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2018 Annual Economic and Financial Review
GRENADA
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Eastern Caribbean Central Bank
to remain subdued in line the forecast for
lower oil prices by the EIA, barring any
sudden adverse shocks.
The merchandise trade deficit is projected to
widen as the importation of construction
materials and other manufactured goods
continue to trend upwards. The increase in
imports payments will be partly offset by
greater travel receipts.
According to the 2019 Budget Estimates of
Revenue and Expenditure, the central
government is expected to record an overall
surplus of 3.8 per cent of GDP and a primary
surplus of 6.0 per cent of GDP. These
balances are slightly below the performance
obtained in 2018 but nevertheless the primary
balance should surpass the target in the FRA
of 3.5 per cent of GDP. The attainment of
this primary surplus will support a further
reduction in the central government debt level.
Despite the announced 2.0 percentage points
reduction in personal income tax and
corporate tax, current revenue is expected to
outperform the intake in 2018. This is on the
basis of continued improvements in tax
administration and a general uptick in
economic activity. Current expenditure is also
likely to increase due to the payment of a
4.0 per cent salary increase to public officers,
the final portion of the agreement negotiated
with trade unions for the triennium 2017-
2019. This is expected to increase the wage
bill by $10.3m. Additionally, public workers
will also receive annual increments.
Notwithstanding, these payments the wage bill
is likely to remain within the FRL target of
9.0 per cent of GDP. Other increases in
current expenditure will emanate from goods
and services, interest payments and transfer
and subsidies. The pace of implementation of
the capital programme is expected to intensify,
thus leading to a higher level of capital
expenditure in 2019. This will be tempered
by an increase in capital grants.
There are a number of threats that could
hinder the realization of the growth
forecast.
Chief among them is lower than
anticipated global economic growth due to
trade tensions, geopolitical conflicts, upward
shocks to oil prices and uncertainties related
to Brexit. Less buoyancy in the global
economy due to those factors can adversely
affect the demand for tourism services and
goods. The country is also highly vulnerable
to natural disasters in the form of hurricanes,
droughts, floods and storms as well as
volcanic activity. These disasters have the