Grenada’s economy has shown resilience in the face of ongoing global uncertainty and the aftermath of Hurricane Beryl, according to a recent statement from an International Monetary Fund (IMF) staff mission. The IMF team noted that strong construction activity and other domestic sectors have offset slower growth in tourism, while Grenada’s fiscal position remains stable due to effective post-disaster financing and prudent use of citizenship-by-investment (CBI) revenues.
The IMF projects Grenada’s GDP growth will rise to 4.4 percent in 2025, up from an estimated 3.3 percent in 2024. This acceleration is attributed mainly to post-hurricane reconstruction and priority development investments, with construction leading the way even as tourism inflows moderate. Growth is expected to taper off gradually, reaching a potential rate of 2.7 percent by 2029. Inflation is forecasted to normalize around two percent by 2028 as global fuel and food prices stabilize.
Despite increased public investment related to hurricane recovery, Grenada’s government maintains a comfortable fiscal position supported by CBI revenue savings from recent years. However, these investments are expected to result in a primary deficit of 2.8 percent of GDP for 2025. The government aims to return to its primary balance floor target of 1.5 percent of GDP by 2027, which would support long-term debt sustainability.
The IMF notes that new infrastructure projects—such as the teaching hospital under Project Polaris—will temporarily halt the decline in general government debt but do not threaten its sustainability; the country is still projected to reach its debt-to-GDP target of 60 percent by 2033.
Risks remain on the downside due to Grenada’s vulnerability to natural disasters and reliance on tourism and imports. Disruptions in CBI or foreign direct investment inflows, issues within the non-bank financial sector, or delays in large-scale projects could pose additional challenges.
The IMF highlighted three main priorities during discussions: managing large public investments responsibly; addressing vulnerabilities in non-bank financial institutions; and strengthening foundations for long-term economic growth and resilience.
To strengthen public finances, authorities have temporarily suspended their primary balance rule to allow for reconstruction spending without affecting other development goals. The IMF recommends resuming expenditure prudence as this rule returns, broadening the tax base, improving tax administration, reconsidering costly incentives for low-emission vehicles, introducing more rules-based pricing for gasoline, and making social benefits more efficient.
Careful management is advised for major investment projects due to their potential long-term fiscal risks—including ongoing costs after completion—and closer integration between statutory entities’ budgets with central government planning is encouraged.
Improvements should continue in project management alongside increased public investment levels. Plans also include encouraging private sector participation through public-private partnerships such as those envisioned around Project Polaris.
On financial stability issues outside traditional banks, credit growth has picked up amid strong liquidity and asset quality compared with regional peers; however, ensuring adequate loan loss provisioning remains important for credit unions specifically. Enhanced supervision practices are recommended across both banking and insurance sectors.
For longer-term growth prospects beyond tourism-led expansion—which so far has had limited impact—the IMF suggests greater support for local businesses through improved access to finance and leveraging regional initiatives like partial credit guarantee schemes or digitalization efforts.
Ongoing efforts aimed at workforce development—expanding technical training opportunities for youth—and modernizing education infrastructure are seen as key steps toward addressing skills shortages aligned with evolving economic needs.
The report concludes that further improvements in economic data collection would help policymakers make better decisions going forward since current gaps contribute to uncertainty about projections.
"The temporary suspension of the primary balance rule has allowed budget space for post-disaster reconstruction outlays without disrupting development priority investments," according to the statement.
"The planned large public investment projects address important development needs but also call for careful management of long-term fiscal risks," said the mission team.
"Accelerating system-wide credit growth and non-bank vulnerabilities call for careful monitoring," they added.
"Facilitating domestic investment and harnessing opportunities to deepen the tourism sector’s integration with the local economy can boost long-term growth."
"Broader efforts to strengthen human capital productivity and resilience also remain important."
"Finally strengthening economic statistics and institutional capacity will be critical to support evidence-based policymaking."
The IMF team expressed appreciation for "the Grenadian authorities and other counterparts for their warm hospitality and constructive discussions."