Grenada - Joint World Bank-IMF Debt Sustainability Analysis

Overview & Synopsis

Grenada remains in public debt distress solely on account of large and longstanding unresolved arrears to an official bilateral creditor of about 38 million dollar (2.7 percent of GDP) as of end-2024. External and public debt are assessed as sustainable, and Grenada has the capacity to meet current and future debt service obligations without requiring debt relief or accumulating additional arrears. There is a one-off near-term breach of the debt-service-to-revenue threshold, reflecting temporarily elevated payments to holders of restructured international bonds. The additional planned borrowing for a new flagship government infrastructure project Polaris, close to 16 percent of 2024 GDP, will delay achievement of the Government’s 60 percent of GDP public debt target by four years, but would not result in breaches of the debt burden thresholds. Anchored in Grenada’s fiscal rules framework, external and public debt are expected to return to a downward path, supported by continued GDP growth and a declining debt service burden underpinned by a high degree of concessional financing. While gross public debt could rise significantly and persistently in more than one shock scenario, government deposits from the recent Citizenship-by-Investment (CBI) revenue surge and tested contingency financing mechanisms would mitigate the risks.