Above: Grenada

By the Caribbean Journal staff

Grenada’s proposed debt restructuring could take “considerable time,” according to New York-based ratings firm Standard & Poor’s.

The firm announced Friday that its “SD,” or selective default, rating on Grenada had remained unchanged.

Grenada defaulted in March 2013 on its foreign and local currency debt maturing in 2025, ceasing service on $193 million external debt and EC $184 million in local currency debt.

“We expect the government’s proposed comprehensive debt restructuring could take considerable time, perhaps 12-18 months or more,” the ratings firm said. “As part of this process, Grenada may, in our view, seek an agreement with the International Monetary Fund (IMF), establishing a framework for future economic policies.”

On that front, the firm said Grenada’s early 2014 passage of a new budget and plans for capital works, among other initiatives, could facilitate the agreement of a new IMF programme.

S&P also said Grenada could subsequently seek relief from its other creditors.

“We think the large commercial portion of Grenada’s government debt — more than half — increases the probability of a reduction in principal, based on recent debt restructuring exercises of other highly indebted neighbors,” the firm said in a statement.

While S&P said Grenada had a “stable political system,” it said the country’s “political institutions and debt management capacity are weak, contributing to the likely prolonged debt restructuring process.”

It also said Grenada had “limited bureaucratic capacity to implement reforms.”

“Key to the success of any long-term recovery plan, and to the future rating on the sovereign’s debt, is the ability to sustain economic growth, particularly
private-sector growth,” S&P said.

Last year, Grenada saw real GDP growth of an estimated 1.3 percent. That number is projected to slow to 1.1 percent in 2014, according to S&P.