ST. GEORGE’S, Grenada, CMC—Finance Minister Dennis Cornwall presented an EC$1.91 billion (One EC dollar = US$0.37 cents) budget to Parliament on Friday. He said the budget had been shaped by domestic and external factors against a complex macroeconomic backdrop.
Despite the devastating impact of a major hurricane, he told legislators that robust economic performance in 2024 underscored Grenada’s growing resilience and that the near-term outlook is also favorable.
Cornwall said that gross domestic product (GD) is forecasted to grow by 4.1 percent in 2025, following the 3.7 percent realized in 2024, driven by continued tourism demand and post-hurricane Beryl reconstruction activities.
He said that consumer prices declined in 2024 from the high levels experienced in 2023, helped by government policies to keep prices down, including the removal of the value-added tax (VAT)on basic food and other essential items and the electricity and petroleum price subsidies.
However, he said that notwithstanding, food inflation, although declining, remained unacceptably higher than overall inflation and that the period’s average overall inflation is forecasted to remain low and stable at around 0.9 percent over the medium term.
Cornwall, presenting the third budget of the Dickon Mitchell administration since coming to office in 2022, said the fiscal package sets the country on a more resilient and inclusive path, consolidating past gains and accelerating progress.
He said recurrent revenue was pegged at EC$1,192.5 million, with total grants of EC$72.5 million. The Recurrent Expenditure is EC$1,105.9 million, with Capital Expenditure estimated at EC$496.5 million.
He said that the 2025 national budget is fully financed, noting that the overall deficit of EC$337.4 million will be funded mainly from a drawdown of EC$287.3 million of government deposits held in the Consolidated Fund.
Cornwall told Parliament that the government would extend the VAT exemption on 20 basic food items and essential products, ranging from cooking oils to baby diapers to all female sanitary hygiene products, including sanitary napkins, tampons, and panty liners for an additional year, effective January 1, 2025.3.7
He said that the estimated revenue forgone for this measure is EC$3.1 million and that while the government “had intended to further protect consumers by placing these items under formal price control for monitoring by the Consumer Affairs Division, this step was not completed in 2024.
“However, we remain fully committed to implementing this measure soon to prevent price gouging and ensure savings reach consumers.”
Cornwall said the government will continue to cap the price of a 20-lb gas cylinder at EC$40, helping to cushion households from fluctuations in global energy prices, resulting in two million dollars from the government’s revenue.
He said the government would maintain the reduced petrol tax at EC$3.50 per gallon instead of EC$5.50 on duty-paid sales.
“This measure alone is expected to result in EC$26.9 million in foregone revenue,” Cornwall said, adding that the Mitchell administration will maintain the EC$10 monthly electricity subsidy for all residential consumers using up to 99 kWh per month at an estimated cost of three million EC dollars.
In addition, the Finance Minister said that the government will introduce new cost-of-living relief measures.
He said the public transportation subsidy will be maintained, noting that bus fares, which the government regulates, have not been increased for over a decade.
“That said, our bus operators, faced with high and rising operational costs, are legitimately seeking an increase in bus fares. Recognizing the impact of increased bus fares on the population, the government is introducing a Public Transportation Subsidy to support bus operators and maintain affordability for commuters.”
Cornwall said through this initiative, the government, through the Grenada Transport Commission, will provide a direct subsidy to registered bus operators to help offset the increasing fuel and maintenance costs.
“This measure is designed to stabilize operational expenses and, in turn, maintain the current regulated bus fares, preventing any undue financial burden on the traveling public. The annual cost of the subsidy is estimated at EC$12 million.”
Cornwall said, in total, this targeted relief package represents an investment of over EC$47 million, a 76 percent increase over 2024 in direct support for Grenadian households.
“These measures underscore our commitment to protecting the most vulnerable while balancing the need for long-term fiscal sustainability. We will monitor external developments as global economic conditions evolve and proactively safeguard our people from economic shocks.”
Cornwall said that the regularisation of the public service is progressing steadily. He said the first phase, which targeted 300 temporary officers, officers on probation, officers on assignment, and officers holding acting appointments, has surpassed the target, with 455 officers confirmed.
He said the second phase, which targets approximately 1,262 workers, is being processed. One thousand one hundred officers will be regularised by April 2025. In addition, 224 teachers are also being processed for regularisation by the end of March 2025.
Cornwall said that this will bring the total number of officers regularised to 1,779 by the end of April this year.
He said the third phase, targeting 3,316 workers for regularisation by December 2025, is on schedule and that a total of EC$22.7 million has been budgeted to cover the additional cost of the regularisation exercise.
The Finance Minister said the government had resolved the “longstanding and painful issue of pay and grade adjustment for the hard-working and dedicated men and women of the Royal Grenada Police Force (RGPF).”
He said the adjustment is effective January 1 this year and will cost an estimated EC$6.5 million, impacting over 1,000 members of the RGPF.
Cornwall said while the rules and targets of the Fiscal Resilience Act (FRA) merit further suspension in 2025 in light of the ongoing recovery and reconstruction needs post-Hurricane Beryl, the government is committed to fiscal prudence and a return to the fiscal rules and targets once it is not harmful to macroeconomic stability to so do.
“Based on our assessment, the return of the fiscal rules and targets under the FRA will not be before 2027. That said, Mr. Speaker, a key aspect of the FRA, that is, the wage bill ceiling of 13 percent of GDP, will not be breached in 2025. Good faith salary negotiations for the next negotiation cycle will ensure compliance with the FRA and sustainable wage bill management beyond 2025,” Cornwall said.
Debate on the budget is scheduled to begin on Monday.
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