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Business Update IMF Staff 2022 Virtual Staff completes visit to Grenada TOU

IMF Staff 2022 Virtual Staff completes visit to Grenada

IMF Staff 2022 Virtual Staff completes visit to Grenada

January 14, 2022

The end-of-mission press release includes statements from IMF staff teams that provide preliminary findings after a visit to the country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF Executive Board. This will not result in a mission board discussion.

                    <ul class="pr-points"><li>The Grenadian economy is slowly recovering from the epidemic.  With implications for recovery in the tourism and offshore education sectors, the main risk for the outlook is the prolonged epidemic.  
  • Extensive response from the authorities has been crucial in limiting the impact of the epidemic. In the near term, fiscal policy aims to continue to weaken, build resilience and support aggregate demand.
  • The impact of the epidemic on the financial sector has so far been limited, partly reflecting Lone Moratoria. The enhanced frequency and intensity of oversight of credit unions and insurance companies by the national nonbank regulator is welcome and should continue for months to come.
  • Washington DC:
    The International Monetary Fund (IMF) team, led by Ms. Hoyden Lynn, held a virtual meeting with Grenadian authorities on January 6-12 to discuss recent economic developments and follow the 2020 request for policy priorities and disbursements raised during the 2019 Article IV consultation. Under the Rapid Credit facility.

    At the end of the mission, Mrs. Lynn issued the following statement:

    “The Grenadian economy is slowly recovering from the epidemic. The recovery is led by construction and agriculture, which supports the expected expansion of about 5 percent of real production in 2022. Following a slow recovery, tourism initially responded positively to the elimination of domestic quarantine requirements by the end of 2021. Food, fuel and transportation prices are expected to continue to push up inflation, which also reflects the impact of global supply chain tensions. The current account deficit has widened, as weak tourism revenue, high fuel prices and demand for imports from construction offset a recovery in agricultural exports. Public debt is projected to decline to 68.9 percent of GDP in 2021 (from 71.7 percent in 2020) and support is expected to continue to decline through economic recovery.

    “With the effects of tourism and student return at St. George’s University (SGU), the main threat to the outlook is the prolonged epidemic. Ongoing outbreaks globally and locally, with slower vaccination rates (only one-third of the total population, or even less than half of the eligible population, have received two doses due to vaccine shrinkage) may emphasize tourism recovery and students. ‘Return to SGU campus (tourism and offshore education account for a quarter of the economy). This may then require additional government spending, which exacerbates financial and external imbalances.

    “Extensive response from the authorities has been crucial in limiting the impact of the epidemic. In 2020-21, escape clauses were properly triggered under the Fiscal Responsibility Act and two stimulus packages were launched (2.4 percent of GDP and 1.2 percent of GDP, respectively) that provide targeted support, including wage subsidies, income support, social relocation and additional health. Is. Costs. Given the current epidemic, the 2022 budget aims to increase social spending and capital spending to support weak, resilient and aggregate demand, with an escape clause for the third year. The hard-won credibility of Granada’s financial structure can be further enhanced through continuous efforts to strengthen revenue administration, public investment management, and fiscal governance and transparency.

    “The impact on the financial sector has so far been limited, partly reflecting the loan moratorium. Lending growth has been moderate, especially for businesses and individuals who are exposed to the hardest hit areas of offshore education and tourism. Case-by-case workouts The loans under Moratoria are slowly coming down as progress progresses, but still represents a significant share of total loans for some banks by the end of 2021. Non-performing loans are on the rise despite low levels. Provisions between credit unions will need to be strengthened if non-performing loans continue to grow. The enhanced frequency and intensity of oversight of credit unions and insurance companies by the national nonbank regulator is welcome and should continue for months to come.

    “Authorities are committed to building resilience to natural disasters and climate change. Admirable progress has been made in the areas of maritime and coastal protection, disaster resilience in schools and registration of public property to prepare for proper insurance and maintenance. The epidemic has also prompted calls for further improvement in competitiveness to advance the authorities’ objectives of promoting sustainable growth and job creation.

    “The mission team thanks the authorities for the open and productive discussions and expresses solidarity with the people and government of Granada as they respond to the COVID epidemic.”

                    <div class="imf-com">
                        <h5>IMF Communications Department</h5>
    
    Media relations

    Press Officer: Randa Elnagar

    Phone: +1 202 623-7100Email: [email protected]

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    @IMFSpokesperson

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