DEBT MANAGEMENT OBJECTIVES AND STRATEGY

St. George, July 26, 2008 -- The objective of the Government of Grenada is to procure and apply debt for Grenada’s development in a prudent and cost effective manner.

As at December 2007 Public Sector Debt to GDP was approximately 109.1 per cent of which Central Government debt was 99.9 per cent and guarantees by Government accounted for 9.2 per cent of public debt. The Government of Grenada is committed to reducing the debt to GDP ratio to 60 per cent by 2018. This is to be achieved through the following strategy:

• Conduct debt analysis of all new debt to be incurred (to determine concessionality)
• Cease incurring any new external commercial debt
• Not issuing any new government guarantees
• Use 50 per cent of the proceeds of the sale of assets to reduce the debt stock
• Reduce capital expenditure to 10 per cent of GDP

The Debt Stock

At December 31, 2007, Grenada’s Public debt including government guarantees was EC$1.73 billion, a 9 per cent increase over 2006. The debt stock includes:

• Central Government Debt - EC$1.58 billion
• Government Guarantees - EC$145.6 million
In 2007 external debt reached EC$1.35 billion, reflecting the expansion of public sector investment programme (PSIP), which included the reconstruction of schools, and the construction of roads and bridges in preparation for the hosting of Cricket World Cup 2007. External debt has risen as Government avoids new external commercial borrowing and seeks cheaper sources of financing from multilateral and bilateral creditors.