Dr Keith Mitchell, prime minister, Grenada (File photo)

Grenada Gov’t acknowledges debt owed to public servants, urges restraint

Dr Keith Mitchell, prime minister, Grenada (File photo)

The Grenada Government says it cannot afford to pay public officers a four per cent salary increase that is “rightly due” to them at this time, saying that the ongoing coronavirus (COVID-19) pandemic has had a major effect on the economy of the country.

In a radio and television broadcast last week Wednesday, Prime Minister Dr Keith Mitchell said it pained him to see that some of the teachers and the leadership of the Grenada Union of Teachers (GUT) felt the “need to engage in protest action in the middle of a global health crisis and during a State of Emergency (SOE), and breaking the laws of the land while doing so.

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

“Government has repeatedly reaffirmed that the four per cent increase is rightly due to public officers, but what we are saying is that we cannot afford to pay now,” Mitchell said, noting that his Administration had in the past “negotiated in good faith, pushing for timely agreement with trade unions so that public officers can receive their increases on time and not long after they were due.

“This is the same Government that concluded negotiations with the trade unions in November 2019, agreeing to a four per cent hike for each year for the period, 2020 to 2022; promptly started the payments in January 2020, and continued to pay the increases throughout 2020, despite the sharp decline in revenue for most of the year.

“This is the same Government that paid all public officers their salaries and allowances, in full and on time during the early stages of the pandemic, when most public officers, including teachers were at home. However, the inescapable reality now is that the significant shortfall in revenue caused by the pandemic, has necessitated tighter controls on Government’s expenditure on recurrent budget items such as wages and salaries.”

Mitchell told the nation that by the same token, it is true that his Administration has incurred significant additional expenses in recent months, some brought about by the fallout from the pandemic and the need to provide support to various sectors of the economy and some, such as the repurchasing of the Grenada Electricity Company (GRENLEC) shares which was necessitated by an arbitration ruling that required action within a stipulated time.

The Grenada Electricity Services Limited building (Photo: The World News)

“Did you know that failure to honour the arbitration ruling could have led to action being taken to put a hold on all Government’s money? Had this been allowed to happen, government services and spending would have been disrupted, even the monthly payment of salaries to public officers. It was the decisive action of Government to repurchase the shares that avoided this possible interruption in its operations.”

He said that the country must understand the distinct difference between recurrent and capital expenditure.

“Recurrent or continuing expenditure includes wages and utility bills which are paid from revenue generated within the current fiscal year. The capital side of the budget provides for expenditure on development projects, asset acquisition or other such initiative that represents an investment and fosters development.

“The responsible fiscal management policies adopted and maintained by this government, prevents us from using money allocated in the annual budget for capital expenditure, on recurrent expenses. Failure to abide by this will jeopardise millions of dollars in additional funding that Grenada can receive from donor agencies and development partners.”

Mitchell said that last year, Grenada benefited from EC$133 million (One EC dollar=US$0.37 cents)  in financing support and debt relief from the International Monetary Fund (IMF), World Bank, G20, Caribbean Development Bank (CDB) and the Eastern Caribbean Central Bank (ECCB).

(Photo: WIC News)

He said so far, this year, the island has been able to attract EC$78 million in external support.

“These sums have helped to facilitate the additional spending Government has incurred in providing relief to some sectors, purchasing the necessary protective gear for frontline workers, investing in the educational infrastructure to ensure our young people are not left behind, and creating a safer environment in schools, among other areas.

“Expenditure continues to exceed revenue collection, therefore Government must continue to aggressively mobilise additional resources to meet expenditure demands in 2021. I ask this: Are we willing to sacrifice the desires of a few when the future of an entire population is at stake?”

He said the reality of the current fiscal situation is that the financial implications of the pandemic caused a revenue shortfall of EC$96.6 million in 2020, with revenue collection in some months, decreasing by as much as 50 per cent, when compared to the same period in 2019.

“Although the economy is slowly recovering, revenue collection is still below projected numbers and far lower than what was generated in 2019, when the agreement with the trade unions was signed. Statistics from the Ministry of Finance show a continued variation in revenue collection. In January and February this year, Government collected EC$30.1 million less than it did in the same period in 2020.

Grenada’s Inland Revenue Division (File photo)

“We are optimistic about continued recovery, but the fact remains that the revenue shortfall considerably affects the money that is available for recurrent expenditure. For the avoidance of doubt, this revenue, collected monthly, is the source of funds for the wages and salaries of public officers.”

Mitchell said that the overriding message here is that the Government must, at all costs, protect the future of the country, noting that “any actions that undermine the economic stability we have sacrificed long and hard to achieve, would nullify those very sacrifices and jeopardise the future of this country and our children and grandchildren”.

He said that while the projection for growth in 2021 is six per cent, this will not take the island back to pre-COVID levels of real growth.

In 2020, the country experienced negative growth of 12.2 per cent and Mitchell said the reality is, it will take two to three years for gross domestic product (GDP) to recover from the significant level of output loss experienced in 2020.

“That said, we remain guardedly optimistic that the recovery process will continue and the rate of recovery will improve,” he said, adding “ I say to you in all honesty, and here I speak specifically to public officers, there is no question of if government will pay the four per cent increase.

“Our track record in this regard, speaks for itself. It is rather interesting that some of the same individuals who are calling on Government to pay the four per cent now, did nothing to advance the cause of public officers, when they had the opportunity to do so.

“That aside, my message to all public officers is this — you are entitled to your increase and you will be paid your increase, but let’s be realistic; thousands of your sisters and brothers forced into unemployment by the pandemic and left without an income, are also looking to Government for much-needed help to survive this crisis. Your elderly relatives, our treasured senior citizens, still require help buying their medication; your sons and daughters still rely on government scholarships to continue their quest for higher education.”

Mitchell said that his Administration recognises and appreciates the many sacrifices made by public servants, adding that they represent the backbone of government’s operations.

“But at the same time, this is a Government for all people, and we take seriously our responsibility to look after the needs of all our people. Should we ignore the needs of the thousands of taxi-drivers, vendors, hotel workers and others whose livelihoods are linked to the tourism sector?

“Should we ignore the desperate needs of the road workers who, three months into the year, have not yet earned a single dollar? Should we allow the international airport to close, removing one of the sources of Government revenue, eliminating a critical export avenue for fishers and farmers, and cutting off our link to the world?

The Maurice Bishop International Airport in Grenada (Photo: GIS)

“Any responsible, conscientious Government will find a way to balance its many responsibilities and that is exactly what this Government is doing, trying to ensure that none of our citizens are disenfranchised while we safeguard the future of our beloved country,” Mitchell said, adding that “notwithstanding the current challenges…I am confident that we will get past this; life will regain a sense of normalcy, livelihoods endangered by the pandemic will restart, and our economy will resume its trajectory of growth”.

He said the signs of recovery are there pointing to the St. George’s University (SGU), which represents about 25 per cent of the island’s GDP, “looking to resume on-campus operations later this year.

“This by itself, will have a positive domino effect on various sectors of the economy, including farmers, fishers, supermarkets and the general retail sector as well as the accommodation sector. SGU is currently engaged in several expansion and re-development projects as it continues to play a key role in meeting the increased global demand for physicians.

“Additionally, several hotels are on course to re-open in the coming months. In fact, Sandals Grenada, resumed operations today, with close to 400 of its staff, back on the job.

“Government continues to invest heavily in its Public Sector Investment Programme, creating hundreds of jobs and spurring development in the country. Similarly, there continues to be a significant level of investor confidence in the local economy, manifested through the several construction projects which are underway, and which are also creating tremendous job opportunities for our people.”

Mitchell said one year after Grenada recorded its first COVID-19 case, the big question is, “how to we get past this stumbling block? How do we begin to recover from the devastating impact of a pandemic that is still unfolding? How do we reactivate our economy?

“How do we get our people back to work? How do we resume the level of social activity that is so much a part of the Grenadian tradition? How do we lighten government’s load and enable it to honour its outstanding commitment to public officers? Multiple questions, legitimate questions, all pointing to a single solution.”

He said to successfully get to the post-COVID chapter, the population must get must get vaccinated.

“The experts call it herd immunity and it is only by getting a significant portion of our population vaccinated that we will be able to achieve it. I have done my part, I have already received my first dose of the vaccine and in another few weeks, based on revised guidance from the World Health Organisation on the timing of second doses, I will receive the second dose.”.