s own buffers; that liquidity is the banking system’s cushion, not the Government’s.
Issue 4: Design-Build-Finance, Correct Accounting, Unasked Questions
The treatment of the EC$161 million Design-Build-Finance (DBF) component is technically careful. Netting it from the cash financing requirement is correct accounting, and the resulting cash requirement of EC$146.3 million for the Supplementary Budget is properly derived.
The framing, however, presents the DBF method as reducing the required cash outlays, which comes close to describing deferred debt as relief.
The questions that determine whether this financing serves the public interest are not asked: who the contractors are, what the repayment schedule provides, what effective financing cost is embedded in the contractors’ pricing, and why borrowing equivalent to roughly 3.8 per cent of GDP has been routed through procurement contracts rather than through a loan instrument laid before Parliament in the ordinary way.
Ms. Bain records that debt rises by EC$190.8 million but does not carry the arithmetic to its ratios, which imply Central Government debt near 58 per cent of GDP and public sector debt around 70 per cent, against the 65.7 per cent projected at budget time.
And the closing reference to keeping debt on track to achieve the debt target by 2035 accepts that date as given, when the official target has in fact drifted from 2030, in the IMF’s 2024 Article IV consultation, to 2033 in the 2025 consultation, to 2035 in the Mid-Year Review, five years of slippage across eighteen months of official documents.
Issue 5: The Questions the Submissions Leave Open
The Budget Alert analysis is financing-side analysis, scrupulous about where the money comes from and largely silent on what it buys and under what fiscal framework.
Five matters central to the 2026 story receive no treatment. The suspension of the fiscal rules is not mentioned, and with it the promised return to the rules in 2027, a return that now requires an improvement in the primary balance of roughly 12.3 points of GDP in a single year, an adjustment whose only precedent, the structural adjustment that followed 2013, was achieved over three years with IMF support and debt restructuring.
The composition of the expenditure overrun, with goods and services running 52.3 per cent above allocation, is not examined, nor is the distinction between one-off and recurring commitments.
And no regional comparison is offered: the EC$310.9 million Supplementary Budget amounts to 18.6 per cent of approved expenditure, against roughly 3.5 per cent in Guyana’s first supplementary and about 5 per cent in Trinidad and Tobago, in a year in which Grenada experienced neither disaster nor windfall.
One clarification will assist readers of both documents: the EC$456.1 million appearing in Budget Alert 6.3 is the cash financing requirement, the EC$617.1 million total less the EC$161 million DBF component, while the EC$456.1 million appearing in the Mid-Year Review is the primary deficit. The identity of the two figures is coincidence, and they measure different things.
Conclusion
The Budget Alert submissions deserve to be read and read carefully. They establish, from an independent and technically credible source, and now corroborated by Dr. Antoine’s independent computations, the facts on which the national conversation should now proceed: an EC$617.1 million authorised deficit, EC$373.8 million of the country’s reserves committed to financing it, and EC$190.8 million added to the Central Government debt.
Where the submissions stop short is in drawing the conclusions those facts invite on the resilience that remains once the buffers are spent and the credibility of the growth projections that must finance the promised 2027 consolidation.
And, too, on the transparency owed to Parliament for EC$161 million of deferred-payment borrowing, and on the fiscal rules whose suspension made all of this lawful and whose restoration is now a promise of extraordinary weight.
These are the questions to which future volumes of the Budget Alert could powerfully turn, and this commentator, for one, would welcome them.
Ms. Bain’s signature maxim holds that knowledge is power and experience is the greatest teacher. Grenada’s experience of 2026 is teaching an expensive lesson; the knowledge in these pages is offered so that the country need not learn it twice.
Michael Church is a former Grenada Minister of International Trade, Economic Development and Agriculture