Caribbean & Central America - March 2025

In late January the International Monetary Fund (IMF) published a report following the conclusion of an Article IV consultation with Grenada, revealing that despite the damage caused by Hurricane Beryl last July – equivalent to around 16% of GDP – growth has been holding up well with GDP expected to expand by 3.9% in 2025.

The report says Grenada has been benefiting from buoyant tourism, moderating inflation, and a narrowing current account deficit. This has been helped by higher-than-expected Citizenship-by-Investment (CBI) revenues.  The CBI programme was launched in 2013 and offers wealthy individuals residence rights and a passport in exchange for a US$235,000 donation to the country’s National Transformation Fund (NTF) or a minimum real estate investment of US$270,000.

The IMF team says that another pro-growth factor has been the rapid response to Hurricane Beryl, which hit Carriacou and Petite Martinique as well as some parts of the main island but caused only limited damage to tourism infrastructure. The government responded with large recovery and reconstruction spending, funded out of substantial government savings and the triggering of disaster-contingent financial instruments. Fiscal spending rules have been relaxed because of the emergency; the report says a key decision for the government is how quickly normal spending constraints should be re-introduced. “Assuming a subsequent timely return to the fiscal rules” the report says, “public sector debt is projected to continue falling and reach the debt target of 60% of GDP by 2030”.

The Fund suggests the major medium-term risks facing the small Caribbean island’s economy include a tourism slowdown because the sector is operating at near capacity, further natural disasters, and what it describes as the “uncertain scale” of future CBI inflows. The IMF Board of Directors made various recommendations, including further strengthening of public investment and budget planning to improve climate resilience, work on the energy transition, and a tightening of regulations against corruption and money-laundering.