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2018 Annual Economic and Financial Review
GRENADA
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Eastern Caribbean Central Bank
potential of damaging the capital stock and
constraining activity in the productive sectors.
On the fiscal front, lower than projected
inflows from the CBI programme could
restrain grant financing for capital projects
and hence, limit construction activity, which
is a major driver of growth. The likely
additional expenditure related to pension
reform along with the introduction of a
National Health Insurance Scheme, could
increase fiscal costs and make the FRL targets
unreachable. Furthermore, capacity
constraints such as weaknesses in project
management and the lack of effective
coordination among executing departments,
could continue to hamper the pace of capital
project implementation. Despite above
average growth rates over the last five years,
unemployment remains high in Grenada,
which continues to be a major challenge for
the authorities. The impact of these threats can
be lessened by the formulation of a carefully
crafted plan to improve economic and
infrastructure resilience. Such a plan should
entail mitigating the impacts of climate change
on the productive sectors, the implementation
of the land use and zoning policy and ensuring
that building codes are adhered to. The
authorities should continue to exercise fiscal
prudence that will allow for some flexibility to
absorb unexpected fiscal costs or adverse
shocks. In addition, efforts to tackle capacity
constraints should be intensified. This will
augur well for the pace of project
implementation and could raise GDP growth
above the level of 2018, given the number of
major projects that were announced to come
on stream in 2019.