Estimated Loss from Statutory Bodies and State-Owned Enterprises Rises to $120.8 Million
Introduction
The Government of Grenada has revealed that the estimated loss arising from statutory bodies and state-owned enterprises (SOEs) has risen to $120.8 million or 3.5 percent of GDP in 2020.
Climate Risks Remain a Concern
Grenada’s vulnerability to natural disasters remains an inherent risk, with adverse effects of climate change negatively affecting infrastructure, tourism, and agriculture in particular. To mitigate this risk, the Contingency Fund stipulated in Section 11 of the National Transformation Fund Regulations will become operational in 2020.
The fund aims to provide a buffer to cushion the effects of climate and economic shocks, while a Line of Credit approved by the World Bank for unforeseen natural events also adds to the Government’s risk-layering approach to disaster rehabilitation financing. Coverage by the Caribbean Catastrophe Risk Insurance Facility (CCRIF) is another layer of protection.
Other Potential Sources of Risks
The financial sector is expected to remain stable and sound, with no significant impact from Corresponding Banking challenges or AML/CTF measures. However, the transfer of assets and liabilities of the Bank of Nova Scotia to Republic Financial Holding Limited heightens concentration risks, requiring enhanced financial sector surveillance.
Public-Private Partnerships (PPPs) are also a potential source of risk, but only one existing arrangement was in place in 2019. The Government has entered into a 15-year PPP agreement with Digicel to support the country’s digital transformation agenda.
Risk Assessment Summary
A summary of the risks facing Grenada is provided below:
| Risk Description | Source of Risk | Risk Rating | Measures to Manage/Mitigate Risks |
|---|---|---|---|
| Macroeconomic | Global economic growth, geo-political uncertainties, Brexit uncertainties | Medium | Continue to implement structural reforms and diversify the economy. |
| Budget | Lower-than-expected external inflows and Grants | High | Strengthen expenditure management and revenue administration. |
| Capacity and institutional constraints | Project implementation | Medium | Strengthen Public investment management system and improve project management capacity. |
| Pension reform and NHI | Ongoing processes | Low | Ensure consistency with preserving fiscal sustainability. |
| Public Enterprises | Fiscal risks from SOEs | High | Ensure timely submission of audited financial statements and monitor management performance. |
| Climate | Adverse effects of climate change | High | Comprehensive disaster risk financing strategy, including Contingency Fund, Line of Credit, and CCRIF. |
The report highlights the need for continued vigilance in managing fiscal risks to ensure the country’s economic stability and resilience.
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