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Finance INSIDE

GRENADA

A Publication of the Ministry of Finance, Planning, Economy, Energy & Cooperatives

Volume 6, Issue 1, January - March 2010

FOR NATION BUILDING

IS HERE !!!!!! After extensive public education and widespread consultation, the Value Added Tax (VAT) and Excise Tax were implemented in Grenada on Monday February 1st, 2010, as promised by Government. VAT replaced the General Consumption Tax (GCT), the Motor Vehicle Purchase Tax and the Airline Ticket Tax. According to the Minister of Finance in his 2010 Budget Speech; “the introduction of Vat at this point in our economic history, signals the beginning of the restructuring of our tax system to reflect the changing nature of our economy.” More information on VAT can be found inside……

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Becoming a logical thinking individual then he/she may be able to adapt and grow, using the same reasoning, in times of difficulty. If a student just memorizes definitions without understanding why the words are defined as they are and why they are used in a given manner, then the student will only be able to understand those few words, versus the entirety of the language and definitions. How do you m a k e decisions? Do you just decide to do something just because you feel like it? Do you decide based on facts? Do you make decisions in an ad hoc manner? Or do you use logic? Decisions made, no matter how it is made, determine the eventual outcome. Therefore, it is important to make the right decisions at all times. Making the right decision involves time, reason, judgment and information. According to Marcia Reynolds, Executive Coach and Leadership Consultant, in her article entitled “How to make Logical Decision” on www.greatsupervisor.com, “Decisions are 90% emotional no matter how logical we think we are. Everything we perceive is processed through the emotional center of our brains first, affecting our judgments and reasoning before we ever have a chance of being logical. Therefore, it is important to have tools and processes to help us make choices. We can't count on our brains alone. Humans are too good at rationalizing, justifying, defending intellectualizing, and denying, which is what we spend much of our brain work doing.” So what is logic and why is it important in making decisions? An online definition states that logic is a method of human thought that involves thinking in a coherent, step-by-step manner about how a problem can be solved. It is a way of learning to think and communicate clearly and coherently. It is important, says another online source, because in reference to education, if a student understands the logic and reasoning behind a given aspect of reality,

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So how does one achieve the essence of 'logic' and become a logical thinking individual and decision maker? The following are a few tips from www.greatsupervisor.com: BRAIN TIP #1. Time to Think. It is important to set quiet, dedicated time aside for making a decision, and then remind our brains of this schedule every time the situation pops into our consciousness. If we don't dedicate the time, we spend too much time letting the arguments run wild in our heads. Then, once the decision is made, we need to stand by the decision without fretting or mulling over it. If you truly can't accept the decision, then reverse it. Otherwise, move on. BRAIN TIP #2. Consider the Angles. Be prepared to answer these questions. 1. What do I need to know (information about the past, present, and future) before I can make a wise decision? 2. Who do I know has made this type of decision in the past? What questions should I ask them that could give the insight I need? 3. Why is it so hard for me to decide? What do I feel is at stake, really? Is it something intangible, such as a loss of control or how people will judge me if I fail? Am I afraid of hurting someone's feelings? Am I holding out for something better around the corner? Am I afraid of calling myself an idiot later? Get the truth out on the table so you can factor this into your decisionmaking. 4. If there were no consequences for my decision, what would I choose? Know that your heart's desire will haunt you no matter what you decide. BRAIN TIP #3. Work it out on Paper. Make a Pro/Con list for each option.

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Consider how each option will positively and negatively affect your 1) Health, 2) Wealth/Career, 3) Relationships, and 4) Happiness.

Make a Why/Why Not list to help you develop additional criteria to weigh your options against. Start with the option you are most leaning toward and list out all the reasons why you like this option, including what seems trivial and silly (we often justify reasons that would seem silly to other people, so why not just tell the truth up front?). Include emotional perks such as safety, status, love, recognition, fame (again, let's be honest. You can decide later if these perks are really worth your time and money). Then list why you don't like this option. Repeat the exercise for all possible options you might consider. BRAIN TIP #4. Face your Procrastination Head on. It is important to determine if your reluctance to choose is because you don't care enough or you care too much about the outcome. If you don't care enough, consider that the decision might be the result of a compromise where you are not getting what you want at all. If this is the case, no choice will make you happy. Are you giving up your power? Are there other options that haven't been explored? If you care too much, you might be avoiding the decision because doing anything else might be easier than facing this complex and difficult decision. Be careful how long you put off the decision. Situations can get worse (and usually do), opportunities are missed, and even worse decisions are made trying to avoid the inevitable. Then all you have are regrets. Elliot Aronson, author of "The Social Animal," said: "Unless we recognize our cognitive limitations, we will be enslaved by them." So try to adopt a logical frame of mind when you make daily decisions. Don't ignore your limitations. You will be thankful that you did not.

Petra


to the list of zero-rated and exempt supplies, this list is available from the VAT Office or from the Inland Revenue and Customs Websites. We agree to make these changes, being conscious of the economic challenges and the need for Government to be able to meet its obligation to all Grenadians. We anticipate some teething problems in the early days of the VAT and so we implore businesses and consumers alike to exercise some patience while the VAT settles. The staff of the VAT Office will address as promptly as possible all queries that you may have. At the same time, we are asking consumers to be assist in monitoring the performance of the system, pay particular attention to the display of VAT Registration Certificates, pricing of goods and information displayed on VAT invoices and receipts. You must ensure that the business that charges you VAT is legally registered to do so. If in doubt, contact the VAT Office. This tax requires a joint effort by the tax administrators, businesses and consumers alike.

Hon. V. Nazim Burke ADDRESS TO NATION BY MINISTER OF FINANCE ON THE IMPLEMENTATION OF THE VALUE ADDED TAX (VAT) Fellow Grenadians, February 1st, 2010, signifies a turning point in Grenada's economic history. It is the day that we have chosen to re-introduce the Value Added Tax to our country. One of the main reasons for the specific date was that based on our records, it is close to the end of the financial year for most businesses and so inventory may be at a minimum level. Additionally, consultations were held with the representatives of the private sector who endorsed the date. This endorsement was significant, since it is the private sector in most part that will be responsible for charging VAT and remitting it to the Government. We have gone through a very detailed process of consultations with all stakeholders, including the private sector and consumers; and have taken on board as much as is possible, suggestions for changes in the legislation. Some of these changes have already been incorporated in the VAT Act while others will be done at a later date. Notwithstanding this, however, effective Monday February 1st, 2010, all suggestions which have been accepted will come into effect. These include amendments

Consumers, you are encouraged to shop around. Many businesses may still have old stock in hand on which they would be required to account for VAT, however some may decide to include VAT in their prices while others may decide to maintain their pre-VAT prices and account for the VAT from their profits; this will result in a difference in prices based on the method of approach used by the business. All businesses have up to March 1st, 2010, to ensure that all prices displayed are VAT inclusive. If any business intends to use the grace period, it is recommended that notice be given to consumers indicating that the prices displayed do not include VAT. This is important so that consumers are not confused with respect to displayed prices and the price shown on receipts. The Government is aware of the current economic times in which we live and does not intend to unduly increase the burden of taxes borne by our citizens, and so we will continue to monitor the performance of the VAT to ensure that it is structured in a manner that supports government development efforts while at the same time do not cause any permanent erosion of the purchasing power of disposable income of our people. Fellow Grenadians, on behalf of the Ministry of Finance and the Government of Grenada, I wish to express my sincere thanks to all those persons and businesses who contributed to an anticipated successful implementation of the VAT on February 1, 2010. God bless you all!!

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TAX INFORMATION EXCHANGE AGREEMENT On Thursday February 18th 2010, Grenada signed a Tax Information Exchange Agreement with the Kingdom of Netherlands. The signing marked the culmination of months of negotiations which were guided by the overarching principle of ensuring that mechanisms are established to ensure that our jurisdictions are not used for illicit purposes. As stated by the Minister of Finance in his 2010 Budget presentation, Grenada is committed to establishing Tax Information and Double Taxation Agreements with its economically significant trading partners on the basis that these agreements promote international transparency. The signing of this agreement was therefore a reflection of Grenada's and the Kingdom of the Netherlands' shared commitment to complying with international standards on money laundering, terrorist financing, tax compliance and financial regulation. It reflected both Governments' shared commitment to implement international principles of transparency and effective exchange of information.

Remarks by The Minister of Finance AT THE SIGNING OF A TAX INFORMATION EXCHANGE AGREEMENT BETWEEN GRENADA AND THE KINGDOM OF THE NETHERLANDS Thursday, 18 February 2010, Grenada Today is a very significant day for Grenada and the Kingdom of the Netherlands as it marks another step in the deepening of relations between our two nations. T h e Ta x I n f o r m a t i o n E x c h a n g e Agreement (TIEA) which we are about to sign today is a culmination of months of negotiations which were guided by the overarching principle of ensuring that mechanisms are established to ensure that our jurisdictions are not used for illicit purposes. As reflected in my recent presentation on Grenada's budget for 2010, Grenada is c o m m i t t e d t o e s t a b l i s h i n g Ta x Information Exchange and Double Ta x a t i o n A g r e e m e n t s w i t h i t s economically significant trading partners on the basis that these agreements promote international transparency. While today's signing marks the establishment of the second such agreement by Grenada, the first being a

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Double Taxation Agreement with the United States of America, Grenada's commitment to this process is reflected in the fact that we have completed negotiations of TIEAs with several countries including France, Germany, Australia, United Kingdom, Northern Ireland, The Netherland Antilles and Aruba. Grenada has also completed negotiations and initialed Agreements, a preliminary step before signing with Sweden, Norway, Finland, Denmark, Iceland, The Faroes and Greenland.

money laundering, terrorist financing, tax compliance and financial regulation. It reflects both Governments' shared commitment to implement international principles of transparency and effective exchange of information. The TIEA will allow exchange of information by request on tax matters in accordance with agreed procedures.

Grenada is recognised by the Organisation for Economic Cooperation and Development (OECD) as having substantially implemented the OECD principles of transparency and exchange of information.

Grenada also takes this opportunity to recognise the Kingdom of the Netherlands as a constructive and co-operative member of the international community. The Kingdom of the Netherlands' leading role in the implementation of international standards of transparency and exchange of information further enhances its reputation as a globally integrated and responsible financial centre.

The signing of this agreement is therefore a reflection of Grenada's and the Kingdom of the Netherlands' shared commitment to complying with international standards on

This agreement is therefore a milestone in relations between our two Governments and Grenada is committed to examining other areas of mutual co-operation and benefit.

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VAT Information

It is an offence for registered businesses to make a sale and not issue a VAT invoice or a VAT sales receipt to the consumer.

ITEM BREAD

Consumers When you make a purchase from a registered business you MUST make sure that you receive a VAT tax invoice or a VAT receipt. For further information contact the VAT Unit at: Tel: (473) 435 6945/46, 435-9085, Fax: 435 9086 Email: gndird@spiceisle.com or vat@gov.gd, Website: www.irdgrenada.com © Ministry of Finance Inland Revenue Division February 2010

VAT UPDATE ON EXEMPT SUPPLIES

Unsweetened and does not include pastries. MEDICINES FOR APPROVED CHRONIC DISEASES The approved chronic diseases are:Cardiovascular diseases/hypertension; glaucoma, cancer, renal (kidney) failure; diabetes; asthma. All medicines in these categories whether generic or brand will qualify for VAT exemption. FRESH AND FROZEN FISH This does not include sea foods such as lobster and lambi. UNPROCESSED AGRICULTURAL PRODUCE In this regard, Unprocessed means in its raw state, unaltered in any form, and in the case of poultry and meats unprocessed means fresh chilled only.

The VAT Unit has conducted a review of the list of items which will not attract VAT and has produced a final list of exempt supplies which has received Government's approval. This review was done to ensure that the Unit can support Government's policy objectives which are to offer relief to consumers from the payment of VAT on the specific items, to ensure effective administration of the VAT and at the same time protect Government's revenue. The revised treatment of the items has the following implications:•

As a consumer, no VAT will be charged on exempt supplies;

Before explaining the implications for a business, a reminder must be given of the main difference between exemption and zero rate - Exemption means there is no associated rate whether zero or positive, neither can VAT be charged. Zero rate means that the supply is taxable at the rate of zero.

Therefore a business making only exempt supplies will not qualify for VAT registration since such businesses are not involved in a taxable supply. A business making both exempt and taxable supplies will be required to register only if the taxable supplies exceed the registration threshold of $120,000 per annum and as such will be allowed to claim some input VAT based on the apportionment formula in Section 34 of the VAT Act.

In light of this review, consumers and businesses should be guided by the following - The exempt supplies for which the necessary amendments will be made in the VAT Act are as follows:-

COMMENTS

Altered means juicing, deboning, peeling, grounding, seasoning etc. We do have list of agricultural produce which are subject to VAT, these are produce that are not grown in Grenada e.g grapes and apples. FROZEN CHICKEN WINGS; BACK AND NECK AGRICULTURAL AND FISHING INPUTS A list of single use items has been developed based on consultations with the Ministry of Agriculture. ENERGY SAVING DEVICES These items include: solar water heaters; energy saving bulbs, Solar panels, inverters and deep cell batteries. HURRICANE MITIGATING DEVICES Items include: hurricane shutters, hurricane straps and ties. MICRO COMPUTER, SOFTWARE AND ACCESSORIES These are specified in the Regulations and include items such as flash drives, printers, speakers.

Details of the entire listings particularly for agriculture and fishing inputs are available at the Inland Revenue Main Office, the VAT Unit, the Customs Division and will soon be available at the District Revenue Offices and the Public library. It is also available on our website www.irdgrenada.com. Registered businesses that are making both exempt and taxable supplies are advised that the apportionment formula should be utilized when completing February's return. For further information, please do not hesitate to contact the VAT Unit at telephone numbers 435-6945/46; or the hotline 435-9085; fax number 435-9086; email vat@gov.gd.

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2010 CELEBRATION OF

INTERNATIONAL CUSTOMS DAY The World Customs Organization has designated January 26, as “International Customs Day”. Customs Organizations all over the world recognizes this day annually. The theme for this year's celebrations was Customs and Business: Improving Performance through Partnerships. In this regard, the Grenada Customs and Excise Department engaged a number of activities as part of its celebrations for this year. These activities included: •

Family Fun Day – Sunday, January 24, which took place at the Morne Rouge Play Ground. Games such as cricket, soccer, cards and dominos were played. The aim of this event was to foster a spirit of camaraderie and sharing so that officers will get to know each other even better as the Department tries to build a healthy work environment through strong working relationships.

Thanks Giving and Appreciation Ceremony – Tuesday, January 26, at the Customs Head Office. The Department recognized the need to give God thanks for His mercies and as a result a Pastor was invited to share a spiritual message and pray with staff for God's continued mercies on the Department continually.

Visit to the Hillarian Home – Thursday, January 27. The Department felt compelled to reach out to the community no matter how small the gesture. A luncheon was organized by the Department and the money raised went towards purchasing items to give to the occupants of the home with the hope of making their lives a bit more comfortable.

Award and Recognition Ceremony – Saturday, January 30, at the Tourist Welcome Centre. Despite the many

challenges faced by the Department during the past year 2009, most of the officers gave of their best and as a result the outstanding efforts were recognized by the dissemination of awards. It is hoped that this will encourage all officers to work hard giving of their best at all times. Awardees General Office Grenville Port Enforcement Unit Entry Processing Unit MBIA Carriacou St. George's Port Most Outstanding Guard Admin. Support VAT PRO IT Unit Most Outstanding Supervisor

The following officers were also recognized for their notable contributions to the smooth operation of their various sections: Ms. Yoshimi Newton Mr. Elvin Niles Ms. Kim De Bellotte Mr. Kevin Wells Ms. Kate Lewis Mr. Dunstan Lawrence Mr. Shane Derby Ms. Judine Thompson Mrs. Kathleen Ambrose Mrs. Lauran Brizan Ms. Natasia Williams

Awardees receiving their awards

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Ms. Kisha Calliste Mr. Kevin Douglas Ms. Anna Antoine Mr. Emron Lessey Mr. Anthony James Mrs. Fitzra Sylvester-Charles Mr. Akido Bain Mr. Arnold Parkes Mrs. Angella James-Teka Mr. David De Coteau Ms. Rosemin Stanislaus Mr. Rene' Parkes Mr. Michael Gibbs

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British American Insurance Company Limited Ministerial Statement on British American Insurance Company Limited March 09, 2010 Mr. Speaker, I wish to take this opportunity to update the House on a matter of considerable importance to many of our citizens and indeed the financial system in the Eastern Caribbean Currency Union. The matter to which I refer is the status of British American Insurance Company (BAICO). The branches of British American Insurance Company Limited (BAICO) in the eight Eastern Caribbean Currency Union (ECCU) countries remain under Judicial Management. The Judicial Managers are accountable to the Courts in their respective jurisdictions, and have the powers and obligations as provided under the respective Insurance Acts. Last October, the Judicial Managers in each of the eight ECCU countries presented their findings and recommendations to their respective Courts. The key recommendation of these reports is the establishment of a new company to take over the liabilities of the Eastern Caribbean policyholders. Last November, the Chairman of the Ministerial Sub-Committee on Insurance, Prime Minister Ralph Gonsalves, articulated the strategy of ECCU Governments to work together on this issue based on the following guiding principles: (i) To ensure that British American does not become a systemic risk to the financial system; (ii) To protect, as far as practicable, the interests of depositors and investors; (iii) To keep British American as a “going concern” in a form to be determined; and (iv) To craft a solution that is regional in nature.

Our citizens were also informed that the proposal by the ECCU Governments would be subject to Court approval of the recommendations of the Judicial Managers. Consequently, it has been necessary to apply to the Court in each country for approval of these recommendations. Court Approval As of today, the High Courts in six of the ECCU jurisdictions have approved proposals for the establishment of a new company to assume the liabilities of BAICO. The countries with approval are: Antigua & Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent & the Grenadines. The hearing for Anguilla is scheduled for the 8th of March, and while no hearing date has been set for Montserrat, efforts are being made to have the matter heard within the next two weeks. The New Company The new company is to be capitalized by contributions from the ECCU Governments, the Liquidity Support Fund (to which the Government of Trinidad & Tobago has contributed US$50 million from its Petroleum Fund), additional contributions from certain CARICOM countries; the residual assets of BAICO; and by a capital injection from at least one significant Strategic Investor. These prospective Strategic investors are highly respected International and Regional financial institutions. It is also expected that the Strategic Investors will play a significant role in the ownership and management of the new company, since the Governments preferred role is to stabilize rather than become directly involved in the long term management and ownership of an insurance company. Discussions with prospective Strategic “... the engine room of the Public Service...”

Investors are progressing well, and pre due diligence is already underway; however, we are bound by nondisclosure agreements and cannot disclose their identities at this stage. Though precise time frames are difficult to provide for such complex and multi-jurisdictional undertakings, it is our hope that the new company will become fully operational within the next several months. Every effort is being made to ensure that policyholders, annuitants and other creditors will recover as much of their investment as possible. However, we have already signaled to them that the new company will not be able to continue to pay the unrealistic high interest rates that contributed to the difficulties of BAICO in the first place. The United States Assets The Judicial Managers have also filed petitions in the United States seeking recognition by the U.S. Courts, of the judicial management proceedings currently taking place in the Bahamas and the Eastern Caribbean. These petitions were heard in the U.S. in early February, and judgment is expected at any moment. These petitions have been submitted to the United States Federal Bankruptcy Court, and are necessary to protect the assets of BAICO in the U.S., and stay litigation commenced against BAICO in the US. British American has investment funds in the U.S. that are managed by U.S. based fund managers, as well as real estate that it owns through various subsidiaries. The Medical Fund The Governments of the ECCU are now finalising the establishment of a Continues on pg. 8

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Continued from pg. 7

Medical Claims Support Fund to offer relief to persons who are awaiting funds from British American to settle their medical insurance claims.

of this Fund is being achieved by collaboration with the Judicial Managers and will be incorporated into the new company.

This Fund is being established to assist, within certain parameters, those ECCU policyholders who would otherwise have been entitled to receive payments of claims under BAICO medical policies. It is being set up as an independent, Governmental Fund rather than a part of the existing BAICO operations. However, the establishment

However, the Fund will not apply to holders of annuities who are seeking funds to pay medical needs. Annuitants can expect some recovery only after the establishment of the proposed new company. A team of legal persons is presently reviewing the terms of the Fund.

The Property Portfolio The Judicial Managers are in the final stages of arrangements with a regional insurance company to take over BAICO's property insurance portfolio within the ECCU, subject to all appropriate court approvals. The Governments of the ECCU are satisfied that ECCU property insurance policyholders would be best served by the proposed transfer to ensure that all property claims can properly be met.

COURTS IN TWO MORE COUNTRIES HAVE APPROVED RECOMMENDATIONS BY THE JUDICIAL MANAGERS OF BRITISH AMERICAN INSURANCE COMPANY IN THE EASTERN CARIBBEAN FOR THE ESTABLISHMENT OF A NEW COMPANY Courts in Antigua and Barbuda and Dominica have now approved recommendations of the Judicial Managers of the branches of British American Insurance Company for the establishment of a new company.

The approval of the Courts means efforts by the Eastern Caribbean Currency Union Governments to establish a new company can be intensified.

This brings to six, the number of countries where Courts have approved these recommendations. The other countries are: Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.

At the time, Prime Minister Gonsalves noted that the plan for the new company must be approved by the Court. He also stressed that “the ECCU governments' first priority has been and continues to be to craft a viable and sustainable solution for our citizens”.

Hearings in Anguilla and Montserrat are expected later this month.

The ECCU Governments welcome these latest approvals by the Courts.

FINANCIALTip

Look for Recreation Instead of Entertainment Movies, shows, concerts and night clubs are not only expensive but also only last for a few hours or one day. If you shift your thinking to recreational activities such as hiking, camping, picnicking, going to the beach or low cost hobbies, you'll find many of these activities offer a no cost or low alternative to high cost entertainment.

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STATEMENT BY AN IMF MISSION TO GRENADA Despite these difficult circumstances, all but two of the targets under the current program were met. The primary deficit (excluding grants) was higher-than-expected, reflecting increased spending on goods and services and higher spending on social assistance programs. The government was late with a few external debt service payments to its official creditors, but has subsequently taken steps to ensure timely payments.

IMF Team

An International Monetary Fund (IMF) mission led by Ms. Nita Thacker of the IMF's Western Hemisphere Department visited Grenada during February 1-10 to conduct the fifth review of the government's home-grown economic programme supported by an IMF financial arrangement under the Extended Credit Facility (ECF, formerly called the PRGF) and to discuss a successor three-year arrangement. The mission met with Finance Minister V. Nazim Burke, Permanent Secretary Timothy Antoine, other senior government officials, representative of Her Majesty's Opposition, and representatives of the business and financial community and labor unions. The mission thanked the authorities for their warm hospitality and close cooperation it received during its stay in Grenada. The following statement was issued today by the IMF mission led by Ms. Thacker: “Grenada has been hit hard by the global economic slow-down with the two mainstays of the economy – tourism and

Foreign Direct Investment (FDI) – weakening significantly. Real gross domestic product is estimated to have declined by 7.7 percent in 2009, after 2.2 percent growth in 2008. Tourism dropped by about 13 percent year-onyear and FDI - related construction is estimated to have contracted by about 50 percent for the year, although the pace of decline slowed in the last quarter of 2009, reflecting an uptick in FDI inflows. Prices fell by 2.4 percent in the 12 months to December 2009, reflecting weak domestic demand and lower international food and fuel prices. While economic activity is expected to improve in 2010, the recovery is likely to be very slow, reflecting the gradual improvement in source countries – in particular, the US and UK. Continued growth in the agricultural sector and some recovery of FDI-financed construction activity are expected to raise growth to 0.8 percent in 2010. However, there are downside risks to this outlook, if weakness in advanced economies continues to adversely affect tourism and FDI. “... the engine room of the Public Service...”

Progress on the structural front was more promising. The value added tax (VAT) to broaden the tax base and enhance the efficiency of tax collection was introduced on February 1, 2010, as initially planned. The government is also working with the Organization for Economic Co-operation and Development (OECD) to revise the Public Procurement Act in line with international best practices and establish a Public Procurement Department. The mission reached agreement in principle on a new three-year arrangement that would be supported under the IMF's Extended Credit Facility, which has replaced the Poverty Reduction and Growth Facility. The government's key objectives in the new program are: ensuring fiscal and debt sustainability by placing the debt-toGDP ratio on a firm downward trajectory; reducing vulnerabilities in the financial system and strengthening the supervision of the nonbank financial sector; generating high and sustainable growth through structural reforms that will encourage private sector-led growth; and reducing poverty by creating more effective social safety nets. The medium-term fiscal program is underpinned by the need to achieve fiscal and debt sustainability. In light of the difficult economic environment, Continues on pg. 10

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Continued from pg. 9

the fiscal adjustment will be phased in. On the revenue side, the Government will focus on improving compliance and simplifying tax collections. The VAT is expected to enhance the coverage and buoyancy of the tax system, and other post-VAT measures are also being considered to improve revenue performance, including facilitating voluntary compliance by continuing the taxpayer education and service program; implementing enforcement programs to deal promptly with non-filers and stopfilers; and developing audit capacity. On the expenditure side, the government plans to control current expenditures by containing the wage bill, reducing the spending on goods and services by improving procurement procedures and reducing waste, and improving the efficiency of social spending. These measures will make room for higher capital spending over the medium-term to improve the productive capacity of the economy and place growth on a sustained upward trajectory. The government is working to improve the supervision of the nonbank financial sector through the Grenada Authority for the Regulation of Financial Institutions (GARFIN). Insurance sector supervision will be enhanced under the new

Insurance Act, through onsite supervision and enforcement of statutory fund requirements. GARFIN is also working to improve the supervision of credit unions, building societies, pension funds, and money service businesses. In partnership with the other Eastern Caribbean Currency Union (ECCU) governments, the authorities are working toward creating a new company to take over the ECCU operations of the British American Insurance Company, in line with the recommendations of the judicial managers, who assessed the company to be insolvent.

“The recently completed Country Poverty Assessment reveals that 38 percent of population lived below the poverty line in June 2008, even before the crisis hit and the unemployment rate reached levels now believed to be about 30 percent. In this context, the government plans to further strengthen and rationalize the social safety net. The government is preparing a full Poverty Reduction Strategy Paper (PRSP), developing a measure of social spending to monitor efforts to protect the most vulnerable groups, and establishing a central registry of beneficiaries.

The government has set out an ambitious agenda for structural reforms. This includes an updated technology infrastructure for customs which in combination with the new Customs Act will speed processing times while improving enforcement. Other reforms, including a separate Registrar of Companies and Intellectual Property, are intended to reduce the time required to incorporate a company and to start a business. The Lands and Deeds Registry will expedite the transfer of property, and an additional Civil Court will reduce the delays at courts and enhance contract enforcement.

The staff team thanks the Grenadian government officials for their close cooperation and looks forward to a continued constructive dialogue on the economic challenges and opportunities facing Grenada. Upon the team's return to Washington, it will prepare the necessary documentation for presentation to the IMF's Executive Board to consider Grenada's request to complete the fifth review and to approve a new arrangement under the Extended Credit Facility. The mission wishes the authorities success in their endeavors and is encouraged by their commitment to undertake reforms to improve the prospects for its population.”

Congratulations MR. RAPHAEL STEPHENS

on attaining your Doctorate in Public Finance 10 Finance INSIDE

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S E C I T O N

The Ministry of Finance wishes to provide clarity on the rate of Value Added Tax (VAT) applicable to the tourism sector.

Please be advised that the VAT rate applicable to the tourism industry is: • 10% for hotel accommodation and dive only • 15% for all other services provided by the sector. Furthermore, the VAT is calculated on the total value of services received, inclusive of the Service Charge. All relevant stakeholders are asked to take note and be guided accordingly. The Value Added Tax (VAT) unit advises all that in accordance with the Value Added Tax (transitional provisions) Section 3, the General Consumption Tax (GCT), the Airline Ticket Tax, and the Motor Vehicle Purchase Tax are repealed and should not be charged or payable in relation to an import, supply, or acquisition that is made on or after the VAT commencement day which was February 1st 2010. The Trading Community is hereby advised that all goods imported into Grenada before February 1st 2010, but not yet entered for clearance, that is, the duties and taxes have not yet been paid, will attract the Value Added Tax (VAT), and not the General Consumption Tax (GCT), along with any other applicable taxes. The only exceptions are the goods released under the pre-delivery or C24 regime, goods released on deposit or goods released under bond. Furthermore, it is required that all Customs entries for these said goods be remade and re-lodged at the Entry Processing Unit (EPU), Customs and Excise Division, as soon as possible.

All relevant stakeholders are asked to be guided accordingly. CLARIFICATION ON THE COLLECTION OF VAT The Value Added Tax (VAT) Unit would like to advise all businesses who have not yet received their Certificate of Registration but have in their possession the Letter of Registration as proof that they have been registered, are advised that they can legally charge VAT. Customers who have been charged VAT and have not seen a Certificate of Registration displayed can request that the business provide such proof of Registration. Unregistered businesses are asked to note that they cannot collect VAT on behalf of the Government since they have not been registered to do so. The VAT Unit is urging that taxpayers and businesses give their full cooperation as we work towards the smooth administration of the Value Added Tax. LIST OF BUSINESSES REGISTERED FOR VAT AVAILABLE ONLINE The Inland Revenue Division, Ministry of Finance, would like to inform the general public that the VAT Register, listing all businesses registered for VAT up to February 28th, 2010, is now completed and is available online on the Inland Revenue website at www.irdgrenada.com. This register will be updated periodically as new businesses register for VAT. Anyone needing further information can contact the VAT Unit at telephone numbers 435-6945/6 or 435-9085.

T

he Minister of Finance, Planning, Economy, Energy & Cooperatives, Permanent Secretary, Management and Staff extend condolences to the family and friends of all those who have lost their loved ones recently. “Good men must die, but death cannot kill their names” God's Peace Be With Their Souls.

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Facts Fun &

Did U Know? -

That VAT returns are due by the 22nd of every month?

-

That submitting VAT returns after the 22nd will result in late filing fee of $10,000, a late payment fee of 20% of the outstanding tax liability and interest of 1.5% per month or part thereof.

Have a laugh... ALWAYS ASK, NEVER ASSUME. His request approved, the CNN News photographer quickly used a cell phone to call the local airport to charter a flight. He was told a twin-engine plane would be waiting for him at the airport. Arriving at the airfield, he spotted a plane warming up outside a hangar. He jumped in with his bag, slammed the door shut, and shouted, 'Let's go'.

Fun Facts -

People say "Bless you" when you sneeze because when you sneeze, your heart stops for a mili-second.

-

Months that begin on a Sunday will always have a "Friday the 13th."

The pilot taxied out, swung the plane into the wind and took off. Once in the air, the photographer instructed the pilot, 'Fly over the valley and make low passes so I can take pictures of the fires on the hillsides.' 'Why?' asked the pilot. 'Because I'm a photographer for CNN', he responded, 'and I need to get some close up shots.' The pilot was strangely silent for a moment.

Riddle A doctor and a boy were on a long trip together. The boy was the doctor's son, but the doctor was not the boy's father. Who was the doctor? Ans: His mother What three numbers have the same answer when added together and multiplied together? Ans: 1, 2, 3

Finally he stammered, 'So, what you're telling me, is . . . You're NOT my flight instructor?'

Quotations A budget tells us what we can't afford, but it doesn't keep us from buying it. William Feather An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today. Laurence J. Peter

room of the Public Co-ordinating Service...� Finance Visit“... thetoengineProject Unit 14 Minister's INSIDE


Highlights of Budget 2010 Continued from back page • • • • • •

Strategic plan for Nutmeg sector Development of Apiculture (Bee Rearing) Food security promotion Support with agricultural inputs for farmers Livestock development Comprehensive plant propagation programme

VALUE ADDED TAX & EXCISE TAX – For Nation Building • Fewer taxes • Easier and fairer to administer • Wider, more equitable tax • Modern tax system • Lower tax rate WASTE REDUCTION - in Government operations • Central mail delivery system from Ministerial Complex • Central Brokerage Unit • Energy saving/efficient systems in ministries and government offices • Enactment of Public Procurement Law • Fully establish Public Procurement Department SOCIAL SAFETY NETS/PUBLIC ASSISTANCE • Increase in public assistance from 4127 to 4827 recipients, an increase of 700 persons or 17% increase • Development and implementation of Poverty Reduction Strategic and Action Plan • Energy Relief Programme - “Illuminating Lives and Energizing Hope” - access to electricity for the elderly and indigent - provision of stove, cooking gas and accessories for the poor and indigent HEALTH - Improving Health Care for all • Refinement of Strategic Plan • Upgrading of Legal Framework to facilitate modern management of health services • Reorganisation of services offered at the community level • Training of Staff at all levels • New standards for private health care providers • Retrofitting of General Hospital with regards to safety concerns • Refurbishing of health care centres and medical stations • Electronic patient registration admission and billing system

CARRIACOU & PETITE MARTINIQUE • Upgrading of Lauriston Airport • Finalisation and formalization of Local Government • Rehabilitation of major roadways • Mitigation plan to respond to droughts • Commencement of construction of new home for the aged at Top Hill • Commencement of construction of passenger terminal for ferry service • Commissioning of Petite Martinique High School (Forms 1 and 2) • Feasibility study for rainwater catchment and storage TOURISM • Product enhancement • Cleaning of Grand Etang Lake • Conch Night at Woburn • Upgrading of Carriacou Maroon Festival and String Music Festival CULTURE • Comprehensive Cultural Policy • Development of a national academy for the performing arts • Preparatory work for the construction of the Simon (Seamoon) Cultural Centre • Rationalisation of the Grenada Cultural Foundation

OTHER • Phase VI of the Basic Needs Trust Fund (BNTF) – funding for preschools, homes for the aged and skills training. • Improvement of water supply system in south St. George (Southern Water Supply) • Relocation of Police Headquarters • Implementation of Integrity Commission • Full-fledged Ministry of Labour (no longer just a department) • Stronger environmental management • Commencement of construction of facilities to implement and operationalise the Advanced Coastal Surveillance Radar System which will enhance Grenada's coastal supervision capability • National media policy

Welcome to all New Members of Staff “... the engine room of the Public Service...”

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FFinance inance INSIDE

What’s Been Happening

NEW CUSTOMS TARIFF

-

Effective 01 February 2010, a new Tariff was implemented by the Customs and Excise Department of the Ministry of Finance, Grenada.

Transposition of HS Codes from one chapter to the next (e.g.) Printers, previously classified in 8471… has moved to 8443.

-

The placing of additional columns to accommodate: the Environmental Levy (E.V.L) (Act 5 of 1997), Customs Service Charge (C.S.C) (Act 4 of 1993), Petrol-Tax and the soon to be implemented Excise Tax (ET) and Value Added Tax (VAT) rates.

As part of its modernization process, the Customs and Excise Division has embarked on implementing the new CARICOM Common External Tariff (CET) which is based on the (2007) Harmonized System (HS). This will replace S.R.O. 37 of 1999 which was based on the 1996 HS.

FUNDS CONTRIBUTED TO AID IN OZONE LAYER PROTECTION

Trade over the years has evolved into a wide range of new products, whilst older products have become obsolete. Consequently, it has become quite apparent that these changes should be reflected in the trade data being produced by the Customs and Statistics Departments in serving the trading community.

In a brief ceremony on Monday January 18, 2010, at the office of the Hon. Minister of Environment, Export Development and Foreign Trade, the President of the Grenada Refrigeration, Air-conditioning and Ventilating Association (GRAVA) was presented with a cheque valued at US $50,000.00, by Hon. Minister, Michael Church.

The Customs and Excise Department therefore takes this opportunity to officially inform its internal and external customers, stakeholders and the general trading community, that the tariff change took effect on Monday February 1, 2010.

The funds presented have been donated to the Government of Grenada by the United Nations Development Programme (UNDP). UNDP is providing funding for one of the components of Grenada's Terminal Phase-out Management Plan (TPMP) for CFCs to the tune of US120, 000.00. A total of US $90,000.00 has already been received.

Importers, Brokers, and the trading community are advised to take note of the following: (1)

The Administrative tariff is currently on the Customs website – www.grenadacustoms.com but subject to changes to reflect policy decisions.

(2)

CD's containing the Administrative tariff will be made available for traders who have computers but lack internet access.

(3)

A document listing the new tariff breakouts and their Value Added Tax (VAT) treatment will be made available to the trading community.

(4)

The Entry Processing Unit (EPU) will exercise administrative tolerance; that is, amending declarations rather than rejecting them where possible, for 2-4 weeks after implementation as a means of facilitating traders.

(5)

The major changes expected in the new CET are: -

Making some numbers redundant, since they are no longer used in trade.

-

The addition of new codes to accommodate new products and different trading practices within the World Trade Organization (WTO), World Customs Organization (WCO) and CARICOM Member States.

GARVA President receiving cheque from Minister church

The funds presented would be used by the GRAVA to procure recovery and recycling equipment for use by local technicians in the Refrigeration and Air-conditioning sector in Grenada. The technicians have already received training in the new state-of-the-art equipment that will be distributed to recovery and recycling centres on Wednesday January 27th, 2010. The main aim of this initiative is to encourage technicians to perform Good Refrigeration Practices so as to prevent the Continues on pg. 17

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release of Ozone Depleting Substances, namely CFCs into the atmosphere. This activity forms part of Grenada's obligation as a party to the Montreal Protocol on Substances that Deplete the Ozone Layer, to completely phase out the consumption/imports of CFCs in Grenada by the year 2010 – a result Grenada has achieved since 2006. The activities of the Montreal Protocol are coordinated by the National Ozone Unit, Energy Division, Ministry of Finance. Project Officer in the National Ozone Unit, Mr. Leslie Smith who was also present at the ceremony, indicated that the equipment provided will be used to establish additional Recovery and Recycling Centres across the island to add to the thirteen Centres already established. Minister Church during his brief remarks, reiterated Grenada's commitment to the Montreal Protocol in ridding the planet of Ozone Depleting Substances in its global effort to protect and enhance the already depleted Ozone Layer. 4 NEW RECOVERY AND RECYCLING CENTRES FOR GRENADA The National Ozone Unit of the Energy Division of the Ministry of Finance, on Wednesday, January 27, 2010, handed out recovery and recycling equipment, valued at US$50,000.00, to four institutions, for the establishment of four (4) additional Recovery and Recycling Centres and the of upgrading of the Recovery and Recycling Centre at TAMCC. The establishment of Recovery and Recycling Centres is a component of Phase II of Grenada's Terminal Phase-out Management Plan (TPMP) for Chlorofluorocarbons (CFC's). This programme is managed by the National Ozone Unit. Its main objective, is to play its part in the global endeavour to

Minister Church with GRAVA Members

Prior to yesterday, thirteen (13) Centres had already been established throughout Grenada. This was done in February 2009 by the Ozone Unit in collaboration with Grenada Refrigeration Air-conditioning and Ventilating Association (GRAVA). The distribution of the current equipment will see the establishment of four additional Centres at: • St. George's University; • Grenada Airports Authority; • General Hospital; and • Dave Riley's Workshop, Tempe, St. George's. These Centres were chosen based on the volume of refrigerants handled, accessibility of the equipment to technician, requisite training, and membership in the Association of Refrigeration and Air-condition technicians in Grenada. The main objective of establishing Recovery and Recycling Centres is to provide local technicians with the necessary equipment to prevent them from venting or purging refrigerants that can damage the Ozone Layer, into the atmosphere. Some of these refrigerant gases are also Green House Gases (GHG) and can contribute to global warming. The equipment was distributed by the Minister of Environment, Hon. Michael Church. Funding for the equipment was provided by the United Nations Development Programme (UNDP) and the equipment was supplied by GRAVA. FIFTH REVIEW OF THE PRGF An IMF team visited Grenada from February 3–10, 2010 to conduct the fifth (5th) review of Grenada's Poverty Reduction and Growth Facility (PRGF) programme.

GARVA President, Minister Church and Ozone Officer at Ceremony

protect, preserve and enhance the fragile Ozone Layer by ridding the planet of harmful Ozone Depleting Substances.

The team was headed by Ms. Nita Thacker. While in Grenada the team held discussions with various stakeholders in the public and private sectors including: the Continues on pg. 18

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Continued from pg. 17

The discussion ended Wednesday February 10th 2010 with a press conference. The text of their report presented at the press conference can be found on page 9.

In November 2009, Chairman of the Ministerial SubCommittee on Insurance, Prime Minister of St. Vincent and the Grenadines, Dr. Ralph Gonsalves, announced that the Governments of the Eastern Caribbean Currency Union (ECCU) had approved a regional plan to assist with the structure and funding of a proposed new entity to take over some of the assets and liabilities of the British American Insurance Company Limited (BAICO) in the Eastern Caribbean.

COURTS APPROVE RECOMMENDATIONS BY THE JUDICIAL MANAGERS OF BRITISH AMERICAN I N S U R A N C E C O M PA N Y I N T H E E A S T E R N CARIBBEAN FOR THE ESTABLISHMENT OF A NEW COMPANY

At the time, Prime Minister Gonsalves noted that the plan for the new company must be approved by the Court. He also stressed that “the ECCU governments' first priority has been and continues to be to craft a viable and sustainable solution for our citizens.”

Courts in four Eastern Caribbean countries have approved the recommendations of the Judicial Managers of the branches of British American Insurance Company for the establishment of a new company.

The ECCU Governments welcome the approval of the Courts.

Minister of Finance and his team; other Government Ministers and senior public servants; representatives from the Grenada Authority for the Regulation of Financial Institutions (GARFIN); the Banker's Association; the Grenada Chamber of Industry of Commerce (GCIC); the Labour Unions; and the like.

The Courts in Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines made the ruling in December 2009. It is expected that the matter of the Judicial Managers' recommendations will soon be heard in other countries of the ECCU. The approval of the Courts mean efforts by Eastern Caribbean Governments to establish a new company can be intensified. The Court in the Bahamas has also approved the recommendations of the Judicial Manager for British American Insurance Company (Bahamas), which is the parent company of all branches of British American Insurance in the Eastern Caribbean, to establish a new company. In August of 2009, Regulators in the Eastern Caribbean Currency Union (ECCU) and the Bahamas intervened in the operations of BAICO and applied to the courts in several jurisdictions to appoint Judicial Managers. As a consequence, the courts in Antigua and Barbuda, Montserrat, St. Kitts and Nevis, St. Vincent and the Grenadines, Grenada, and St. Lucia, where BAICO operates branches, issued separate orders for the firm to be placed under Judicial Management. On 8th September 2009, the Supreme Court of The Commonwealth of the Bahamas ordered that BAICO be placed under Judicial Management.

AGREEMENT SIGNING WITH EUROPEAN UNION On Friday February 5th, 2010, the Grenada Government and the European Commission signed an addendum to the Country Strategy Paper and the National Indicative Programme for the period 2008-2013 at the Ministry of Tourism's conference room. The addendum was signed by Minister of Tourism, the Honourable Glynis Roberts for the Government of Grenada and Head of Delegation Ambassador, Valeriano Diaz for the European Commission. The Country Strategy Paper/National Indicative Programme provides grant funding for Grenada under the 10th European Development Fund to support Grenada's development programmes for the period 2008 – 2013. The addendum provides for grant funds amounting to EC$18.5 million to be paid in the form of general budget support. The European Commission has increasingly chosen to provide grant funds through budget support instead of financing specific projects because it gives the beneficiary countries greater flexibility in the use of these funds to support home-grown economic development. GARFIN APPOINTS DEPUTY EXECUTIVE DIRECTOR The Grenada Authority for the Regulation of Financial Institutions (GARFIN) has appointed Mr. Niguel Streete to the position of Deputy Executive Director with effect from January 19, 2010.

The Judicial Managers were all appointed from among professionals of a single group, the chartered accounting firm of KPMG. The reports of the Judicial Managers, which included their key findings and recommendations, were filed in the Courts in Anguilla, Antigua and Barbuda, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines at the end of October 2009. The report for Dominica was filed in December 2009.

Mr. Streete brings a wealth of experience to this position having served as Executive Director of the Anguilla Financial Services Mr. Niguel Streete

Continues on pg. 19

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Commission for the last three years. Prior to that, he spent fifteen years at the Eastern Caribbean Central Bank (ECCB) holding positions of Advisor to the Governor on regional regulatory cooperation and consolidated supervision; Director of the Bank Supervision Department; and Secretary of the Eastern Caribbean Securities Regulatory Commission (ECSRC). Mr. Streete holds an MSc in International Economics, Banking and Finance from the University of Wales - Cardiff Business School and a Bachelor of Science Degree in Accounting from the University of the West Indies. Mr. Streete's appointment will further strengthen the capacity of GARFIN to conduct its activities as regulator of the Non-Bank Financial Sector in Grenada which includes insurance companies, credit unions, and money transfer agencies.

This means that the operations of GREP phase I will now end on December 31, 2010, whereas it should have ended on December 31, 2009. This extension will also serve as a bridge between GREP phase I and GREP phase II which is expected to be operational in January 2011. GREP phase II is expected to be approved by CDB and the International Fund for Agricultural Development (IFAD) before the end of 2010. A total of US$ 7.5million is earmarked for this phase with US$2 million coming from the CDB; US$3 million from IFAD; and US$2.5 million from the Government of Grenada.

GRENADA INITIALS TIEA WITH FRANCE Grenada made another concrete step today towards establishing twelve (12) Tax Information Exchange Agreements (TIEA) by the Organisation for Economic Cooperation and Development's (OECD) deadline, of March 2010. On Tuesday February 23, 2010, Grenada initialled a TIEA with the French Republic, which effectively concludes the negotiation stage for the Agreement and clears the way for the contracting parties to move the Agreement through their legislative processes. It is anticipated that the final Agreement will be signed before the end of March. Grenada is particularly pleased to conclude negotiations with the French Republic, including its European and overseas departments, because of France's active role in the OECD. The conclusion of this Agreement is a further indication of Grenada's commitment to transparency and international cooperation on tax matters. This brings to eight the number of agreements initialled. Grenada has also signed two agreements and has concluded negotiations, without initialling, on another four agreements. Grenada and its regional counterparts are concerned about the recently announced pre-emptive actions being contemplated by France in imposing economic sanctions on perceived uncooperative jurisdictions. Grenada is optimistic that the commitment being demonstrated today by the initialling of this Agreement will put a stay on any contemplated negative action against Grenada. GRENADA GETS EXTENSION OF GREP PHASE 1 Pursuant to Article IV, Section 4.03 of Schedule 1 to the loan agreement between the Caribbean Development Bank (CDB) and the Government of Grenada for the Grenada Rural Enterprise Project (GREP), the CDB has extended the terminal disbursement date for phase I of the project to December 31, 2010.

Minister Burke IFAD Country Manager signing Memorandum

GREP Phase II will focus on agriculture and enterprise development. This is consistent with Government's continued focus on agriculture, rural development and employment creation. A Memorandum of Understanding for this phase was signed by the Minister of Finance, Hon. V. Nazim Burke and IFAD's Country Manager for Latin America and the Caribbean, Ms. Jaana Keitaaranta on December 10, 2009. WORLD BANK CONSULTATION ON OECS COUNTRY PARTNERSHIP STRATEGY A World Bank Team visited Grenada on Thursday February 25, 2010 to hold a cross sectoral consultation on a proposed OECS Country Assistance/Partnership Strategy. A Country Assistance/Partnership Strategy is an essential tool of the World Bank Management and the Board of Executive Directors for reviewing and guiding the country programmes and, ultimately, judging the impact of the Bank's work. In the case of the Eastern Caribbean, the strategy being developed is a sub-regional one (that is a strategy that encompasses the six independent territories of the OECS) as opposed to a single/individual country strategy. Starting from the region's vision of its development goals, the Regional Continues on pg 20

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Partnership Strategy (RPS) is being prepared in collaboration with the OECS Governments and in consultation with the private sector, civil society, development partners and other stakeholders. The objective of the RPS is to identify the key areas in which Bank Group support can best assist the sub-region to achieve its sustainable development and poverty reduction goals. The Bank prepares the RPS jointly with the International Finance Corporation (IFC).

The team consisted of Ms. Olga Kalinina, Associate Director and Mr. Richard Francis, Director of Standard and Poors. While here, they met with various stakeholders including the Ministry of Finance and other Government bodies; the leader of Her Majesty's Opposition; the Grenada Authority for the Regulation of Financial Institutions (GARFIN); the United States Embassy; and representatives from the Board of Tourism, the Grenada Chamber of Industry and Commerce, and the Banking Sector. Credit ratings are usually awarded relative to other countries in the world. Standards and Poors rates over 100 countries internationally. The report of the mission, once completed, will be made available on the Standard and Poors website and through the Ministry of Finance. MINISTRY OF FINANCE ENGAGES INDIAN & SYRIAN BUSINESS COMMUNITIES

Participants at consultation

Thursday's consultation was used as a forum to present the proposed strategy and to receive feedback on the proposal from the government, the private sector and civil society. The members of the Multi-partite Consultative Committee and other stakeholders attended the meeting.

The Minister of Finance, Hon. V. Nazim Burke yesterday (March 2, 2010), met with members of the Indian and Syrian business communities, to discuss issues relating to the implementation of the Value Added Tax (VAT). In his introductory remarks, the Minister explained that this meeting was called, “as part of the Ministry's thrust to forge partnerships and build trust between government and the business sector.” He further stated that, “the Ministry continues to engage all sectors of the economy thereby improving working relations and economic opportunities.” Minister Burke also took the opportunity to re-emphasize the importance of the VAT, the obligations under the VAT Act, and other economic policies as presented in the 2010 Budget. The Minister commended the attendees for their large turn out which he thinks is a demonstration of their interest in forging good working relations with Government.

Participants at consultation

The Bank's representatives presented a power point presentation setting out it's diagnosis of the region's development challenges, the region's development vision, the proposed areas of focus of the Bank's support, development results to be influenced by the Bank and an indicative programme of Bank lending and non-lending activities. The meeting was chaired by the Minister of Finance, Hon. V. Nazim Burke. Business Men at Meeting

STANDARD AND POORS ANNUAL REVIEW As part of its ongoing Credit Review, a team from Standard and Poors conducted their annual review for reassessing Grenada's Sovereign Credit Rating from March 23 – 24, 2010.

The members of the business communities took the opportunity to seek clarification on the VAT with respect to billing, the issuance of receipts and other legislative issues and to express their concerns and offer suggestions for improved VAT implementation. They also spoke extensively on the

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slow-down in the economy, explaining that the current economic conditions are having a detrimental effect on their businesses, and that they sometimes have to forego profits in order to generate sales.

enhance the well-being and increase the incomes of poor people. Bank development policy lending is a quickdisbursing financing instrument that helps a borrower address actual or anticipated development financing requirements of domestic or external origins.”

The Director of Private Sector Development, Mr. Christopher De Riggs, assured them that Government is doing all in its power to revitalize the economy. He explained that the Government is currently engaging several investors in an effort

Minister Burke with Members of DPL Mission Team

The DPL mission team met with the Minister of Finance and a number of government departments and officers, including the Office of Private Sector Development, the Land and Deeds Registry, the Value Added Tax (VAT) Unit, and the Registrar of Companies.

Business Men at Meeting

to start development projects which will stimulate jobs in the construction sector, one of the sectors hardest hit by the current economic downturn. The expectations coming out of this meeting are that the Ministry will now have a better working relationship with these two business communities; there will be more dialogue and better understanding between the two; and that the VAT obligations would be better administered by these businesses in their daily operations. The meeting was also attended by the Permanent Secretary, the Comptroller of Inland Revenue, the Head of the VAT Unit, and other senior officials of the Ministry of Finance. WORLD BANK DPL MISSION A World Bank group visited Grenada (from March 23–26, 2010) on the assessment mission for a Development Policy Loan (DPL) which the Grenada Government is considering as part of its response to the global crisis. Speaking on the issue, Hon. Minister Burke, Minister of Finance, said that he welcomed this support from the World Bank since he had asked them to consider what additional support can be provided to Grenada to cushion the effect of the global economic recession.

DPL & Finance Teams in negotiations

The team also met with the Permanent Secretary and other senior officers of the Ministry of Finance to negotiate terms and conditions of the DPL facility, which will provide US$8m to Grenada. The team will return and present their proposal to the World Bank Executive Board of Directors in early June 2010. MANAGEMENT FOR DEVELOPMENT RESULTS The Basic Needs Trust Fund (BNTF) Office, in collaboration with the Caribbean Development Bank (CDB), held a two (2)

In 2004, the World Bank introduced DPLs as a softer and gentler form of conditionality (lending instrument) to replace their regular loans. According to World Bank documentation, “Development policy lending aims to help a borrower achieve sustainable reductions in poverty through a programme of policy and institutional actions that promote growth and Participants at consultation

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The formulation of a strategic plan for the reconstruction and development of Haiti;

Progress regarding the formulation of a regional response by CARICOM to the financial and economic crisis Member States addressed their specific performance in respect of the achievement of agreed targets;

CARICOM Financial Services Agreement;

CARICOM Investment Code;

The administration of the Intra-CARICOM Double Taxation Agreement; and

The operations of the Caribbean Catastrophe Risk Insurance Facility (CCRIF).

Presenters and Participants at Consultation

day workshop on Management for Development Results from Monday March 22nd to Tuesday March 23rd, 2010 at the Ministry of Finance Conference Room. The workshop was used as a means to introduce new methods and approaches for monitoring and evaluating BNTF subproject and development projects. The objectives of the workshop were: • To improve the participant's skills to conceptualize and design development projects and to become engaged in the monitoring process. • To emphasize the importance of designing 'good' projects that respond to countries' and communities' (and CDB) priorities and to obtain results. • To present and seek agreement on the revised system for monitoring and reporting of results. • To clarify roles and responsibilities of stakeholders in conducting the monitoring and reporting of results.

The meeting was also used as an opportunity by World Bank officials to brief the Ministers of Finance and prepare them for an upcoming meeting with the President of the World Bank, Mr. Robert Zoellick, who is scheduled to meet CARICOM Heads (and officials) of Government in Dominica on March 11th, 2010. The Ministers were briefed on issues which were raised by the CARICOM Governors during the IMF-World Bank Annual Meeting in Istanbul namely tax havens, debt and climate change. In preparation for this aspect of the meeting the Ministers were encouraged to prepare and present their respective country's debt profile and debt servicing requirements for the next 10 to 20 years; a medium term financing plan; and ideas regarding possible criteria to be considered for country's eligibility for concessionary financing, especially for highly indebted middle income countries. The upcoming meeting with the President of the World Bank is seen as an excellent opportunity for Member States to obtain consensus on the treatment of key policy challenges critical to their socio-economic development.

Participants for the workshop included persons from all organizations that have been involved in the BNTF projects.

GRENADA RECEIVES TECHNICAL ASSISTANCE ON PUBLIC DEBT MANAGEMENT

MINISTER OF FINANCE AT 14TH MEETING OF COFAP

In response to the Government of Grenada's request for technical assistance in public debt management, a technical team from the International Monetary Fund (IMF) arrived in Grenada on March 24, 2010 to work with the Debt Management Unit of the Ministry of Finance for approximately 1 1/2 weeks.

“The 14th meeting of the Council for Finance and Planning proved to a very constructive engagement of the minds of Ministers and officials as they sought to tackle some of the strategic issues and challenges confronting our region both in the short and medium term.” These were the words of the Minister of Finance, Hon. V. Nazim Burke as he returned from the 14th meeting of the Council for Finance and Planning (COFAP) held in Trinidad on Monday, March 1st 2010. The meeting brought together the Ministerial Heads of Finance of the CARICOM Member States.

The mission team was headed by Mr. Myrvin Anthony, Senior Economist of the Sovereign Asset and Liability Management Division, Monetary and Capital Markets Department of the IMF. The other members of the team were Messrs. Faisal Ahmed (Economist, IMF), Mike Williams (Public Debt Management Consultant, IMF External Expert), and Ms. Michele Robinson (Public Debt Management Consultant, working with CARTAC).

The Agenda of this 14th meeting saw discussions on:

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The overall objective of this mission was to assist Grenada's government in improving public debt management. This is in keeping with the statements made by the Minister of Finance, Hon. V. Nazim Burke, in his 2010 Budget Statement. He stated that training for the Debt Management Unit “is essential as Government seeks to thoroughly analyse all new debts before they are contracted, to re-examine our current portfolio and ensure that we chart a course with a renewed debt strategy which will bring our debt closer to sustainable levels. He further stated that: “During 2010, Grenada will work with the ECCB and other partners to access support through the Debt Management Programme (DEMAS) funded by Canada. Government will also be seeking further debt relief from the Paris Club creditors.” Specifically, the intentions of the mission were to: (i) review the Government's overall medium-term debt management strategy and identify and advise on changes needed and additional analysis required to strengthen the formulation of the mediumterm debt strategy; (ii) advise on the coordination of debt management with macroeconomic objectives, including fiscal and debt sustainability; (iii) examine interactions of debt management with banking system stability, social security fund sustainability, and quasi-fiscal implications of public corporations' borrowings; (iv) review the institutional arrangements for debt management including the decisionmaking framework, accountability arrangements and reporting requirements; and (v) review the scope for borrowing regionally under the Regional Government Securities Market (RGSM).

Cooperatives, on the progress made in seeking the speedy enactment of modern legislation for effective regulation in the cooperatives sectors of the ECCU; and -

Hon. Harold Lovell, Council Member for Antigua and Barbuda and Chairman of the Ministerial Sub-Committee on Offshore Business, on the progress made in seeking the speedy signing of Tax Information Exchange Agreements (TIEAs).

Hon. Dr. Ralph Gonsalves, Prime Minister of St. Vincent and the Grenadines, will also make a presentation on behalf of the Ministerial Sub-Committee on Insurance Business, which is currently seeking to find a resolution to the insurance sector crisis in the ECCU. Coming out of the meeting, member countries were provided with directives and guidelines on fiscal policies to address their current financial issues to meet their needs at this time. NEW ACT BRINGS STRONGER REGULATION & SUPERVISION FOR INSURANCE COMPANIES The Ministry of Finance and the Grenada Authority for the Regulation of Financial Institutions (GARFIN), is pleased to inform the general public that the new Insurance Act, No. 5 of 2010, which was passed in Parliament in December 2009, came into effect on Friday March 26, 2010 by way of S.R.O. No. 6 of 2010. The S.R.O. was signed by the Minister of Finance in accordance with section 1 of the said Act.

MINISTER BURKE ATTENDS 66th MEETING OF THE MONETARY COUNCIL Minister of Finance, Hon. Nazim Burke attended the 66th Meeting of the Monetary Council of the Eastern Central Bank (ECCB) in St. Kitt's, on March 5th 2010. According to information from the ECCB, the main discussion items on the agenda were the stability of the Eastern Caribbean Currency Union's (ECCU) financial sector and sustaining growth in the post economic crisis period. Members of Insurance Sector at the discussion on new Act

In addition, reports were given by: -

Hon. Roosevelt Skerritt, Prime Minister of Dominica and Chairman of the Ministerial Sub-Committee on

It may be recalled that the Minister of Finance, in the 2010 Budget Speech, promised stronger regulation and supervision of insurance companies. The new Act repeals and replaces the Insurance Act of 1973 and now gives Grenada a modern insurance legislative framework in keeping with international standards and best practices. The new Act increases the capital and solvency requirements for insurance companies and makes provision for the establishment of statutory funds to protect policyholders liabilities. It also imposes penalties on companies and their officers for non compliance and brings insurance agents, brokers and adjusters under greater supervision.

Governors at Monetary Council Meeting

Overall, the new Act strengthens the supervisory and regulatory powers of GARFIN as the Supervisor of Insurance.

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Highlights of Budget 2010 • Teacher education • Rehabilitation of schools • Construction of three (3) new preschools • Full refund of external examination fees to all students who passed eight (8) or more subjects in their external examinations, such as CXC HOUSING • Housing solutions to over 650 families • Low income housing projects – 350 families will benefit • Sustainable Livelihoods Project – in excess of 2000 families will have access to enhanced community facilities, amenities and services

Some members of the Budget Day Presentation Team

JOB CREATION • 1,500 permanent jobs • 15,000 temporary jobs INVESTMENT • Over twenty (20) private investments expected to come on stream • Government support/facilitation for private sector investment projects CONSTRUCTION • VAT relief on construction materials for six months • Rehabilitation of Houses of Parliament • Restoration of other Government buildings • Upgrading of roads in St. Patrick • Ye a r- r o u n d r o a d m a i n t e n a n c e programme • Concrete roads programme – rehabilitation of roads, pavement construction, drainage and retaining walls • Grenville Market Development - Construction of the bus terminal in the Moon Shadow Park area - Relocation of the Grenville Abattoir to Mirabeau

- Expansion and refurbishment of the Grenville Market Square YOUTH DEVELOPMENT • Youth Entrepreneurs Development Fund - Employment opportunities - Development of entrepreneurs and entrepreneurship skills • Education enhancement and training in Wood Work, Agribusiness and Coast Guard Services EDUCATION • Curriculum Refocusing and Implementation - Tap into the diverse intelligence and talents among students - Reintroduce TVET in primary schools - Enhance the range of TVET subjects accessible to students - Provide schools with relevant equipment and materials for curriculum delivery - Introduction of the subjects: tourism, and entrepreneurship education in the curriculum • Technical and Vocational Training

SPORTS • Comprehensive sports policy • Completion of Cuthbert Peter's Park • Upgrading of Morne Rouge Playing Field • Bleachers at Progress Park • Lighting up of six (6) playing fields • Commence construction of international swimming pool at Calliste AGRICULTURE • Development and rehabilitation of Government Estates • Agriculture Farm Labour Support Programme - Rehabilitation of Farm and Feeder Roads - Labour for land – preparation for farmers wishing to establish fruit tree orchards of one acre or more and for maintenance of already established orchards of more than one acre - Labour for land preparation to farmers seeking to establish plots of minor spices (cinnamon, cloves, bay leaf) of one acre or more and for maintenance of these plots - Labour and/or material to livestock farmers to establish pastures and forage banks - Labour for farmers to improve drainage, contouring and other soil conservation techniques Continues on pg. 15

Ministry of Finance, Planning, Economy, Energy & Cooperatives Financial Complex, Carenage, St. George’s Tel.: 440-2731-34, 435-0057; Fax: 440-4115; Website: www.gov.gd; Email: finance@gov.gd, financegrenada@gmail.com Contact: Petra Joseph, Editor-in-Chief, 440-2731, ext.: 1108/435-0057 Designed and printed by Government Printery

Inside Finance - Volume 6, Issue 1, January - March 2010  

Government of Grenada

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