Government’s total expenditure for 2024 is estimated to increase by 17% because of Hurricane Beryl’s devastation on 1 July according to the 2024 mid-year review which is set to be tabled in the Lower House of Parliament on 27 August.
“Total expenditure for 2024 is estimated to be EC$1,548.1 million, representing a 17.2% (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 44.9% increase in capital expenditure over the budgeted amount, reflecting heightened capital investment for rapid Hurricane Beryl response,” said the report prepared by the Ministry of Finance.
Based on the actual outturns up to June 2024 and other assumptions, Grenada’s fiscal performance for the full year 2024 shows a notable divergence from the budgeted expectations.
“Following Grenada’s full rebound from the pandemic in 2023, real GDP is projected to grow by 3.9% 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 overview of the report, which further explained the total revenue and grants are estimated at EC$1,404.1 million, which is 6.3% higher than the budgeted amount of EC$1,321.4 million. “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%.” Finance Minister Dennis Cornwall will table the document.
The report said that grants fell short of the budget by 30.5% during the first six months, partially offsetting the gains from increased non-tax revenue. Members of Parliament in the Lower House are scheduled to approve a supplementary budget of more than EC$269 million on 27 August, and those funds, which target several programmes created because of Hurricane Beryl damages, must be spent before 31 December.
Focusing on the impact of the hurricane, the report explained that devastation would result in fiscal deterioration, though the first half had excellent performance. “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.” The report explained, “This stands in sharp contrast to the more favourable fiscal position observed in 2023 and will lead to a severe deterioration of the overall balance and primary balance.” The report described the first 5 months of 2024 as experiencing deceleration in several areas, including construction.
The finance ministry said that given the economic shock experienced as a result of Hurricane Beryl and the fiscal implications as outlined, suspension of the Fiscal Resilience Act is necessary to accommodate the overall impact of the recovery and rebuilding process on Government’s revenue and expenditure against the established fiscal targets.