ST. GEORGE’S Grenada: Reducing public debt to a safer level is a matter of economic urgency and social responsibility, according to IMF official Mr. Prakash Loungani. An IMF team visited Grenada this week and presented the 2005 Article IV consultation discussion on Grenada’s economy. The total stock of outstanding public and publicly-guaranteed debt in Grenada at end 2004 was EC$1.5 billion, or about EC$15,000 per person. Mr. Loungani said the fiscal situation in Grenada is challenging. Extraordinary reconstruction expenditures need to be undertaken nut, at the same time, the revenue base has eroded and the high public debt level limits additional government borrowing. Mr. Loungani continued that, despite generous assistance from the international community and sustained efforts to reduce non-essential expenditures, the government was not able to close financing gaps for 2004 and could not fully service its debt obligations. The report added that the 2005 financing gap is 4.6 percent of GDP, including almost 2 percent of GDP in overdue payments to creditors from last year. Beyond 2005, financing gaps are expected to widen to between 12-15 percent of GDP despite an anticipated recovery in revenues, in large part because reconstruction expenditures remain high and grant commitments are expected to fall off sharply. The IMF team official said that despite the downturn the economy is expected to rebound next year after sluggish growth in 2005. The IMF projects growth of only about 1 percent this year, as conditions in the agricultural sector remain depressed and the recovery in tourism is not yet enough to supplement the stimulus from the reconstruction boom. “Further fiscal measures will be needed to fill financing gaps in 2006-10. The mission recommends that the authorities devise a medium-term macroeconomic framework, with fiscal targets for the next 3-5 years that would be based on a broad consensus and approved by parliament. Such a plan could be built around a menu of growth and fiscal measures, many of which are already on the agenda of the authorities,” Mr. Loungani said. Reprinted from Caribbean Net News caribbeannetnews.com