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Caribbean Islands
Index
The Blaize government played only an advisory role in the
economy, preferring a market-oriented system to the tightly
controlled economy of the previous government. The government saw
its role as one of overseeing the privatization of the economy and
assisting national development through public sector investment, as
well as through monetary and fiscal policies.
The government's principal role as overseer of public
enterprises and manager of infrastructural development was
coordinated through its program of public sector investment. The
purpose of this program was to coordinate private sector and public
sector development efforts to maximize the potential for national
economic growth. This was accomplished by providing direct
assistance to the productive sectors, while also supporting them
with infrastructural development. In 1985 investment in the public
sector focused on three major areas: the productive sectors of
agriculture, tourism, and manufacturing; physical infrastructure,
such as roads; and the social sectors, principally health and
education. Seventy-four percent of the funds were placed in
infrastructural projects, including roads, water and sewerage,
communications, and energy. Agriculture commanded 12 percent of the
funds invested in productive resources, and education, health, and
housing received a combined total of 7 percent of public funds.
Major improvements to communication and transportation
facilities were attributed to public sector investment. Domestic
and international communication systems on Grenada were considered
good in the mid-1980s. The Grenada Telephone Company served all
parts of the island with a 5,600-instrument automatic telephone
system. Radio-relay links to neighboring islands provided highquality international telephone and telex service. St. George's had
one government-owned AM radio station broadcasting on 535 kilohertz
and one television station. The principal local newspaper, the
Grenadian Voice, was independent and was published weekly.
Roads were the primary mode of local transportation. Grenada
had approximately 900 kilometers of improved highways, 600
kilometers of which were paved. Of the two principal roads, one
followed the coastline and the other bisected the island,
connecting St. George's and Grenville. Municipal buses and taxis
linked all areas of the island. There were two airports on the
island: Point Salines International Airport in St. George's and the
older Pearls Airport, located north of Grenville. Grenada had no
railroads or inland waterways and was serviced by ports in
Grenville and St. George's.
Future allocation of funds called for a greater emphasis on the
productive and social sectors; total expenditures on infrastructure
were to be reduced to approximately 47 percent of the public sector
investment budget. Such allocation was expected to assist with
Grenada's development over the long run, but allocation was
vulnerable to regional and economic politics because it depended on
the government's ability to attract sufficient foreign capital.
Although financing of capital expenditures was to be accomplished
using foreign funds on a matching basis, all financing of the 1985
budget came from external grants and loans.
The government's role as public enterprise manager diminished
after 1986 because of its desire to see the private sector control
as much of Grenada's economic assets as possible. Among the twentynine public sector enterprises existing in that year, only five
were slated to remain either partially or totally controlled by the
government. These included three utility companies that provided
water, electricity, and telephone service.
The government's role in the economy also included the
formulation of monetary and fiscal policies. In the case of
monetary policy, however, the government was constrained by its
reliance on the ECCB for controlling the money supply. This forced
the government to rely heavily on fiscal policy to guide the
economy.
Fiscal policy was a major government mechanism for encouraging
economic development but became very controversial in 1987 with the
introduction of the national budget. It provided for an entirely
different tax structure in which a value-added tax (VAT--see Glossary) replaced virtually all other taxes, including personal
income taxes, export duties, and consumption taxes. The primary
purpose of the VAT was to raise funds to correct the budget
imbalance, while simplifying attendant collection and oversight
responsibilities. A reduction in inflation and increased domestic
savings and investment were also expected to result from the new
tax strategy.
These goals were to be achieved by encouraging individual
production, while simultaneously discouraging immediate consumption
in favor of increased personal savings. The elimination of the
personal income tax would make more money available to wage earners
and give them a greater incentive to work. Consumption would be
penalized with a 20-percent VAT placed on all domestically produced
goods. Many essential items, such as food, were exempt from
taxation. The resulting increase in personal savings would then
provide a resource base for domestic investment, while also
reducing aggregate demand and placing a check on inflation. In
early 1987, the VAT did not appear to be succeeding. A large
government deficit was projected because of a decline in aggregate
tax revenue, and political repercussions were also apparent.
Opponents of the VAT argued that it penalized domestically
produced items that faced regional or international competition. In
some cases, for example, Grenadian rum products, imported
substitutes immediately became less expensive. Such a turnaround
forced the government to make many concessions in the VAT, which
reduced revenue needed for central government operations.
The VAT was created to correct the government's budget deficit
that had persisted throughout the 1980s and had been financed by
external grants. Nonetheless, it appeared that this problem would
not be solved in 1987 because the VAT was not capable of generating
sufficient revenue to cover government expenses. Alternative
measures would have to be found, however, because continued
reliance on foreign aid to solve fiscal shortfalls was not a longterm solution.
Data as of November 1987
- Caribbean Islands-Historical Background
- Caribbean Islands-Prosperity and Government Centralization, 1974-81
- Caribbean Islands-Economy
- Caribbean Islands-Agriculture
- Caribbean Islands-Government and Politics
- Caribbean Islands-Tourism
- Caribbean Islands-Political Dynamics
- Caribbean Islands-COUNTRY PROFILE: Turks and Caicos Islands
- Caribbean Islands-Chapter 7 - Strategic and Regional Security Perspectives
- Caribbean Islands-Role of Government
- Caribbean Islands-Labor Force and Industrial Relations
- Caribbean Islands-Role of Government
- Caribbean Islands-Growth and Structure of the Economy
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Economy
- Caribbean Islands-Political Dynamics
- Caribbean Islands-A Regional Security System
- Caribbean Islands-Tourism
- Caribbean Islands-Other Third World Relations
- Caribbean Islands-SOCIAL AND CULTURAL CHARACTERISTICS
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Balance of Payments and Debt
- Caribbean Islands-HEALTH AND WELFARE
- Caribbean Islands-ACKNOWLEDGMENTS
- Caribbean Islands-Role of Government
- Caribbean Islands-FOREIGN RELATIONS
- Caribbean Islands-Education
- Caribbean Islands-Manufacturing
- Caribbean Islands-Relations with the Commonwealth and Others
- Caribbean Islands-Foreign Relations
- Caribbean Islands-COUNTRY PROFILE: St - Christopher and Nevis ST - CHRISTOPHER AND NEVIS
- Caribbean Islands-The Penal System
- Caribbean Islands-The Soviet Presence
- Caribbean Islands-Colonial Heritage HISTORICAL SETTING
- Caribbean Islands-National Security
- Caribbean Islands-COUNTRY PROFILE: Antigua and Barbuda ANTIGUA AND BARBUDA
- Caribbean Islands-The Public Security Forces
- Caribbean Islands-Political Systems
- Caribbean Islands-EDUCATION
- Caribbean Islands-Relations with Latin American and Caribbean Countries
- Caribbean Islands-Changes in the Social Base of Political Power POLITICAL INDEPENDENCE
- Caribbean Islands-POPULATION
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Relations with the United States
- Caribbean Islands-Livestock, Fishing, and Forestry
- Caribbean Islands-National Security
- Caribbean Islands-Population
- Caribbean Islands-Education
- Caribbean Islands-ECONOMY
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Population
- Caribbean Islands-NATIONAL SECURITY
- Caribbean Islands-Agricultural Sector
- Caribbean Islands-The Barbados Defence Force
- Caribbean Islands-Government and Politics
- Caribbean Islands-Geography
- Caribbean Islands-Economy
- Caribbean Islands-The Police
- Caribbean Islands-The Robinson Government
- Caribbean Islands-United States Preeminence
- Caribbean Islands-External Sector
- Caribbean Islands-Energy
- Caribbean Islands-Education
- Caribbean Islands-POLITICAL TRADITIONS
- Caribbean Islands-THE STRATEGIC SETTING
- Caribbean Islands-Education
- Caribbean Islands-Role of Government
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Geography
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Government and Politics
- Caribbean Islands-Livestock, Fishing, and Forestry
- Caribbean Islands-Industrial Sector
- Caribbean Islands-Relations with the Commonwealth and Others
- Caribbean Islands-THE COLONIAL PERIOD
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Relations with Communist Countries
- Caribbean Islands-Role of Government
- Caribbean Islands-GEOGRAPHIC SETTING
- Caribbean Islands-Government and Politics
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-National Security
- Caribbean Islands-Natural Gas
- Caribbean Islands-Geography
- Caribbean Islands-Incidence of Crime
- Caribbean Islands-Economy
- Caribbean Islands-COUNTRY PROFILE: Barbados BARBADOS
- Caribbean Islands-The Road to Independence
- Caribbean Islands-PREFACE
- Caribbean Islands -CHAPTER 3 - TRINIDAD AND TOBAGO
- Caribbean Islands-Services
- Caribbean Islands-National Security
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-World War II
- Caribbean Islands-External Sector
- Caribbean Islands-EDUCATION
- Caribbean Islands-Foreword
- Caribbean Islands-Health and Welfare
- Caribbean Islands-The Postwar Strategic Vacuum
- Caribbean Islands-Education
- Caribbean Islands-Regional Security Threats, 1970-81
- Caribbean Islands-Controversial Security Issues
- Caribbean Islands-HEALTH AND WELFARE
- Caribbean Islands-Foreign Assistance
- Caribbean Islands-Chapter 4 - The Windward Islands and Barbados
- Caribbean Islands-ECONOMY
- Caribbean Islands-Population
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Banking, Financial Services, and Currency
- Caribbean Islands-HISTORICAL SETTING
- Caribbean Islands-Education SOCIAL AND ECONOMIC DEVELOPMENTS, 1800-1960
- Caribbean Islands-The Post-Williams Era, 1981-86
- Caribbean Islands-The Armed Forces
- Caribbean Islands-Chapter 6 - The Northern Islands
- Caribbean Islands-Relations with the United States
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Population
- Caribbean Islands-Finance and Banking
- Caribbean Islands-COUNTRY PROFILE: CAYMAN ISLANDS BRITISH DEPENDENCIES: THE CAYMAN ISLANDS AND THE TURKS AND CAICOS ISLANDS
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Services
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Education
- Caribbean Islands-Land Tenure and Use
- Caribbean Islands-COUNTRY PROFILE: MONTSERRAT
- Caribbean Islands-Growth and Structure of the Economy
- Caribbean Islands-Population
- Caribbean Islands-Transportation, Communications, and Electricity
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Government and Politics
- Caribbean Islands-Petroleum and Asphalt
- Caribbean Islands-Economy
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-The Pre-European Population HISTORICAL AND CULTURAL SETTING
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-National Security
- Caribbean Islands-COUNTRY PROFILE: The Bahamas THE BAHAMAS
- Caribbean Islands-Health and Welfare
- Caribbean Islands
- Caribbean Islands-Crops
- Caribbean Islands-National Income and Public Finance
- Caribbean Islands-COUNTRY PROFILE: Dominica DOMINICA
- Caribbean Islands-National Security
- Caribbean Islands-Population
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Trade and Finance
- Caribbean Islands-Chapter 1 - Regional Overview
- Caribbean Islands-Economy
- Caribbean Islands-Labor Organizations
- Caribbean Islands-Revenues
- Caribbean Islands-THE REGIONAL SECURITY SETTING
- Caribbean Islands-Construction
- Caribbean Islands-Manufacturing
- Caribbean Islands-Agriculture
- Caribbean Islands
- Caribbean Islands-ISLANDS OF THE COMMONWEALTH CARIBBEAN
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Political Dynamics
- Caribbean Islands
- Caribbean Islands-Relations with Latin American and Caribbean Countries
- Caribbean Islands-National Security
- Caribbean Islands
- Caribbean Islands-COUNTRY PROFILE: ANGUILLA
- Caribbean Islands-NATIONAL SECURITY
- Caribbean Islands-Economy
- Caribbean Islands-THE EUROPEAN SETTLEMENTS
- Caribbean Islands-Balance of Payments and Debt
- Caribbean Islands-INTRODUCTION
- Caribbean Islands-Foreign Relations
- Caribbean Islands
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Current Strategic Considerations
- Caribbean Islands
- Caribbean Islands-Narcotics Crime
- Caribbean Islands-Economy
- Caribbean Islands-Petrochemicals
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-POPULATION
- Caribbean Islands
- Caribbean Islands-The Post-Emancipation Societies
- Caribbean Islands-The West Indies Federation, 1957-62
- Caribbean Islands-Relations with the United States, Britain, and Canada FOREIGN RELATIONS
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Crops
- Caribbean Islands-National Income and Public Finance
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Precursors of Independence
- Caribbean Islands
- Caribbean Islands-Education
- Caribbean Islands-The Criminal Justice System
- Caribbean Islands-GEOGRAPHY
- Caribbean Islands-Role of Government
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Economic Policy and Management
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Political Unrest and Economic Troubles, 1970-73
- Caribbean Islands-Education
- Caribbean Islands-Labor Force and Industrial Relations
- Caribbean Islands-Chapter 5 - The Leeward Islands
- Caribbean Islands -Chapter 2 - Jamaica
- Caribbean Islands-Health and Welfare
- Caribbean Islands-The Governmental System GOVERNMENT AND POLITICS
- Caribbean Islands-The Sugar Revolutions and Slavery
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-The Cuban Presence
- Caribbean Islands-Geography
- Caribbean Islands-Population
- Caribbean Islands-Land Tenure and Use
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-Role of Government
- Caribbean Islands
- Caribbean Islands-Government and Politics
- Caribbean Islands-The Governmental System GOVERNMENT AND POLITICS
- Caribbean Islands-Economy
- Caribbean Islands-Industry
- Caribbean Islands
- Caribbean Islands-The Increased Role of the United States
- Caribbean Islands-Population
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Transportation and Communications
- Caribbean Islands-Country profile: Grenada GRENADA
- Caribbean Islands-Iron and Steel
- Caribbean Islands-Geography
- Caribbean Islands
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Postwar Federation Efforts
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Government and Politics
- Caribbean Islands
- Caribbean Islands-Population
- Caribbean Islands-GEOGRAPHY
- Caribbean Islands-Industry
- Caribbean Islands-Consolidation and Economic Hardship, 1962-69
- Caribbean Islands-Patterns of Development
- Caribbean Islands-Geography
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