by Linda Straker
- Fiscal Resilience Act (FRA) Escape Clause went into effect on 6 September
- FRA Escape Clause anticipated to continue for 2025
- Government’s priority will be building resilience in aftermath of Hurricane Beryl
Finance Minister Dennis Cornwall has announced that Government anticipates the Escape Clause of the Fiscal Resilience Act (FRA) will continue for the year 2025 because Government will still be recovering from the impact of Hurricane Beryl.
Addressing the opening ceremony of the Ministry of Finance budget retreat on Tuesday, 24 September, Cornwall announced that the Escape Clause of the FRA which went into effect on 6 September, will be significant for recovery.
“To support the immediate recovery in the aftermath of Hurricane Beryl, we have taken the decision to temporary suspend the public debt target and primary balance rules under the Fiscal Resilience Act, we anticipated a further suspension will be required in 2025 as recovery and reconstruction efforts accelerate,” said Cornwall who is currently the Acting Prime Minister.
As of 6 September, Grenada activated the suspension law of the Fiscal Resilience Act which provides for the finance minister to suspend the requirements for public debt target and primary balance rule during a fiscal year when the condition for suspension is applicable. Among the conditions are a disaster arising from a natural hazard as declared by an authorised national, regional or international agency, or any other disaster declared pursuant to Section 55 of the Disaster Management Act, 2023. The passage of Hurricane Beryl is a natural disaster.
According to the Fiscal Resilience (Suspension of the Public Debt Target and Primary Balance Rule) Order or SRO 25 which was published in an extraordinary publication of the Government Gazette on 9 September but dated 6 September, and signed by Finance Minister Cornwall, Hurricane Beryl devastated parts of the State of Grenada and this constitutes a major economic shock and the suspension will be applicable for the fiscal year January to December 2024.
The FRA provides for the Ministry of Finance to take certain responsibilities if the suspension order is published in the first half or second half of any given year. The legislation states that when the suspension order is published within the second half of the year, “the medium term economic and fiscal strategy report accompanying the national budget for the new fiscal year shall include the measures proposed to facilitate compliance with the public debt target and primary balance rule in the new fiscal year, including the size and nature of the revenue and expenditure measures for the national budget for the new fiscal year.”
Cornwall told participants attending the retreat that Government’s priority will be building resilience in the aftermath of Hurricane Beryl and its focus must remain steadfast. “Accordingly, the 2025 budget should prioritise anything that elevates health, education and social welfare. By investing in our people, we are laying the groundwork for a fair and a more prosperous Grenada,” he said, pointing out that each programme should be designed to enhance the quality of life of citizens and address critical local needs with compassion.
“We should continue our efforts to diversify our economy. Our focus for 2025 should focus on us presenting a dynamic and competitive economy while showing that our infrastructure can withstand the challenges that are caused by climate change and other extreme weather events.” His opening remarks were broadcast live via the Government Information Service (GIS) social media platform.
