February 5, 2025
On January 24, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Grenada.
By the end of June 2024, Grenada’s economy was experiencing sustained strong growth, supported by buoyant tourism, moderating inflation, and a narrowing current account deficit. A surge in Citizenship-by-Investment (CBI) revenue contributed to a significant improvement in the fiscal position and a reduction in public debt. The financial system remained stable.
On July 1, Hurricane Beryl caused damage exceeding 16 percent of GDP on the Grenadian islands of Carriacou and Petite Martinique, as well as in the northern parishes of the main island. The authorities responded swiftly with a package of fiscal measures, including the suspension of fiscal rules to permit temporary deficit spending in support of recovery and reconstruction.
Grenada’s near-term economic growth is projected to remain resilient at 3.9 percent in 2025, buoyed by limited hurricane damage to tourism infrastructure and substantial recovery and reconstruction spending by the authorities. Sizable government savings and the activation of disaster-contingent instruments create fiscal space for these spending needs. Assuming a timely return to fiscal rules, public debt is projected to continue falling, reaching the debt target of 60 percent of GDP by 2030.
Over the medium term, GDP growth is projected to slow as the tourism sector operates near its peak-season capacity. Key downside risks include the threat of further natural disasters, potential shocks to tourism demand, and the uncertain scale of future CBI inflows. The domestic non-bank financial system faces rising vulnerabilities from the continued rapid expansion of credit unions and the increasing costs of property insurance. Prospective hotel developments and public investment projects represent upside risks to the medium-term growth outlook.
Source: (International Monetary Fund)
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