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Grenada’s economy bounces back amidst global challenges

Leon Bullen - an Economist representing ECCB on the FROC reveals positive economic outlook for 2023

Amidst global turmoil, Grenada stands tall as an economic beacon, with the Fiscal Responsibility Oversight Committee (FROC), which is tasked with monitoring the government’s fiscal performance in keeping with measures enshrined in the Fiscal Resilience legislation reporting a remarkable growth trajectory.

The latest FROC report for 2023 highlights a staggering “5.5%” economic growth, signaling a resilient bounce-back to pre-COVID-19 levels.

Leon Bullen, an Economist representing the Eastern Caribbean Central Bank (ECCB) on the FROC Committee, revealed a promising economic landscape highlighting encouraging trends such as declining inflation rates, improved labor market conditions, and a stable banking sector, buoyed by high liquidity and minimal non-performing loans.

According to Bullen, key drivers of Grenada’s economic resurgence include the construction sector, which expanded by 12.6%, and the thriving hotel and restaurant industries, experiencing a growth rate of 15.6%.

He said that “(the) transport, storage and communication sectors (also grew) by 5.2%, and, we also saw some positive contribution from (the) education (sector) of 3.8%.”

However, the ECCB economist noted that “there was some contraction in the agricultural sector of 6% on account of adverse weather conditions” and that 2023 witnessed a modest uptick in public sector debt, though offset by an impressive 8.8% surge in gross domestic product.

The FROC report revealed that Grenada’s public sector debt inclusive of the Petro Caribe debt rose by 3.1% or $80.7million dollars to 2.69 billion dollars in 2023 compared with 2.62 billion dollars in 2022.

However the country experienced a sizable increase in its gross domestic product, which Bullen noted has “contracted by 4.1% percentage points to 74.6 percent down from 78.7%.”

Despite a notable increase in the import bill, which rose to “$589 million” in 2023, trade in services enjoyed a surplus of $1.1 billion, an improvement of 11.6%.

Although high on praise of the government’s fiscal performance in 2023, FROC Chairperson, Laurel Bain has underscored the need for enhanced fiscal transparency.

The committee has identified several areas for improvement in fiscal transparency including publishing the audited public accounts and reports on tax concessions and the National Transformation Fund, aligning with legislative mandates.

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“The report on tax concessions which should also be published, the report on the National Transformation Fund should be published all in accordance with the Public Finance Management Act,” said Bain, who also recommended that an end of year fiscal report be published although such a requirement is not mandated in law.

“This is not in any of the legislation. However, at the time of the presentation of the national budget, the Estimates of Revenue and Expenditure, the information contains estimated data for the year under review. The actually outcome could be significantly different from the estimated outcome and hence in the New Year it is necessary to publish an end of year fiscal report,” she explained.

The FROC Chair said there is also a scope for improved data management, for timely update and comprehensive data, particularly, for preparing national accounts reviewed by the Committee.

“That data,” according to Bain, “should be presented in a manner that allows for ease of analyses.”

Looking ahead, Bain said that FROC is also advocating for strengthened data management and inter-sectoral linkages to drive productivity and facilitate a conducive business environment.

“In terms of growth and transformation, the Committee recommended that along with strengthening the sectors there is need to further strengthen the linkages among the sectors,” she said.

“There is also the need to develop indicators that will measure productivity and the ease of doing business as these could also affect the growth and transformation of the economy,” she added.

The report on the performance of the economy during 2023, was expected to go before both Houses of Parliament for scrutiny on Thursday and Friday.

It is the second report to be put together by this current Committee of Bain that was appointed by the Congress administration following the 2022 general election.

The other Committee members are attorneys Lisa Taylor and Annette Henry, along with Accountant Randy Lewis.

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