The 2005 National Budget was presented on April 11, 2005 by Hon. Anthony Boatswain, Minister of Finance, at the Grenada Trade Centre, under the theme “Rebuilding a Better Grenada for All.” According to Minister Boatswain, the theme reflects the imperative of building back better, the dreams and aspirations of the Grenadian people and the necessity for all Grenadians to share in the benefits of a better Grenada. The theme also challenges all citizens to take personal responsibility for the task of rebuilding the Nation. The 2005 Budget focuses on the reconstruction of Grenada in the aftermath of Hurricane Ivan with the main objectives being: To stabilize the public finances of the country by narrowing the deficit on current operations; and To facilitate and promote the reconstruction of Grenada’s economy in the shortest possible time through specific sectoral interventions and incentives. To achieve its’ objectives, Government announced a number of measures to increase revenue as well as assist citizens in rebounding after the devastation of Hurricane Ivan. These measures include: Reduced Property Tax – For 2005, Government has approved a 50% reduction in the tax payable on residential properties and an exemption from the payment of Property Tax on residential buildings where the tax payable is the minimum of $20.00 or less. Reduced GCT on Alternative Energy Products – Government has decided to remove the GCT on an approved list of alternative energy products, including solar and wind energy products as a response to the National Environmental Management Strategy’s call for incentives to promote the use of alternative energy products. Reduction in GCT on Tyres and Brakes – As of June 1, 2005, the GCT on New Tyres, brakes and brake accessories would be reduced from 25% to 5% and these items would be placed on the Price Control List to ensure compliance. This reduction not only seeks to improve road safety by ensuring that new and better quality products are purchased, but also serves to mitigate the effect of the increase in the price of fuel on bus fares since an increase would adversely impact the lives of many, especially school children. Increase in the retail price of fuel – The price of fuel was increased to $8.50 as of May 1, 2005. It is important to note that before that date, Grenada had the lowest retail fuel price in the Eastern Caribbean. However, with the current fiscal situation, Government was unable to continue subsidising the cost of fuel as it had been doing over the last four years. Contributions to the Grenada Reconstruction and Development Fund – As of July 2005, all workers will contribute to the Grenada Reconstruction and Development Fund, for a fixed period of 5 years, as a means of raising local resources to assist in the rebuilding of the country. The rates of contribution are: i. 5% of gross income of persons earning up to $5000 EC per month. ii. 2.5% of gross income of persons earning in excess of $5000 EC per month. Increased GCT on Cigarettes and Alcohol – As of June 1, 2005 the General Consumption Tax will be increased on beers, stouts, wines, spirits, liqueurs and other spirituous beverages, cigars, cheroots and cigarillos. This measure is projected to yield an additional EC$2 million per year. The 2005 Budget also detailed specific rehabilitation programmes for: - Agriculture – A total of EC$38.2 million has been allocated to this sector. Government has approved EC$5.1 million for the Agriculture Recovery Project. Under this project support will be given to farmers in the areas of planting materials, fertilizers and labour and equipment support. This sector will also from the construction of farm roads and forest and watershed restoration. - Fishing – EC$518,000 has been allocated to the Upgrading of Fish Markets in Gouyave and Victoria. Through FAO funding, a special assistance programme has been designed for fishermen to repair boats, replace engines and other equipment. - Housing - Government has approved a Housing Recovery Plan at a cost of EC$61.5 million. This plan involves, grants for the reconstruction of 500 homes for families whose homes were completely destroyed by hurricane Ivan; materials provision to assist 2000- lo-income-families with their home repair; a revolving soft loan facility for 500 families which do not qualify as most vulnerable; and the establishment of a new residential settlement in six (6) areas to accommodate 500 families. - Tourism – The Budget provides EC$9 million for the marketing and promotion of Grenada and a further EC$2 million for joint marketing and risk sharing agreements with selected airlines. The Grand Etang Tourist site will be rehabilitated and the second phase of the road signage project would commence. - Business Reactivation – With funding from the USAID, a Business Resource Centre was established at the GIDC to support business development in Grenada. Additionally, USAID is providing support for a microfinance scheme to help small and micro businesses through local institutions; financial grants for the commercial sector for restoration of business activities; export development plans for export oriented firms; and agribusiness and fisheries. The Small Agro-processors Development fund, the Small Farmers Financing Scheme, The Small Entrepreneur Development Fund and the Micro-enterprise Project have been merged as a means of reducing administrative costs and higher levels of efficiency. This merger would also ensure more meaningful and sustained support for small and micro enterprises. EC$1 million has been allocated in the Budget for this project, as an initial capital injection. Funds would be disbursed on a concessionary loan basis and must be repaid. - Health-Care- A total of EC$63.6 million or 10% of the 2005 Budget has been allocated to this area. Work will commence on Phase II of the New Hospital at an estimated cost of EC$18 million. Emphasis would be placed on repairing damaged infrastructure, including the Princess Alice Hospital, Central Medical Stores, and several medical stations. Much emphasis would also be placed on the public education of HIV/AIDS. - Education and Training – The Budget has earmarked approximately EC$1million for scholarships to needy and aspiring students. The Ministry of Education would soon engage in a three-year comprehensive schools rehabilitation programme. The approximate cost of this programme is EC$165.0 million of which EC$32 million would be expended in 2005. - Physical Infrastructure – The major infrastructure projects for 2005 include: i.Bridges & Road Improvement Project- EC$15 million ii.Eastern Main Road Improvement- EC$7 million iii.Refurbishment of Govt. Building - EC$4 million iv.Hurricane Ivan Emergency Project- EC$4 million v. Emergency Recovery/Disaster Mgmt.-EC$3 million vi.Melville Street Reconstruction- EC$2 million vii.Ministerial Complex Repairs- EC$1.2 million viii.St.George’s Market Square-EC$1 million - Psychological Rehabilitation – The Agency for Reconstruction and Development will spearhead a programme to provide counseling and debriefing to 2000 persons during the year. The programme will also provide therapy for 200 traumatised persons and will encourage groups and individuals to actively participate in the rebuilding process. - Youth Development - The Budget provides EC$2.5 million for the continuation of the Imani programme. Emphasis will be placed on employment and training opportunities for youth. - Sport Development – An allocation of EC$3 million has been made for upgrading roads required for Grenada’s hosting of the World Cup Cricket. The sum of EC$1.4 million has been allocated to upgrade and rehabilitate several playing fields around the country. The Republic of China has committed to reconstruction the National Stadium at an estimated cost of US$40 million. - Disaster Management – Cdn$1 million has been developed to build the capacity of the National Disaster Management Agency (NADMA) in the areas of community disaster planning; public education and information capacity; emergency communications among key response agencies and district committees; and integrated relief programme management. - Physical Planning – The draft National Physical Development Plan will be put into effect after it is tabled in Parliament. The Physical Planning Unit will be strengthened with additional inspectors for enforcement of the development plan and the building code. - Public Sector Modernisation- A number of bills will be tabled in Parliament later this year to facilitate the public sector’s adaptation to the challenges of the 21st century. Government has also proposed that all project coordinating units be merged into a Central Projects Department as an attempt to strengthen Government’s capacity to manage and implement projects. - Carriacou & Petite Martinique- Some of the major projects to be completed in 2005 include: i. Cultural and Sporting Complex–EC$1.5 million ii.PRC/GOG Multi-Project-EC$600,000 iii.Renovation of Fish Centres-EC$350,000 iv.Hillsborough Recreation Facilities-EC1$50,000 v.Lauriston Sea Defense Wall-EC$100,000 vi.Expansion of Petit Martinique Playing Field –EC$100,000 - Poverty Alleviation- The Old Age Pension, Emergency Housing Programme, School Books and Uniform Programme, Free Water Supply to the Poor and Needy; and the Free Medicine for the Elderly initiatives will be maintained. Pensioners will receive 4.5% increase in line with the salary increase awarded to the public officers in 2005. - Price Control – The following actions will be initiated: i.Upgrade of the Price Control Act to provide stronger penalties for acts of non-compliance; ii.Expand the List of Price Controlled Items; iii.Increase the list of pharmaceutical and generic products eligible for tax exemptions; iv. Initiate consultation on a new Consumer Protection Act; and v. Promote the issue of price control as part of the development of a Social Pact with the social partners. Source: Ministry of Finance