ST. GEORGE’S, Grenada, CMC—Prime Minister Dickon Mitchell is objecting to the International Monetary Fund (IMF) recommendation that Grenada establish a more coherent and transparent framework for managing Citizenship By Investment (CBI) revenues, which would strengthen budget and investment planning.
Last week, the Washington-based financial institution said that while Grenada’s economy is experiencing “sustained, strong growth,” a surge in the CBI revenue has resulted in a large budget surplus, an increase in government deposits, and lower public debt.
Under the CBI, foreign investors are granted Grenadian citizenship in return for making a substantial investment in the country’s socio-economic development.
The IMF, which sent a mission to Grenada earlier this month, said that the key fiscal policy priorities are improving the management of these potentially volatile CBI revenues, containing the growth of recurrent expenditures, and strengthening public financial management.
“Given the volatility in CBI revenues, a rules-based mechanism should be implemented to allow annual transfers from the NTF (National Transformation Fund) to the budget. This would reduce uncertainty over budget revenue and guide the degree to which CBI inflows should be saved or used to finance fiscal spending.
“Applying the primary balance rule to a definition based on the NTF transfer (rather than the CBI inflow) would provide a more predictable annual budget constraint. All NTF assets should be externally managed under a specified investment policy and subject to a strong transparency and accountability framework, with the operationalization of regular financial reporting on the size, asset allocation, and performance of the NTF,” the IMF recommended.
But, on a television program here over the weekend, Prime Minister Mitchell told viewers that he “objected to that statement, and I still object to it.
“However, it is the IMF statement, and they are entitled to say whatever they want,” Prime Minister Mitchell told the Bubb Report, a weekly Sunday talk show produced and hosted by the US-based Grenadian communications expert Dr Kellon Bubb..
Prime Minister Mitchell told the program that the IMF’s recommendation for transparency concerns the budgeting process and how the Ministry of Finance is accounting for the revenue earned through CBI.
For the two years from 2022 to 2023, Grenada earned revenue of EC$531.4 million (One EC dollar = 0.37 cents) through the CBI program.
“When we formed the government, CBI revenues were being recorded in some instances as a grant, and my position is that it is not a grant; no external partner is giving us a gift; this is essentially the government of Grenada revenues specifically attributed to the CBI program,” said the Prime Minister, who served as finance minister up to March 31 last year.
“The prior administration used to record the funds as grants. We do not record them as grants. I certainly don’t think it is a grant or a gift from anybody. It’s an investment that is being made into the country either as in the fees we earn from the real estate projects, in direct investment, or in the person who wishes to become a citizen of the country,” he said.
Sharing his views about the suggestion, the Prime Minister said that questions were raised about whether or not the balances of funds from previous years should be published instead of showing the current balance.
“I think…some of the issues they are speaking about, as to how the funds are treated, but unfortunately, words like transparency in the literal sense mean to see through, and when you use some of these words in the context of economic management, it sometimes gives the impression that someone is hiding something or so and that is why I objected to the use of the word because of the connotation that it normally has in the context of politics.
“Our view is that we may have a difference of opinion from them to how we record and treat with those funds, for instance, should the budgetary and management system reflect the current state of the financing that comes from CBI or whether it includes, for example, all the previous years and what are the balances that you are holding over from those accounts and to ensure that it is added to the current situation.
“These are really what I will call technical, financial different perspectives or views as to how those things are to be treated, but at the end of the day, it is a matter for Grenada, not the IMF. It is really for us to decide how we wish to categorize and treat the funds,” Mitchell told television viewers.
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