Washington, July 20: The World Bank Board of Executive Directors today approved a $30 million Development Policy Credit (DPC) to support Grenada's economic recovery and enhance its resilience to climate change. This credit is the second in a series of two International Development Association (IDA) operations aimed at promoting a greener and more climate-resilient economy while improving fiscal management sustainability, inclusiveness, and accountability.
Like many small developing island states, Grenada has faced significant challenges exacerbated by the COVID-19 pandemic and the food and fuel crisis. The country's strong socio-economic performance was compromised, reducing its ability to withstand external shocks. The proposed DPC aims to address these challenges and enhance Grenada's preparedness for future shocks.
"It is encouraging that Grenada remains committed to undertaking critical reforms to strengthen its economy. The new Development Policy Credit will provide further support to the country's efforts in recovering from the impacts of the COVID-19 pandemic and building resilience against climate change and address other challenges that Grenada faces as a small developing island state," said Lilia Burunciuc, World Bank’s Country Director for the Caribbean countries.
The objectives of the Development Policy Credit are twofold. Firstly, it seeks to promote a greener and more climate-resilient economy. This will be achieved through reforms that enhance disaster risk management and improve energy efficiency, helping Grenada mitigate greenhouse gas emissions and build resilience against external shocks and the impacts of climate change.
Secondly, the credit aims to improve the sustainability, inclusiveness, and accountability of fiscal management in Grenada. Reforms will include implementing environmental levies and health-related taxes, incorporating gender and climate resilience considerations in the budgeting process, establishing unemployment insurance, and strengthening statistical capacity and fiscal transparency.
The World Bank's support through this operation will benefit vulnerable populations affected by climate change and natural disasters. It also aims to narrow gender disparities in access to economic opportunities and mobilize private finance, particularly in the energy sector, to support Grenada's development.
Development Policy Credit (DPC) is a financial instrument the World Bank uses to support policy and institutional reforms to help countries achieve sustainable growth and reduce poverty.