ST. GEORGE’S, Grenada – The Grenada economy is in a deficit despite the government’s monthly revenue being more than what was collected monthly last year, a senior government minister said here on Tuesday.
Foreign Affairs, International Business and CARICOM Affairs Minister, Oliver JosephForeign Affairs, International Business and CARICOM Affairs Minister, Oliver Joseph, told reporters that increased expenditure is driving the deficit.
“While the revenue situation is increasing, I can tell you that the expenditure is above the revenue. I can tell you that is not a good situation to be in because it means you are in a deficit and for the last five years, we were not in a deficit position, but for the first time due to COVID and the impact on revenue, we are in a deficit position now,” Joseph told reporters at the weekly post cabinet news conference.
“So, the situation from January to June is that we have not returned to the 2019 period because we are using the base year as 2019, that is before COVID when the economy was performing well. “Overall, we are still in a deficit, that is what the analysis is showing,” said Joseph, who confirmed that members of the Cabinet received a status of the economy report during the cabinet meeting on Monday.
“And in addition to that we have to add EC$1.2 million (One EC dollar=US$0.37 cents) to that wage bill for the public sector which will put us into a further deficit unless we have interest performance on the revenue collection side,” said Joseph who served as the head of the Government’s Negotiating Committee (GNC).
He said that despite the shortage in revenue, the government will be paying the four per cent interest on public servants’ salary from the end of August. The collective agreement for the increase was signed in late 2018 when the economy was performing better, he explained.
A review of the Ministry of Finance Fiscal Reports for the months of April, May and June have shown that the government earned more than the targeted revenue as projected in the 2021 Estimate of Revenue. All three months also surpass the amount earned for the same period in 2020.
The most revenue was earned through taxes on international transactions, with Customs and Excise collecting more than EC$80 million during those three months.
However, despite surpassing targets, the government’s expenditure according to the monthly fiscal report for each of the three months of this year was more than the targeted amount.
In April, the total Current Expenditure, excluding principal repayments on debt for that month was EC$51.5 million which was EC$0.4 million more than the EC$51.1 million targeted.
For the month of May, total Current Expenditure, excluding principal repayments for that month was EC$65.6m, which was EC$5.7 million more than the EC$59.9 million targeted and in the month of June total Current Expenditure, excluding principal repayments was EC$50.8 million, EC$2.3 million more than the $48.5 million targeted.
The figures also show that the revenue for April 2021 was $57.8 million, which was $8.2 million more than the April 2021 target and EC$13.2 million more than the collections for April 2020.
Revenue for May 2021 was EC$57.7 million which was EC$3.2 million more than the May 2021 target and EC$11.1 million more than the collections for May 2020.
Current Revenue for June 2021 was EC$60.4 million, which was EC$7.2 million more than the June 2021 target and EC$8.4 million more than the collections for June 2020.
Meanwhile, Joseph has denied that the government has made a monthly stipend of one million EC dollars to the Grenada Airport Authority (GAA) saying the state-owned agency had been provided with a loan to eliminate its monthly deficit of EC$2.2 million.
“The government provided a loan not a subsidy for the airport to continue running. So, it is a credit facility that the airport draws down on,” Oliver Joseph.
In March, a government statement noted that as part of its strategy to deal with the shortfall in revenue because of the COVID-19 pandemic “the Grenada Airport Authority has also sought out and received assistance from Government, which will amount to one million dollars each month, for the rest of 2021.
“The GAA has experienced a significant decline in revenue since the start of the pandemic as the sharp decrease in the demand for world travel has triggered reductions in flight operations, causing passenger arrivals through the Maurice Bishop International Airport (MBIA) to be almost non-existent,” said the statement.
Official figures showed that aircraft movement declined by more than 50 per cent between 2019 and 2020 and that prior to the pandemic, the figure stood at 12,970 compared to 6,015 in 2020. Similarly, passenger movement declined by 72 per cent, moving from 447,522 persons in 2019 to 126,336 in 2020.
Joseph told reporters that the funds provided to the GAA was to assist with the operations at the airport until flights resume and the statutory body returns to a state of profit making.
“So that was to assist, remember that flights had stopped coming in, remember we had a lockdown, there was a lock down and that is where they get the revenue from,” said Joseph, who said he anticipates that the airport’s management will be able to service their loan and continue their operation.
“The airport was very profitable before 2020 and it is still a very profitable institution or company as we may say,” said Joseph.
