St George’s – The International Monetary Fund (IMF) Friday said Grenada is navigating the recovery from the twin shocks of the pandemic and a rise in energy and food prices and that the island’s real gross domestic product (GDP) is estimated to have expanded by 6.4 per cent in 2022.
In a statement following an IMF mission to the Caribbean island, the Washington-based financial institution said that Grenada’s decisive policy response, supported by the policy space that was created from past fiscal prudence, provided space to cushion the impact of these shocks.
It said as the recovery takes hold, the immediate policy priorities are to return to the fiscal rules to preserve credibility and to deepen structural reforms to promote robust, inclusive, and sustainable growth.
The IMF said enhancing the fiscal framework and increasing public expenditure efficiency will help create fiscal buffers against future shocks and make space for the country’s development and resilience building needs.
“Measures to increase competitiveness, such as promoting gender equality, investing in skills development, and expanding digitalisation, would help boost economic growth.”
The IMF said that the economic recovery is taking hold and that tourism activity has rebounded strongly, with stay-over tourist arrivals reaching 80 per cent of their pre-crisis levels, and private and public construction projects also contributed to the growth.
“There was a sharp fall in agricultural production, however, largely due to adverse weather. Inflation rose modestly to 2.6 per cent on average in 2022 despite the surge in global food and energy prices, as the authorities’ policy response, such as the temporary removal of the petrol tax and of the value added tax (VAT) on basic food items, helped dampen the inflation pressure from higher global prices.”
The IMF said that the fiscal balance excluding interest payments is estimated to have maintained a surplus of 2.6 per cent of GDP, while central government and government guaranteed debt declined to 64.6 per cent of GDP in 2022.
“The real economy is projected to continue expanding in 2023, but at a slower pace of 3.9 per cent as the tourism recovery matures and public investment scales back from a very high level.” (CMC)