by Linda Straker
- Less than EC$100 million in debt service payment
- Debt service payments of EC$ 4.1 million to 3 bilateral creditors suspended
At the end of 2020, Grenada’s public debt stood at 70.4% of GDP or EC$1.988 billion and multilateral creditors were the principal sources of external debt. They comprised 64.5% of the external portfolio while at the same time domestic debt stood at EC$457.1 million or 16.2% of GDP at the end of 2020.
According to the recent Ministry of Finance published “Debt Bulletin” there was less than EC$100 million in debt service payment. “In the final quarter of 2020, total actual debt service payments amounted to EC$89.1 million against a budgeted EC$104.0 million, 47.9% was external debt service and 52.1% domestic debt service.” The bulletin explained that that differences in budgeted and actual payments can be attributed primarily to late disbursements resulting in changes to forecasted payment schedules.
“The Debt Service Suspension Initiative and to a lesser extent, interest rate and exchange rate fluctuations.” The report explained that because of the DSSI, debt service payments to 3 of Government’s bilateral creditors were suspended for the duration of the DSSI, which was 1 May to 30 December 2020. The total agreed debt service suspended was EC$ 4.1 million.
Due to the Covid-19 pandemic, many countries across the world have been faced with unprecedented challenges. Consequently, on 15 April 2020, G-20 Finance Ministers endorsed the G20-DSSI, which came in response to the call by the World Bank and the IMF to grant amortisation and interest payment suspension to all International Development Association (IDA) countries, from bilateral creditors. Debt service is suspended once there is a formal request from countries that are benefitting from the IMF’s Rapid Credit Facility. This has been done to help manage the severe impact of the pandemic.
The government has developed the Medium-term Fiscal Framework (MTFF) for 2021-2023 and it will be used to support the execution of the public sector work programme as set out in the Medium-term Agenda (MTA) which is aligned to the national MTAP. The MTFF 2021-2023 has 3 specific components: a medium-term revenue strategy; an expenditure strategy; and a debt management strategy.
The Medium-term Debt Management Strategy among other things focuses on managing public debt in a manner that is consistent with ensuring that the budget is adequately funded at the lowest cost and within a manageable risk framework, and ensuring that public debt management operations support the establishment of a well-developed domestic debt market in the medium-to-long term.
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This is a good time to start educating our students about GDP as not many citizens understand what it means.
Grenada is very small and to have a GDP of 70.4% Is rather high regardless of the current economic climate considering we been given a stimulus package.