VZCZCXRO8065
RR RUEHGR
DE RUEHGR #0026 0921815
ZNR UUUUU ZZH
R 021815Z APR 09
FM AMEMBASSY GRENADA
TO RUEHC/SECSTATE WASHDC 0550
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHGR/AMEMBASSY GRENADA 0637

UNCLAS GRENADA 000026 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR WHA/CAR MITCHELL 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ELAB GJ
SUBJECT: PRIME MINISTER ROLLS OUT STIMULUS PACKAGE IN "OBAMA-STYLE 
TOWN HALL MEETING 
 
¶1. (U) Grenada Prime Minister Tillman Thomas and his ministers 
held a hastily arranged "Obama-style" town hall meeting to 
announce an "Obama-style" stimulus package on March 31.  The 
stimulus package was made possible by a US$7 million (EC$20 
million) loan Parliament approved on March 25 to come from three 
to five banks with branches in Grenada.  The original loan 
legislation was vague about how the money would be used. 
Thomas' March 31 presentation detailed exactly where the 
government expected to use the money.  Included are plans for 
continued clearing of vegetation along the country's roads, 
agriculture, road work, and repairs of several ministry 
buildings.  The focus was on job creation, although the GOG has 
come up with a complicated, and confusing, system to spread the 
jobs around.  As a result, while the total number to be employed 
in road work is over 700, people will be rotated in and out of 
the jobs every few weeks, so that at any given time the total 
will be lower, and no one would work for the duration of any 
project. 
 
¶2. (U) The tax amnesty program begun in November 2008 and 
already extended from December 31 to March 31, 2009, was 
extended again to the end of April.  The government has shied 
away from giving actual dollar figures for collections to date. 
All the GOG will say is that the amnesty is a hit with 
businesses.  The overall amount owed the GOG by private 
individuals, businesses, and investors is about US$28 million 
(EC$75 million).  The expiration on December 31, 2008 of the 
national reconstruction levy (NRL), and the further delay in 
implementing value added tax from 2009 to 2010, combined with 
the non-payment of taxes means that government revenues are most 
likely down significantly. 
 
¶3. (SBU) The Prime Minister and his ministers took questions 
from the sparse crowd of 50 after his 20 minute presentation. 
Concerns were raised about the weak enforcement of Grenada's tax 
laws, the ineffectiveness and incompetence of the Grenadian 
legal system and fraternity, and the downside of allowing 
governments to bid on construction projects funded by the 
international financial institutions (code here for the Chinese 
who underbid local contractors, do not use local labor, and 
import equipment and materials duty-free from China).  The 
government responses were not very detailed and were designed 
more to reassure than to inform. 
 
¶4. (SBU) Comment: Speculation was rampant about what the loan 
funds would be used for after the borrowing was approved. 
During parliamentary discussion, the opposition warned darkly of 
the dangers of borrowing to pay for regular expenditures.  The 
government plans laid out March 31 appear to include spending at 
least some of that money on ongoing programs, such as road 
clearing.  On the positive side, the government is trying to 
figure out ways to put people to work during difficult economic 
times.  The GOG may regret not taking more time to work out the 
details of the programs it wants to implement with the borrowed 
money.  If the work for any given individual only lasts one or 
two weeks in order to spread limited funding around, the 
programs could prove to be unpopular.  Ultimately, the GOG must 
implement VAT and figure out how to ensure people pay taxes and 
rents they owe on time in order to close the budget gap and to 
create sustainable, long-term employment. 
 
MCISAAC