Grenada and the International Monetary Fund

The island nation of Grenada is the smallest country in the Western Hemisphere. A sovereign state that is located in the West Indies in the Caribbean Sea towards the southern end of the Grenadine island chain, the nation is composed of the island Grenada along with six smaller islands that lie north of it.[1] Grenada is known as the "Isle of Spice" for its production of nutmeg and mace crops (the nutmeg even being featured on the nation's official flag), for which it is one of the world's largest exporters and contributes vastly to the country's GDP.[2] Grenada is a developing country that relies heavily on the support of other nations and organizations to finance many of its government projects. One of Grenada's partners is the International Monetary Fund.

The national flag of Grenada. Adopted after Grenada separated from the United Kingdom on February 7, 1974.

Relations with the International Monetary Fund

The nation of Grenada joined the International Monetary Fund (IMF) on August 27, 1975.[3] Since then, Grenada has been under heavy review with the IMF, who have made Grenada eligible for special drawing rights. Special drawing rights (abbreviated SDR) are supplementary foreign exchange reserve assets defined and maintained by the IMF. Based on Grenada's performances, both economically and policy wise, Grenada can be eligible for more SDRs. In the previous years, Grenada and the IMF have been working closely to grow and sustain their economy.[4] [5]

History of Lending
(In Thousands of SDRs) [6]
Facility Date of Arrangement Expiration Date Amount Agreed Amount Drawn Amount Outstanding
Extended Credit Facility Jun 26, 2014 Jun 25, 2017 14,040 8,040 8,040
Extended Credit Facility Apr 18, 2010 Apr 17, 2013 8,775 2,525 2,398
Extended Credit Facility Apr 17, 2006 Apr 13, 2010 16,380 16,380 10,715
Extended Fund Facility Aug 24, 1983 Jan 23, 1984 13,500 1,125 0
Standby Arrangement May 11, 1981 May 10, 1982 3,425 2,900 0
Standby Arrangement Nov 06, 1979 Dec 31, 1980 651 651 0
Standby Arrangement Jun 30, 1976 Dec 31, 1976 225 225 0
Standby Arrangement Sep 29, 1975 Jun 30, 1976 500 500 0
Total 57,496 32,346 21,152

Grenada and the IMF have been lending since September 29, 1975.

The nutmeg and the mace is one of Grenada's largest spice export.

Economic Overview of Grenada

The economy of Grenada is small and tourism is its largest foreign exchange earner.[7] Grenada shares a common central bank with Organisation of Eastern Caribbean States (OECS),[8] and holds the East Caribbean dollars as its currency.[9] After tourism, Grenada relies heavily on agricultural exports, mainly different types of spices. The nutmeg, wheat flours, and various fruits makes up majority of Grenada's exports (per 2017).[10] Grenada has suffered many economic drawbacks since becoming a nation. A major concern is the rising fiscal deficit and a heavy debt crippling its government operations. Hurricane Ivan in 2004 led to serious setbacks for Grenada, along with the Great Recession in 2008 as the United States of America is one of Grenada's largest trade partners.[11] Grenada was listed nine spaces above the bottom when it came to total debt in 126 developing countries in 2017.[12]

2019 Article IV Consultation with Grenada

The most recent publishing of the Article IV Consultation conducted by the IMF showed some favorable reviews towards Grenada. The press release shows great progress for Grenada: including a GDP growth of 3.1% and Quota (SDR) of 16.4 million. The IMF notes that the increase of GDP productivity through construction projects and tourism. Grenada has also been able to keep inflation low and bank credit positive.[13] One negative mark noted was that unemployment, although declining, still remains high at 21.7%.[14] A statement from the Executive Board Statement states:

"... welcomed Grenada’s continued strong economic and fiscal performance and sustained debt reduction, underpinned by sound policies. They emphasized that further policy improvements and public support for reforms are critical to achieve higher and broad-based medium-term growth, further reduce unemployment, entrench debt sustainability, and strengthen financial stability."[15]

Grenada has also pushed to focus its concerns on the growing worry of climate change. The destruction brought on upon by Hurricane Ivan was devastating,[16] but with the more powerful natural disasters accruing due to the warming of Earth's atmosphere,[17] Grenada could quite possibly be destroyed or even underwater. Many actions are being taken place to counteract the effects of climate change that are seen in the policies Grenada has been implementing this year.

References
  1. "Grenada", Wikipedia, 2019-12-02, retrieved 2019-12-03
  2. "Grenada", Wikipedia, 2019-12-02, retrieved 2019-12-03
  3. "Grenada : 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Grenada". IMF. Retrieved 2019-12-03.
  4. Kirton, Claremont D. (July 1989). "Grenada and the IMF: The PRG's Extended Fund Facility Program, 1983". Latin American Perspectives. 16 (3): 121–144. doi:10.1177/0094582X8901600307. ISSN 0094-582X. S2CID 143232150.
  5. Mike Xin Li, Saji Thomas, Tamon Asonuma, Michael G. Papaioannou, Eriko Togo (2018). "Sovereign Debt Restructurings in Grenada: Causes, Processes, Outcomes, and Lessons Learned". Journal of Banking and Financial Economics. 10 (2): 67–105. ISSN 2353-6845.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  6. "History of Lending Arrangements: Grenada". www.imf.org. Retrieved 2019-12-03.
  7. "Grenada", Wikipedia, 2019-12-02, retrieved 2019-12-03
  8. "Organisation of Eastern Caribbean States". oecs.org. Retrieved 2019-12-11.
  9. "Grenada", Wikipedia, 2019-12-02, retrieved 2019-12-03
  10. "Products exported by Grenada (2017)". Oec - the Observatory of Economic Complexity. Retrieved 2019-12-03.
  11. "OEC - Grenada (GRD) Exports, Imports, and Trade Partners". oec.world. Retrieved 2019-12-03.
  12. "Grenada", Wikipedia, 2019-12-02, retrieved 2019-12-04
  13. "IMF Executive Board Concludes 2019 Article IV Consultation with Grenada". IMF. Retrieved 2019-12-04.
  14. "IMF Executive Board Concludes 2019 Article IV Consultation with Grenada". IMF. Retrieved 2019-12-04.
  15. "IMF Executive Board Concludes 2019 Article IV Consultation with Grenada". IMF. Retrieved 2019-12-04.
  16. "Hurricane Ivan devastates Grenada". The Guardian. Associated Press. 2004-09-09. ISSN 0261-3077. Retrieved 2019-12-11.
  17. "How climate change is making hurricanes more dangerous » Yale Climate Connections". Yale Climate Connections. 2019-07-08. Retrieved 2019-12-11.
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