2014年-IMF国际货币组织全球_Grenada_First_Review_Under_the_Extended_Credit_Facility_Arrangement_and_Financing_Assurances_Review_77页_1mb

GRENADA: First Review Under the Extended Credit Facility Arrangement and Financing Assurances Review

Core Content Summary

This document outlines the results of the first review under the Extended Credit Facility (ECF) arrangement and Financing Assurances Review for Grenada, which was approved by the IMF Executive Board on June 26, 2014, for a total of SDR 14.04 million (about US$21.7 million, 120% of quota). The review includes the Staff Report, a Staff Statement, and a Press Release, all of which provide an overview of economic developments, program performance, and policy discussions.

Main Objectives of the ECF Program

• Improve competitiveness and medium-term growth prospects
• Restore fiscal and debt sustainability
• Strengthen financial stability

Recent Economic Developments

• The economy is slowly recovering from a prolonged recession, but domestic demand remains weak
• Growth in 2013 was 2.4% (market prices), higher than previously reported, due to the construction of a large resort
• Tourism arrivals increased strongly in 2014 following the resort's opening
• Consumer prices declined by 1.2% on average in the first nine months of 2014, with deflationary pressures persisting
• Real effective exchange rate (REER) depreciated significantly since mid-2013 (6% by mid-2014), improving price competitiveness
• Net international reserves rose to US$152 million (17½% of GDP) by end-August 2014, up from US$133 million at end-2013

Program Performance

• Fiscal consolidation is proceeding as planned, with all quantitative performance criteria for the first review met
• Primary balance registered a small surplus (0.1% of GDP) in the year-to-June 2014, compared to a programmed deficit of 1.5%
• Primary spending was 1.3% of GDP below the performance criterion, reflecting strong fiscal performance
• Social spending was slightly below the indicative floor due to delays in implementing a new targeting tool for the SEED program
• Wage freeze successfully contained the public wage bill, which fell further than planned
• Expenditure arrears were reduced, with supplier arrears down to 3% of GDP by September 2014
• Debt arrears were also under control, with no new arrears incurred outside restructuring negotiations

Structural Reforms

• Public Financial Management (PFM) framework was overhauled with the approval of a new PFM Act, meeting the end-August 2014 structural benchmark
• Reforms to statutory bodies and SOEs are underway, with a strategic plan approved by the Cabinet. Two structural benchmarks were met or expected to be met, and two more are to be finalized soon
• Investment Law was drafted with technical assistance from the World Bank and financial support from DFID, aiming to streamline and simplify the investment regime
• Tax incentive reforms are well advanced, with the goal of enhancing transparency and reducing uncertainty in the investment environment
• Treasury Single Account (TSA) is progressing, with the goal of being fully operational by end-2015

Policy Discussions

• No substantive changes to the macroeconomic framework were proposed
• The fiscal outlook for 2014-15 remains unchanged, with the program’s fiscal targets still in place
• New structural conditionality focuses on strengthening the fiscal policy framework through regulations, debt management, and revenue administration reforms
• Citizenship-by-Investment (CBI) program is a key structural reform, with potential to boost investment and growth
• Equity investment in St. George's University is expected to provide positive spillovers to economic growth

Risks and Outlook

• Downside risks include a weak global recovery, continued fiscal consolidation, appreciation of the U.S. dollar, and potential natural disasters
• Upside risks include the successful implementation of the CBI program and the equity investment in St. George's University
• Inflation is expected to remain low or slightly negative in the short term, but will rise due to lower global commodity prices and the impact of the U.S. dollar appreciation
• Growth is projected to remain positive but below potential over the next two years, with an average of 1.5% in 2015-17 and recovery to 2-2.5% in the medium term

Financing and Implementation

• The ECF arrangement was approved for a three-year period, with SDR 2.04 million disbursed upon approval and an additional SDR 2 million expected upon the completion of the first review
• The investment promotion framework is being modernized, with the new Investment Law expected to be considered by the Senate in November 2014
• The program is in its early stages, and implementation risks remain, particularly in the area of structural reforms

Key Documents

• Staff Report: Completed on November 21, 2014, following discussions with Grenada officials
• Staff Statement: Updated information on recent developments was released on December 9, 2014
• Press Release: Includes a statement by the IMF Executive Board Chair
• Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding are included in the package

Conclusion

The first review of the ECF program for Grenada indicates a strong start in policy implementation, with fiscal targets met and structural reforms progressing. The economy is slowly recovering, but challenges remain, particularly in the private sector and public institutions. The program is on track, but further reforms and implementation are needed to ensure long-term fiscal sustainability and economic growth.