Caribbean Tourism

Government & Economy

Government

Grenada is an independent state within the Commonwealth, with the British monarch as Head of State represented by a Governor General (Daniel Williams since 1996). There are two legislative houses, the House of Representatives with 15 members. and the Senate with 13 members. The Government is elected for a five-year term.


Economy

Agriculture accounts for about 12% of gdp. According to a 1995 agricultural census the number of farmers has fallen to 11,871, from 15,319 in 1961, with the area of prime farming land falling from 61,000 to 31,000 acres in the same period. The major export crops are nutmeg, bananas and cocoa; nutmeg and mace together account for about 14% of all exports and Grenada is a leading world producer of this spice. International prices for nutmeg collapsed in the mid-1990s but new projects have come on stream (for example a nutmeg oil distillation plant began operations in 1994 which will produce 30 tons a year from 300 tons of defective nutmeg). Production of nutmeg and mace fell in 1998.

Banana exports have fallen because of labour shortages and inconsistent quality and quantity but account for about nine of exports. Cocoa exports (15% of the total) were hit by the loss of Grenada’s main customer because of overstocking, and a mealy bug infestation which spread to 93% of cocoa fields in 1996. Both cocoa and nutmeg growers receive funds from the European Community commodity price funds (Stabex). There is also some cotton grown on Carriacou and limes are grown on both Carriacou and Grenada. Sugar cane is grown in the south of Grenada but efficiency is not high. Most of the rest of farming land is devoted to fruit and vegetables for export as well as domestic consumption, such as yams, eddoe, sweet potatoes, tannia, pumpkin, cassava, pigeon peas and maize.

Manufacturing is also mostly processing of agricultural produce, making items such as chocolate, sugar, rum, jams, coconut oil, honey and lime juice. There is a large brewery (majority owned by Guinness) and a rice mill. There are 10,000 acres of forest, of which three-quarters are owned by the Government which is undertaking a reafforestation programme to repair hurricane damage. Fishing is a growing industry, involving about 1,500 people and contributing 16% of exports. Japan financed the construction of fishing centres in Gouyave and Grenville, a jetty and fish processing plant near St George’s.

Recent Trends

The economy suffered from the uncertainties surrounding the Bishop murder and the US invasion, but confidence has gradually returned and investment has picked up. The main area of expansion has been construction, led by tourism, which has benefited from the airport expansion started with Cuban assistance by the Bishop administration. Stopover visitors and cruise ship passengers have risen steadily as new hotels and facilities have been built. The yacht charter business has also expanded considerably. Room capacity should exceed 2,500 by 2000. Tourism revenue reached EC$169 mn in 1998, up from EC$159 mn in 1997. Cruise ship arrivals were likely to be down in 2000, however, when Carnival announced in November 1999 that it was ending calls to Grenada. It claimed that the landing fee of US$3 per person and environmental levy of US$1.50 were excessive. Carnival previously accounted for about half of the annual income of EC$9 mn from cruise passengers.

Despite buoyant tourism, Grenada has considerable financial imbalances and unemployment is a problem at 14% of the labour force. Imports are six times the value of exports and tourism revenues are insufficient to cover the trade deficit. During the 1990s the Government has engaged in selective debt rescheduling, a reduction in the number of public employees, the sale of certain state assets and an overhaul of the tax system. The IMF approved a structural adjustment programme to allow Grenada to seek credits from other multilateral agencies. By 1994 economic growth began to pick up, the fiscal position had improved, allowing the Government to consider greater capital spending. After three years of structural adjustment the Government announced a new economic programme aimed at producing annual growth of 3% in 1994-96. Fiscal policy was to remain tight, but public sector investment would rise. Positive results were recorded and gdp growth rose steadily. Construction is still providing the main impetus for growth, with several huge tourism projects being built, but investment in telemarketing and data processing is expected to help absorb a large number of the unemployed generating 1,000 jobs in 2000.

A 1999 IMF report criticized the Government for obtaining economic growth at the expense of deteriorating public finances and increasing the current account deficit. However, no new taxes were proposed in the 1999 budget and capital spending on infrastructure (roads, airport expansion, cruise ship terminal, water supply), was set to increase.


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Introduction

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GRENADA: USEFUL INFORMATION

TOURIST OFFICES Country Contact Information Grenada Burns Point PO Box 293 St. George's Grenada, West Indies 473-440-2279 473-440-2001...