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A view of St George's, the capital of Grenada. (Photo: Britannica)

COVID-19 hits revenue collection in Grenada

A view of St George's, the capital of Grenada. (Photo: Britannica)

…programmes for poor and vulnerable still a priority

The Government of Grenada says the coronavirus crisis continues to undermine its ability to collect revenue and, therefore, estimates that it will collect less than the EC$181 million that it previously projected.

In his address to the nation on Monday, August 17 2020, Prime Minister and Minister of Finance Dr Keith Mitchell said, “[The] Government has revised downwards revenue initially proposed in the 2020 budget, given the estimated 40 per cent or more in reduction on average in revenue collected by the Inland Revenue and Customs Departments and other areas of revenue generation.”

Dr Keith Mitchell, prime minister and minister of fincance, Grenada (File photo)

Faced with this reality, he further pointed out that FY2020 expenditure must now reflect the current situation. “This means that the budgets of most ministries will have to be adjusted to deal with the reduction in revenue. In addition, measures such as streamlining discretionary recurrent expenditure, stricter manpower management, and waste reduction initiatives must be implemented,” Mitchell explained.

The prime minister also promised that the Government will increase its drive to aggressively implement capital projects funded with external grants and loans in order to create jobs and stimulate the economy.

An earlier update

Earlier this month, Trade Minister Oliver Joseph shared that the Grenada Government had to adjust 2020 budgetary projections because of the negative effects of COVID-19. He also outlined the implications that lockdowns, which began in March, had on the island economy.

Grenada’s Minister of Trade Oliver Joseph (File photo)

“As a small island state with an open economy where international trade accounts for 48 per cent of current revenue, the closure of ports, hotels and St George’s University has seriously reduced Government’s ability to collect projected revenue,” the trade minister said during the virtual post-Cabinet briefing on Thursday, August 6, 2020.

After recording its first COVID-19 patient in March, the Government of Grenada declared a State of Emergency, which included a curfew and lockdown of the country, as part of measures to curb the spread of virus.

“Because we had taken a decision to close our port and reduce business significantly, the government revenues are seriously undermined,” Joseph said.

“As a small island state with an open economy where international trade accounts for 48 per cent of current revenue, the closure of ports, hotels and St George’s University has seriously reduced Government’s ability to collect projected revenue.”

Oliver Joseph, minister of trade, Grenada

He reasoned, too, that when the Government prepared the 2020 Estimate of Revenue and Expenditure, in November 2019, it could not account for the impact of COVID-19 since it was not present.

A benefit for the poor and vulnerable

“Now it is here, we have to deal with it. Government continues to meet its obligation to workers and other sectors despite the shortfall in revenue,” the trade minister said, adding that the Dr Keith Mitchell Government had no plans to cut social programmes, especially those that benefit the poor and vulnerable in society.

With the Government projecting a fall in income by 50 per cent, Joseph said the budget would see changes in accordance with rules set out in the Fiscal Responsibility legislation and the Public Finance Management Act.

Grenada’s Inland Revenue headquarters. (File photo)

“The Fiscal Responsibility Act sets certain targets and has a number of rules in place governing how Government spends money. Because of the current situation, you will find instances where there is need for adjustments and, therefore, we will have to look at the target that was set under the Fiscal Responsibility Act and what our response should be.”

“It will be done in line with the Fiscal Responsibility Act and the Public Finance Management Act. All our actions will be done in compliance with these two acts,” he said., reiterating that the “Government’s full intention is to reactivate the economy through job creation, but as such there is a priority list with agriculture and education high on the agenda.”