Budget Speech 2011 - Government of Grenada

3. The relief granted by the restructuring was only a flow treatment
and the rates of interest increase every two or three years.
We must start with the realization that there are essentially four ways to
raise monies to finance government expenditure - taxes and other imposts,
excessive borrowing from the central bank (printing money), loans and
grants. Let us briefly consider these options:
Printing money: Grenada is part of a monetary union through the Eastern
Caribbean Central Bank so printing money is simply not allowed.
Taxes: Everyone agrees that now is not the time for tax increases.
Grants: Everyone knows that grants are limited and are being targeted to
the poorest countries in the world.
Loans: Everyone agrees that the national debt is too high but that we must
borrow prudently to supplement our limited revenue so we can implement
development projects, create jobs and get our economy growing again.
Mr. Speaker, the question we must consider is what would happen if we
unilaterally decided and communicated to the world that we would no
longer be repaying our debts?
First it should be noted that any such signal to the international creditors
would be met by a corresponding decision not to provide loans to Grenada
or make further advances under existing loan agreements with Grenada.
Indeed, it is the lending policy of all multilateral financial institutions
including the CDB, IMF and World Bank that where a borrower is in
default on their loan obligations, no advances will be made under existing
loan agreements and no new loan agreements will be approved by the
institution.
It follows that should Grenada decide to proceed in this way the resources
that we now rely upon to undertake capital works will not be forthcoming:
2011 Budget Statement Page 57