Economy & Trade, Headlines, Latin America & the Caribbean

GRENADA-ECONOMY: Country Braces Itself For The Tough Times

Michael Bascombe

ST. GEORGE'S, Dec 12 1996 (IPS) - Despite government assurances that its 1997 budget will keep inflation under control and guarantee growth in the economy, many Grenadians say they are bracing themselves for economic hardships in the year ahead.

“You can’t tell me there is economic progress when roads are taking more than two and three years to build and prices have not changed for the better,” says 34-year-old Dwayne Burke, a construction worker.

“What is important to me is not how much money government wants to spend but rather how much services we could get and whether I will have to pay more at the groceries,” he says.

Despite government’s upbeat attitude, the Keith Mitchell administration is also coming in for criticism from the farming sector in light of the destruction caused to non-traditional crops by the pink mealy bug and the falling prices on the international market.

The attack of the pink mealy bug, an Asian pest which found its way into the western hemisphere through Grenada in late 1994, all but devastated crops and plant life in the island before the infestation was stabilised early this year.

Observers say government’s policy will have to be directed towards the revitalisation of the agricultural sector designed largely to earn foreign exchange and enhance food self-sufficiency.

The pace of real growth in the economy will be slowed by the decline in the agriculture sector brought about by falling prices, low production and poor quality produce, economists say.

“There is no clear policy to guide us (farmers) as to the way forward, except to say they have budgeted money to help us,” says Claney Williams.

The 1997 budget package presented to the nation last week amounts to 130 million dollars and government plans to spend about 77 million dollars on the recurrent side.

Capital spending is in the range of 52 million dollars. Twenty- eight million dollars will be spent on the infrastructure, nine million dollars on agriculture and another five million dollars on education.

To the relief of many Grenadians who were bracing themselves for tax increases, government does not plan to raise its revenue through taxation, saying there are limitations to the extent to which increased taxation could be used to increase income without adversely affecting the level of economic activity in the country.

The government however plans to step up its tax collection system. Mitchell has warned of increased measures aimed at tax compliance.

Last April the government abolished income tax while imposing a five percent tax on electricity and telephone rates. The previous administration had instituted a 10 percent income tax for those earning between 3,700 and 9,000 dollars. For those earning more than 9,000 dollars per year the tax rate was 15 percent.

But like many ordinary Grenadians the parliamentary opposition leader, George Brizan says the budget provides for “gloom and doom” for Grenadians and threaten the stability of the country.

“There are no provisions to help public workers to cushion the effects of rising cost of living and I predict more economic crisis in 1997,” says Brizan.

“The 1997 budget is a non-event with no specifics but only rhetoric and ‘ole talk.’ The budget makes no attempt to deal with the real issue confronting our people today, the issue of the spiralling cost of living,” says opposition member of Parliament, Francis Alexis.

“I will enjoy destroying that budget, ripping it apart in the week coming.”

But not everyone holds that view, and some are holding on to the promises of government. “I listened to the budget presentation and found it very challenging and given our economic circumstances and the conditions in the world economy, we have a lot of work to do,” says Cecelia Quashie of the National Women’s Organisation.

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