Grenada: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Grenada

2024ARTICLE IV CONSULTATION—PRESS RELEASE;STAFF REPORT; AND STATEMENT BY THE EXECUTIVEDIRECTOR FORGRENADA Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussionswith members, usually every year. In the context of the2024Article IV consultation withGrenadathe following documents have been released and are included in this package: •APress Releasesummarizing the views of the Executive Board as expressed during itsJanuary 24, 2025,consideration of the staff report that concluded the Article IVconsultation withGrenada. •TheStaff Reportprepared by a staff team of the IMF for the Executive Board’sconsideration onJanuary 24, 2025, followingmissiondiscussions that ended onJune 14, 2024,and subsequentupdatediscussionsthat ended on December 6, 2024,with the officials ofGrenadaon economic developments and policies. Based oninformation available at the time of these discussions, the staff report was completedonJanuary 6, 2025. •AnInformational Annexprepared by the IMFstaff. •ADebt Sustainability Analysisprepared by the staffs of the IMF and theInternational Development Association. •AStatement by the Executive DirectorforGrenada. TheIMF’s transparency policy allows for the deletion of market-sensitive information andpremature disclosure of the authorities’ policy intentions in published staff reports andother documents. Copies of this report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202) 623-7201E-mail:publications@imf.org Web:http://www.imf.org International Monetary FundWashington, D.C. IMF Executive Board Concludes 2024 Article IV Consultationwith Grenada FOR IMMEDIATE RELEASE Washington, DC–February 4, 2025:On January 24, the Executive Board of theInternational Monetary Fund (IMF) concluded the Article IV consultation1with Grenada. Through end-June 2024, Grenada’s economy was experiencing sustained strong growthsupported by buoyant tourism, moderating inflation, and a narrowing current account deficit. Asurge in Citizenship-by-Investment (CBI) revenue supported a strong improvement in thefiscal position and reduction in public debt. The financial system remained stable. On July 1,Hurricane Beryl caused damage in excess of 16 percent of GDP on the Grenadian islands ofCarriacou and Petite Martinique, as well as in the northern parishes of the main island. Theauthorities responded swiftly with a package of fiscal measures, including suspension of fiscalrules to permit temporary deficit spending in support of the recovery and reconstruction. Grenada’s near-term economic growth is projected to remain resilient at 3.9 percent in 2025,buoyed by limited hurricane damages to tourism infrastructure and the authorities’ largerecovery and reconstruction spending. Sizable government savings and triggering of disaster-contingent instruments create fiscal space for these spending needs. Assuming a subsequenttimely return to the fiscal rules, public debt is projected to continue falling and reach the debttarget of 60 percent of GDP by 2030. Over the medium-term GDP growth is projected to slow given the tourism sector operatesnear its peak-season capacity. Key downside risks include the threat of further naturaldisasters, potential shocks to tourism demand, and the uncertain scale of future CBI inflows,while the domestic non-bank financial system faces rising vulnerabilities from the continuedrapid expansion of credit unions and the rising costs of property insurance. Prospective hoteldevelopments and public investment projects represent upside risks to the medium-termgrowth outlook. Executive Board Assessment2 Executive Directors agreed with the thrust of the staff appraisal. They welcomed Grenada'srobust economic performance in 2023 and the first half of 2024, buoyed by strong tourism.Directors also commended the authorities’ swift and prudently tailored response to HurricaneBeryl, which supported disaster-relief and helped mitigate the impact on economic growth.Noting that the medium-term outlook remains subject to risks from natural disasters, uncertainCitizenship-by-Investment (CBI) flows, and other external shocks, they encouraged the authorities to exercise continued fiscal prudence and to pursue structural reforms to boostlong-term growth and enhance resilience, while leveraging Fund technical assistance. Directors welcomed Grenada’s commitment to fiscal prudence and debt sustainability andemphasized the importance of a timely return to the suspended fiscal rules. In that context,they noted the need for continued expenditure prioritization and revenue mobilization to createfiscal space for future investment needs, including for climate resilience. Further strengtheningpublic investment management and budget planning processes would also be important.Directors also saw merit in developing a more uniform framework for managing all CBIresources and encouraged continued p