Economic and Financial Review - June 2019

June 2019 Economic and Financial Review GRENADA

corresponding period of 2018. The rise in the current account surplus reflected stronger revenue performance while containing expenditure outlays. Current revenue rose by 3.5 per cent ($13.0m) to $389.9m, driven by tax receipts which grew by 4.2 per cent ($14.9m) to $373.6m. Receipts from taxes on domestic goods and services advanced by 3.5 per cent ($5.3m), primarily associated with an uptick in revenue of $1.7m from the Value Added Tax, consistent with growth in economic activity. A 10.6 per cent ($1.0m) increase in the collection of licences also contributed to the performance of taxes on domestic goods and services. The yield from taxes on international trade and transactions grew by 4.4 per cent ($5.0m) boosted mainly by improved revenue performances for import duty and customs service charge of 4.6 per cent and 3.6 per cent respectively. Revenue from taxes on income and profit grew by 5.1 per cent ($3.8m), attributable to higher receipts from personal income tax. The boost in income tax collections reflected the effect of legislative changes to tax rates in 2019. For the tax period 2019, there were 2.0 percentage points reductions to 28.0 per cent for both the personal income tax for income in excess of $5,000 per month and the corporate tax. The gains

Grenada Consumer Price Index Percentage Change

%

1.5

1.0

0.5

0.0

-0.5

-1.0

17 Q1

17 Q2

17 Q3

17 Q4

18 Q1

18 Q2

18 Q3

18 Q4

19 Q1

19 Q2

All Items Food & Non-Alchoholic Beverages Energy

Note: Energy includes Housing, Utilities, Gas & Fuels

Fiscal and Debt Developments Fiscal responsibility legislation enacted in 2015 during the Home Grown Structural Adjustment Programme forms the backdrop to fiscal policy in Grenada. In the context of fiscal rules, the fiscal policy stance in Grenada remained conservative, and contributed to a larger central government overall surplus. The overall surplus expanded to $89.1m in the first six months of 2019 from $68.0m in the corresponding period of 2018. Likewise, the primary surplus improved by 20.7 per cent to $116.2m. Both the overall and primary balance outcomes reflected the combined effects of buoyant real sector activity on revenue collections and prudence on the expenditure side of the accounts.

For the six-month period ended June 2019, a current account surplus of $81.6m was reported, up from one of $68.1m in the

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Eastern Caribbean Central Bank