Government Expenditures Expected to Increase by 17% due to Hurricane Beryl
Mid-Year Review Tables Parliament
ST. GEORGE’S, Grenada, CMC—The Government’s expenditures are expected to increase by 17 percent this year due to Hurricane Beryl’s passage in July, according to a mid-year review reported to be tabled in Parliament on Tuesday.
“Total expenditure for 2024 is estimated to be EC$1,548.1 million (One EC dollar=US$0.37 cents), representing a 17.2 percent (EC$227.2 million) increase over the budgeted amount of EC$1,320.9 million.
“This surge in expenditure is largely attributable to a substantial 44 percent increase in capital expenditure over the budgeted amount, reflecting heightened capital investment for rapid Hurricane Beryl response,” said the report, which the Ministry of Finance prepared.
Fiscal Performance Diverges from Budgeted Expectations
The report said that based on the actual outturns up to June this year and other assumptions, Grenada’s fiscal performance for the entire year showed a notable divergence from the budgeted expectations.
Real GDP Growth Projected
“Following Grenada’s full rebound from the (COVID-19) pandemic in 2023, real GDP (gross domestic product) is projected to grow by 3.9 percent in 2024. This performance marks a deceleration in growth as major sectors, such as private education, reach peak output and other sectors grapple with the adverse effects of climate change in the form of extreme droughts and severe tropical cyclone occurrences,” said the report.
Revenue and Grants
It further explained that the total revenue and grants are estimated at EC$1,404.1 million, 6.3 percent higher than the budgeted amount of EC$1,321.4 million.
Non-Tax Revenue
“This increase is primarily due to higher-than-expected collections in non-tax revenue, particularly IMA revenues, which exceeded the budget by a significant margin of 42 percent,” said the document, which will be tabled in the Parliament by Finance Minister Dennis Cornwall.
Grants and Supplementary Budget
The report noted that grants fell short of the budgeted amount by 30.5 percent during the first six months of the year, partially offsetting the gains from increased non-tax revenue. Legislators are expected to approve a supplementary budget of more than EC$269 million on Tuesday, and those funds will be used to address several programs created because of Hurricane Beryl’s damages to be spent before December 31.
Construction and Retail Sectors
The construction sector is expected to experience growth in 2025, despite a moderate slowdown in the first quarter of 2024, due to the devastating impact of Hurricane Beryl on the sister isles and northern Grenada.
Whole and Retail Trade
Whole and retail trade are the other sectors that experienced a decline in the first five months of this year, with data showing a decline of 3.3 percent.
Fiscal Deterioration and Suspension of Fiscal Resilience Act
“Overall, the fiscal performance for 2024 indicates a substantial fiscal deterioration driven by the need for significant spending to address the immediate and near-term challenges in the aftermath of Hurricane Beryl,” said the report.
Conclusion
In conclusion, the Government’s mid-year review highlights the significant impact of Hurricane Beryl on Grenada’s economy, with expenditures expected to increase by 17 percent and a subsequent fiscal deterioration. The construction and retail sectors are expected to experience growth in 2025, but the overall fiscal performance in 2024 is expected to be disappointing.
FAQs
Q: Why are government expenditures expected to increase by 17 percent?
A: Government expenditures are expected to increase due to the passage of Hurricane Beryl and the subsequent need for significant spending to address the immediate and near-term challenges in the aftermath of the storm.
Q: How does the fiscal performance of Grenada compare to budgeted expectations?
A: The fiscal performance of Grenada has diverged from budgeted expectations, with a notable increase in total expenditure and a subsequent fiscal deterioration.
Q: What sectors are expected to experience growth in 2025?
A: The construction sector is expected to experience growth in 2025, despite a moderate slowdown in the first quarter of 2024, due to the devastating impact of Hurricane Beryl on the sister isles and northern Grenada.
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