by Linda Straker
- FRA Escape Clause triggered following Hurricane Beryl will remain in effect until 2027
- Escape Clause triggered in September 2024
- FROC report said fiscal balances deterioration due to Hurricane Beryl did not materialise
Finance Minister Dennis Cornwall has announced that the Escape Clause of the Fiscal Resilience Act (FRA), which was triggered following Hurricane Beryl, will remain in effect until 2027.
The Escape Clause of the Fiscal Resilience Act, which went into effect on 1 January 2024, mandates, among other things, that the government maintains a primary balance of at least 1.5% of Gross Domestic Product (GDP). Cornwall triggered the Escape Clause of the FRA in September 2024, approximately 2 months after the hurricane hit the state on 1 July 2024.
“We have said in earlier times that we had to suspend the Fiscal Resilience Rules to allow Grenada to rebuild itself. Coming out of Beryl, we have had the 16.5% restructuring of GDP, and we need to basically find the avenue to basically rebuild,” Cornwall said.
“All the housing that’s going on and so on, all the roads that we rebuilding back, all the other facilities that we have to put in place to make sure we can get back to the level where we were and move from there, it will cost us money and so on,” he said, announcing that Grenada will not have had to borrow money to do certain things if the category 4 hurricane did not hit. “So I can see that we need about 2 or 3 years of breathing space to allow us to basically recover to where we were prior to Beryl. So, yes, I am looking at maybe 2027 to talk about reinstating the fiscal rules.”
Cornwall said, “We are not doing so maliciously. We are doing it in conjunction with our partners out there, the World Bank, the IMF [International Monetary Fund], they are also working along with us and guiding us. We have the FROC; the FROC is one of the institutions that was created by Parliament to assist or to tell the people what is happening in Grenada.”
However, the Fiscal Resilience Oversight Committee (FROC) in its report for 2024 said that Central Government finances strengthened substantially in 2024 and the deterioration in the fiscal balances which was projected due to the impact of Hurricane Beryl, and which was included in the memorandum to support the activation of Section 9 of the FRA, did not materialise.
“This was attributable mainly to higher receipts from the IMA and proceeds from CCRIF despite the increase in total expenditure. Consequently, a primary surplus of 11.3% of GDP was recorded in 2024. Negative fiscal balances are projected for 2025, influenced by a fall-off in revenue and greater expenditure,” said the 2024 report, which was laid in the Lower House of Parliament in May 2025.
