Grenada will receive US$22.4 million in emergency support from the International Monetary Fund (IMF).
The emergency financial assistance for Grenada was approved by the IMF executive board on Tuesday for disbursement under the Rapid Credit Facility. The amount payable represents 100% of Grenada’s quota under the RCF which is intended to support “macroeconomics stability and facilitate the subsequent economic recovery“.
Prime Minister and Minister of Finance, Dr. Keith Mitchell has welcomed the news of the imminent disbursement stating that the money will be used as budgetary support, given the adverse impact of the COVID-19 pandemic on the local economy coupled with increased expenditure to mitigate the impact of the disease.
Prime Minister Mitchell went on to state that even as they face the prospect of a significant drop in revenue collection due to the COVID-19, government moved rapidly to announce measures intended to bring relief to the population. The uncertainty about the potential duration of the crises meant that they also had to begin looking at funding options, therefore; confirmation of Grenada’s approval under the IMF Rapid Credit Facility is indeed welcoming news.
Grenada's OECS counterparts St. Lucia and Dominica have also been approved for funding under the RCF
A drop in fiscal revenues, combined with additional direct health and social expenditure will temporarily increase true fiscal deficit and financing needs. IMF support will cover some of these needs and allow the government to ease the impact on the population, such as upgrading public facilities and also providing social assistance to the vulnerable and adversely affected sectors.
Prime Minister Mitchell said Grenada will continue to examine all options for economic relief during this crisis. He said despite the remarkable performance of Grenada’s economy in recent years, the magnitude of the COVID-19 pandemic threatens to erode much of those gains. Therefore, as a matter of fact, he said as government is exploring options that will create additional fiscal space while they continue to provide relief for those most affected and initiate measures to stimulate economic activity.
The IMF financing is being provided to Grenada as a loan, but with very concessionary terms. The Prime Minister has indicated that the support of the international community will be paramount to re financing of Grenada’s fiscal operation this year in light of the impact of COVID-19.