After completing the 2nd Poverty Reduction Growth Facility Arrangement review in Grenada, the International Monetary Fund has said that, ‘the economic outlook for the year has deteriorated’, echoing concerns that have been raised by Grenada’s Opposition over the last few months about the dramatic change in Grenada’s economy. “Work has slowed on several tourism investment projects, resulting in a marked slowing of construction activity” the IMF said, after a monitoring visit to Grenada from the 15th to the 23rd of September this year. A year ago, the IMF said that, “Grenada's economy has rebounded after the devastating impact of Hurricanes Ivan and Emily, with the recovery centered on reconstruction and 2007 Cricket World Cup (CWC) preparations. Real GDP growth averaged 7 percent a year during 2005-06 and is projected at about 3 percent in 2007 and 4 percent beyond, reflecting a further strengthening of tourism, the recent initiation of several major tourism projects, and a gradual recovery of agriculture. Inflation has remained low, buttressed by the regional currency board arrangement”. The positive outlook from the 2007 review was continued in the review that took place in July, 2008, that resulted in the release of USD $4.8 million as the new government assumed office. In July, the IMF said that the “authorities are to be commended” for their implementation of the PRGF reforms and the rebound of the economy in the wake of natural disasters, referring to the work of the NNP Administration. This favourable optimism described Grenada’s economy, despite the obvious rising food and fuel prices. Since the elections, however, Grenada’s economic outlook has changed from ‘favourable’ to ‘deteriorated’ which is illustrated by the 3% projected growth for 2008 being cut in half to 1.6%, and the 4% growth projected for 2009 highly uncertain. Given how robust the economy was in the first half of 2008, these figures illustrate an economy that was growing at the rate of 3% for the first half of the year, with little to no growth in the second half, resulting in a decline of 50% for the overall projection of growth for the year at 1.6%. When asked by local media about why the drastic economic downturn has taken place since the election, the Head of the IMF Mission, Ms. Portillo, explained that her in-country discussions revealed that the elections have played a role in the state of the economy today. The elections created a “wait and see” attitude among business interests, and foreign investors, Ms. Portillo said. She also explained that while it may be normal for ‘wait and see’ periods to accompany elections, Ms. Portillo said that normally, “It should take a short time to see how things are going with the new government”. The three month ‘wait and see’ period that has not yet ended in Grenada is not within the range of ‘normal’. Even before these observations were confirmed by the IMF, the Grenada’s opposition has consistently criticized the new finance minister for his remarks after the opening of parliament, describing Grenada’s finances as an ‘absolute mess’ due to an ‘empty treasury’. These remarks, among others have essentially described Grenada as a bankrupt, disorganized, corrupt nation; and that does not build confidence for the private sector. Remarks like these may earn political mileage for the new government, but has the total opposite effect on business interests. Based on Grenada’s economic performance since the elections, the evidence seems to be proving the NNP Opposition correct in their assessment. Challenging the poor economic performance, the ‘wait and see’ attitude, and the deteriorated economic outlook for Grenada, the NNP has served up some sharp criticism for the new government. The NNP have argued that spending on an expanded government, extensive travel, and non-essential purchases indicate that the new government has poor financial and management skills. In addition, there has also been speculation that the revolutionary military council influences in the new government have made business interests nervous, as the country has recently seen the third political detention without arrest, in as many months. The NNP have consistently claimed that the local media coverage of events such as these detentions is overwhelmingly bias in favour of the new government. However, the more balanced access to media coverage overseas may mean that external interests are not as convinced as some local Grenadians about the poor performance of the previous government, and that may be having an effect on investor confidence in a risk-adverse global financial climate. The New National Party maintains that the ‘proof is in the pudding’ where good governance is concerned. Regardless of what people may choose to believe about the NNP, there is no question that one of the things the New National Party was very good at was managing the economy. The New National Party has been giving the new government the opportunity to settle in since the elections, but warns that if this economic travesty continues for much longer, the new government will have a lot to answer to. (The above article represents the views of the opposition New National Party and not necessarily those of Inside Grenada staff) Inside Grenada News