by Linda Straker
- Suspension of Escape Clause of Fiscal Responsibility Act triggered from 2020 to 2022
- In 2023, ruling Government replaced Fiscal Responsibility Act with Fiscal Resilience Act
- Finance Minister informed that Grenada will continue with suspension of Escape Clause of the Fiscal Resilience Act until 2027
Prime Minister Dickon Mitchell has told several world leaders that Grenada never had to suspend its debt payment or engage in calamitous financial restructuring during the Covid-19 pandemic, or following the devastation from Hurricane Beryl in July 2024.
The prime minister at the time was a member of a panel, including British Virgin Islands (BVI) Premier Dr the Honourable Natalio Wheatley, that engaged in a High-Level Dialogue at the 2026 World Governments Summit earlier in the week. He told the discussion that although Grenada’s financial services are not on the same level as the BVI, the Citizenship by Investment (CBI) programme — rebranded as the Investment Migration Agency (IMA) — have contributed significantly to the economy and that contribution is responsible for the island not suspending its debt nor its fiscal legislation.
However, Finance Minister Dennis Cornwall informed the Lower House of Parliament when he presented the 2026 Budget statement that Grenada will continue with the suspension of the Escape Clause of the Fiscal Resilience Act until 2027.
Research of parliament documents since April 2020 showed that Grenada triggered the suspension of the Escape Clause of the Fiscal Responsibility Act. The triggering by the former New National Party (NNP) covered the period 2020 to 2022.
In 2023, the ruling National Democratic Congress (NDC) Government repealed the Responsibility Act and replaced it with the Fiscal Resilience Act. In the aftermath of Hurricane Beryl, in September 2024, Finance Minister Cornwall announced that the Escape Clause of the Resilience Act would be triggered. So far, it has been in effect for 2024, 2025 and 2026, with the anticipation that it will be revoked for 2027. This means that from 2020 to 2026, only the year 2023 the fiscal rule applied.
With regards to debt suspension, in the Paris Club Debt Service Suspension Initiative (DSSI) provided to Grenada in May 2020, at the request of the former NNP administration, the country had to pay interest and penalty for the period in which the debt payment was suspended by the informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by borrower countries. The DSSI granted the country suspension of debt service between May and December 2020.
In August 2024, the government triggered the hurricane clause and deferred 2030 bondholders’ payments. Grenada announced that it would defer more than US$$17 million in total payments on government bondholders because of the devastation caused to the nation following the passage of Hurricane Beryl on 1 July. The estimated loss from the hurricane was US$30 million.
