ST. GEORGE’S, Grenada – Prime Minister Dickon Mitchell is objecting to the International Monetary Fund (IMF) recommendation that Grenada should establish a more coherent and transparent framework for managing Citizenship By Investment (CBI) revenues as this would strengthen budget and investment planning.
Last week, the Washington-based financial institution said that while Grenada’s economy is experiencing “sustained, strong growth” a surge in the CBI revenue has resulted in a large budget surplus, an increase in government deposits, and lower public debt.
Under the CBI, foreign investors are granted Grenadian citizenship in return for making a substantial investment in the socio-economic development of the country.
The IMF, which sent a mission to Grenada earlier this month, said that the key fiscal policy priorities are to improve the management of these potentially volatile CBI revenues, contain the growth of recurrent expenditures, and strengthen public financial management.
“Given the volatility in CBI revenues, a rules-based mechanism should be put in place that allows for annual transfers from the NTF (National Transformation Fund) to the budget. This would reduce uncertainty over budget revenue and guide the degree to which CBI inflows should be saved or used to finance fiscal spending.
“Applying the primary balance rule to a definition that is based on the NTF transfer (rather than the CBI inflow) would provide for a more predictable annual budget constraint. All NTF assets should be externally managed under a clearly specified investment policy and subject to a strong transparency and accountability framework, with operationalization of regular financial reporting on the size, asset allocation and performance of the NTF,” the IMF recommended .
But, speaking on a television programme here over the weekend, Prime Minister Mitchell told viewers that he “objected to that statement and I still object to it.
“However, it is the IMF statement and they are entitled to say whatever they want,” Prime Minister Mitchell told the Bubb Report, a weekly Sunday talk show produced and hosted by the US-based Grenadian communications expert, Dr Kellon Bubb..
Prime Minister Mitchell told the programme that the IMF’s recommendation for transparency has to do with the budgeting process and how the Ministry of Finance is accounting for the revenue earned through CBI.
For the two years period of 2022 to 2023 Grenada earned revenue of EC$531.4 million (One EC dollar=US$0.37 cents) through the CBI programme.
“When we formed the government, CBI revenues were being recorded in some instances as grant and my position is that it is not a grant, no external partner is giving us a gift, this is essentially government of Grenada revenues specifically attributed to the CBI programme,” said the Prime Minister, who served as finance minister up to March 31 last year.
“The prior administration used to be recording the funds as grant, we do not record it as grants, I certainly dont think it is a grant nor a gift from anybody, its an investment that is being made into the country either as in the fees we earn from the real estate projects in the direct investment or in the person who wish to become a citizen of the country,” he said.
Sharing is views about the suggestion, the Prime Minister said that questions were raise as to whether or not the balances of funds from previous years should be published as oppose to showing the current balance.
“I think…some of the issues they are speaking about, as to how the funds are treated but unfortunately, words like transparency in the literal sense means to see through and when you use some of the these words in the context of economic management, it sometimes gives the impression that someone is hiding something or so and that is why I objected to the use of the word because of the connotation that it normally has in the context of politics.
“Our view is that we may have a difference of opinion from them to how we record and treat with those funds, for instance should the budgetary and management system should reflect the current state of the financing that comes from CBI or whether it includes for example all the previous years and what are the balances that you are holding over from those accounts and to ensure that it is added to the current situation.
“These are really what I will call technical financial different perspectives or views as to how those things are to be treated but at the end of the day it is a matter for Grenada, not the IMF. It is really for us to decide how we wish to categorize and treat the funds,” Mitchell told television viewers.
