Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

GRENADA

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.

______________________________________________________________________________ 69 Eastern Caribbean Central Bank