Fiscal Responsibility Legislation Escape Clause continues for 2022

by Linda Straker

• Escape Clause of Fiscal Responsible Legislation invoked for second year to increase spending efficiencies
• Announced at traditional throne speech delivered via video conference
• Escape Clause was first triggered in December 2020

Lingering effects of the Covid-19 pandemic has caused the Grenada Government to invoke the Escape Clause of the Fiscal Responsible Legislation for a second successive year as part of steps to increase spending efficiencies.

Governor-General Dame Cecile La Grenade made the announcement while delivering the traditional throne speech in the ceremonial opening of the Fifth Session of the Tenth Parliament on Friday, 15 October 2021.

“Sound financial and economic management play a pivotal role in maintaining economic stability and supporting growth and recovery. My government reaffirms its commitment to pursue sound financial and economic policies to limit the social and economic implications of the crisis and to foster a robust and sustainable recovery,” she told citizens.

Presenting the address via video conference after Members of both Houses approved her request to use technology to address the Parliament, the Head of State said that despite the many challenges facing the country because of Covid-19, the Government will continue to take steps to increase spending efficiencies while boosting capital investments.

“To facilitate this, my government will, for a second time, invoke the Escape Clause under the Fiscal Responsibility Law in 2022. My government also wishes to reaffirm its commitment to return to the rules and targets under the Fiscal Responsibility Law once the pandemic abates,” she assured.

The Escape Clause was first triggered in December 2020, this move provides the Government with the latitude to effectively administer the affairs of the country without complying with the mandate of certain clauses in the Fiscal Responsibility Law.

“The Minister may by Order suspend, for a period not exceeding one fiscal year, fiscal rules, targets and corrective measures under sections 7 and 8, where– (a) a natural disaster, public health epidemic, or war as a result of which a state of emergency has been declared by the Governor-General pursuant to section 17 (1) of the Constitution,” said the Fiscal Responsibility Law.

The 2020 Fiscal Responsibility Oversight Committee which is chaired by Dr Angus Friday said that the escape clause was properly invoked. Once the Minister gazettes the escape clause order, a recovery plan must be presented to the Members of the Houses of Parliament.

The theme for this Session of Parliament is: “Towards Vision 2035: Protecting Lives, Safeguarding Livelihoods; and Investing for Growth and Resilience.” Besides, invoking the Escape Clause, Government, according to the Governor-General, other strategic objectives that will guide the way forward include initiatives that impact various sectors directly or indirectly.

These include boosting competitiveness and diversifying the economy and export base; investment in health to improve health care delivery and build resilience to health crises; Accelerating human capital development in education by investing in infrastructure, ICT infusion and skills development and accelerating the infusion of technology into the economy to fast-track digital transformation.

There will also be increased investment in agriculture and the light manufacturing sector to boost food and nutrition security and to reduce our huge food import bill; Continued efforts to build resilience against external shocks, including to strengthen structural, financial and post-disaster resilience as well as preserving and expanding social safety nets, to protect and empower those most affected by the pandemic.