ST GEORGE’S, Grenada, (CMC) – Former Prime Minister Dr Keith Mitchell is of the view that the announcement by the Government that it will be seeking Parliament’s approval to borrow EC$725 million to fund developmental projects in 2025 will increase the gross domestic product (GDP) ratio overnight.

“You cannot be proud because it means that the debt to GDP ratio of this country will jump up overnight and frighten every serious financial person that understands finance,” Mitchell told delegates attending the New National Party Women’s Arm Convention on the weekend.

He said that anyone who went to first level economic class in any school will tell you something is fundamentally wrong with any organisation seeking this large amount of money to fund projects in a budget.

The latest International Monetary Fund (IMF), Article IV Consultation on Grenada published earlier this month, says Grenada revoking the suspension clause of the Public Finance Management Act is essential for the country to reach the target of 60 per cent of GDP by 2030.

“Assuming a subsequent timely return to the fiscal rules, public debt is projected to continue falling and reach the debt target of 60 per cent of GDP by 2030,” said the report. Grenada suspended its fiscal rules following the passage of Hurricane Beryl in 2024.

Last week, Finance Minister Dennis Cornwall announced that the rules will be in place until 2026 and the government will be presenting the 2025 budget or Estimates of Revenue and Expenditure on March 7.

He further explained that besides seeking the approval of Parliament for the budget, the parliament will also be asked to approve a budget loan authorisation bill of approximately EC$725 million.

“We will present to the parliament an opportunity to have us borrow extra money for all our development projects that will be coming up. I will wait until that number is finalised before I announce it to the nation…I know what the ballpark figure we are looking for is over EC$725 million,” he said in the news conference.

Since coming into office in June 2022, each budget presented by the Dickon Mitchell administration has seen an increase in the budget loan authorisation act following the presentation of budget for the upcoming year.

The 2023 budget which was presented in December 2022 had a budget loan authorisation bill of EC$350 million previously it was EC$300 million; the 2024 budget which was presented in December 2023 had a budget loan authorisation Bill of EC$375 million.

Section 56(1) of the Public Finance Management Act authorises, by resolution of the House of Representatives, the Minister of Finance to borrow on behalf of the Government of Grenada in any form and from any legitimate source, whether domestic or external and for any fiscal purpose, on terms and conditions to be agreed with any creditor, an amount not exceeding in the aggregate the sum specified in the resolution.

This is a legal requirement that must accompany, and has accompanied every annual National Budget, under all Governments, should there be a need to borrow at any time during the year.

Cornwall said that Grenada, which raised more than EC$100 million on the Eastern Caribbean Securities Exchange in 2024 by auctioning treasury bills to refinance existing treasury bills and treasury notes currently on the market, will be looking to raise more funds via that medium for 2025.