by Linda Straker
- Fiscal Responsibility Act, Public Finance Management Act, and Public Debt Management Act approved in 2015
- Senator Adrian Thomas is Leader of Government Business in Senate
- Government will seek international institutions’ input to amend Fiscal Responsibility Act
The Dickon Mitchell administration has announced that it will be approaching international institutions in the new year seeking their input to amend Grenada’s 2015 Fiscal Responsibility Act (FRA).
“For the first time since Covid-19, Grenada will return to the FRA, the fiscal responsibility legislation that will guide this budget. This administration is accustomed to law and order, so we have no problem with that. We are a law-abiding citizen; we promote that, so if it means that we have to follow the FRA, we will do that, this is in our DNA, in our culture and we will be happy to be guided accordingly,” said Senator Adrian Thomas, who is the Leader of Government Business in the Upper House or Senate.
He announced this while presenting the 2023 Estimates of Revenue and Expenditure for debate among members of the Upper House on Monday, 19 December 2022. “We are cognisant of the fact that this Government has always sought technical assistance from the IMF and World Bank to make sound economic decisions. We are quite aware that when the FRA came into existence, it was a different ball game. It was Covid. It was different economic issues that we have to deal with.”
Thomas incorrectly claimed that the 2015 law was nowhere around for the last couple of years.
“The FRA was nowhere around for the last couple of years but today we have to abide by it, so we will be seeking the advice of the international institutions to let them know that the FRA has to be tweaked, has to be adjusted and we will need your assistance because this FRA has to be aligned with what we have to say because we want to move forward. We have no problem in collaborating with the relevant institution to make this happen,” he told the House.
The specific objectives of the FRA are “to establish a transparent and accountable rule-based fiscal responsibility framework in Grenada, to guide and anchor fiscal policy during the budget process, to ensure that Government finances are sustainable over the short, medium, and long term, consistent with a sustainable level of debt, and for related matters” according to the explanatory notes of the legislation.
The FRA was one of the new financial legislations enacted and enforced by the former NNP administration after it won the 2013 General Election. In 2015, Government approved the Fiscal Responsibility Act, the Public Finance Management Act, and the Public Debt Management Act No. 28 of 2015, all essential to the then Government’s 3-year homegrown Structural Adjustment Programme.
Among the rules and targets under the FRA are that the rate of growth of the primary expenditure of the Central Government, and of every covered public entity, shall not exceed 2% in real terms in any fiscal year when adjusted by the preceding year’s inflation rate. The Minister of Finance shall take appropriate measures to ensure that the ratio of expenditure on the wage bill shall not exceed 9% of GDP, and the Minister shall ensure that contingent liabilities arising from, as a result of, or in connection with public-private partnerships shall not exceed 5% of GDP.
