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A lot of
factors contribute to a country’s
financial well being. The most
significant factor is of course a
country’s ability to raise money through
taxes, which are used to pay for the
services we are accustomed to; such as
infrastructure, education, social
services, and more. Factors that detract
from a country’s financial well being
include natural disasters, major changes
in the global economy and a country’s
ability to raise money through taxes.
Grenada’s
population enjoys a relatively low
taxation rate, in comparison with some
more wealthy and developed nations such
as Canada for example, where the
population pays Provincial Sales Tax,
National Goods and Services Tax, Income
Tax, Property Tax and more. The
favourable tax environment that Grenada
enjoys has been a deliberate effort to
keep the economic activity going, by
keeping as much money in the hands of
consumers as possible, while also
attracting investment.
When
Grenada’s economy was devastated by
Hurricane’s Ivan and Emily, the Nations
suffered a tremendous blow to its
revenue generating capacity, as well as
having to suffer through the
consequences of rebuilding the nation
from the bottom up. Ivan, for example
was a tremendous blow in terms of
financial losses: 85% of the nutmeg
stock was destroyed and 70% of the hotel
room stock was destroyed. Combined, the
loss of economic activity in these two
sectors alone was catastrophic on the
country’s ability to raise money to run
itself. The NNP Administration did not
panic in the face of this financial
catastrophe – the NNP got on with the
business entrusted to them by the
people.
The country
survived and government salaries were
paid. Grenada benefitted from the
generosity of donors thanks to the solid
reputation of good governance which
assisted the Government in rebuilding
housing stock, schools, and
re-establishing the economy. Since then,
Grenada has been profiled on the world
stage as an example of best practice in
disaster recovery.
Challenges
like the hurricanes, only provides a
partial explanation for the state of
Grenada’s economy however. The other
side of the problem stemmed from
structural issues that go back as far as
the colonial era, where our economy was
narrowly focused on raw exports, making
Grenada’s economy very vulnerable.
Moving Grenada towards a footing of
economic diversification and
independence and prosperity has and will
continue to be a challenge - but it is
not an insurmountable one.
The New
National Party recognized the challenges
and the opportunities. The first
priority was, and should continue to be,
the creation of jobs. Following the
disasters, the construction industry
provided employment to thousands of
people, followed by the resurgence of
our tourism industry which employed
thousands more. Many of the investments
which were condemned by the NDC and
their activists while they were
opposition, were conservatively
estimated to provide an additional 6000
jobs. Early indications, such as the
employee lay-off at Port Louis do not
suggest that the New Administration has
succeeded in keeping fuel in the engine
of growth for our economy. Investors
need confidence, and having the new
Government declaring a financial crisis
in the first two months in office
doesn’t support investor confidence.
When the
NDC assumed Office in July, the
International Monetary Fund clearly
stated that Grenada’s new Government had
inherited a healthy economy, which is
the backbone of the Nation’s financial
well being. The IMF then disbursed $4.7
million USD, which appears to have been
spent on new furniture for the Prime
Minister’s Residence, among other things
that are not in line with the Nations
priorities.
The hard
fact is that Grenada has been operating
with debt has never been a secret to the
Nation. Debt is an unavoidable
circumstance for a developing country,
and the best way to deal with that is to
ensure what is borrowed is an investment
in the future. The NNP Government had an
even longer term vision that took the
Nation beyond a world class tourist
destination. The ultimate goal for the
NNP was the creation of a information
based economy, where the physical size
of the country would no longer be a
limiting factor. Through information
technology, for example, Grenada has the
potential to develop an economy without
borders that could grow as large and
generate as much wealth as the
imaginations and innovations of
Grenadians and investors would allow.
To this
end, the investment the previous
Government had been making in building
the Nation’s financial independence was
working. While most economies in the
world were suffering, Grenada’s economy
was growing so well the growth rate in
percent was even higher than some
biggest economies of the world.
Additionally, the longer term vision
meant that the monies spent today were
monies invested in tomorrow – much like
a person taking out a mortgage to
purchase or build a house.
The hard
part about making this kind of long term
investment is that the nature of the
political beast discourages this kind of
thinking, because there is a tendency
for new Administrations to throw the
baby out with the bathwater when they
assume office, which often leads to a
zig-zag in the development path that
ultimately slows down the progress
towards the ultimate goal – prosperity,
freedom, independence and ultimately the
sustainability of all of these.
This
context must be taken into consideration
when evaluating the facts about the
Nation’s finances. Grenada is a
developing country, and as facts will
show, most developing countries have
financial circumstances similar to
Grenada in terms of debt – but few of
them can boast Grenada’s growth rate,
life expectancy, quality of life, access
to health care, and more that the
Government has been able to provide for
the people - as if it were a wealthier
nation.
Some
developing countries, are carrying the
burden of massive debts because of
lavish spending by their leaders. Some
leaders have built gold palaces for
themselves, and squandered untold
billions on weapons and things that did
not benefit the people. Other countries
fell victim to poorly conceived aid
projects, or development schemes that
didn’t work. In Grenada’s case, there is
little question that there is much to be
proud of, both in terms of the Nation’s
finances and the nations standard of
living.
The New
National Party knows that there is
nothing to apologise for. The Nation
has survived a number of events that had
contributed to Grenada’s debt now, but
one thing the people can be assured of
is that the debt that the Nation carries
now was spent on the people.
There are no palaces, weapon stockpiles,
private planes, lavish parties, private
yachts, expensive travel, or lavish
gifts to be uncovered by the new
Administration while they waste
Government’s time and money turning over
every stone in the hopes of finding
such.
Unlike the
Government of Today, the New National
Party believed in the potential of the
Grenadian people, and the New National
Party knew that if we invested in the
people’s future by creating the
conditions necessary to allow everyone
with the dream and desire to reach their
potential they could, that our dreams
would come true.
Perhaps the
deepest underlying fear of the National
Democratic Congress, many of whom once
believed they had to ‘dictate’
development to the masses, don’t really
believe that Grenadians can achieve and
reach high enough to make the risk of
investing in you worth it. |
