By Laurel Bain

The cycle has begun for the preparation of the 2026 national budget, which will be Grenada’s financial plan for 2026 with estimates for developments in 2027 and 2028. This financial plan comprises three components, namely the current or recurrent account, the capital account and the financing section.

The national budget is based on an estimation of the available financial resources comprising domestic or current revenue, capital revenue, grants and loans; and shows the allocation of the financial resources between current and capital expenditure. For ease of economic analysis, the revenues and expenditure are classified according to functions. As such, tax revenue is subdivided into taxes on income and profits, taxes on property, taxes on domestic transactions and taxes on international trade; and the current expenditure classified into compensation to employees (wages), goods and services, transfers and subsidies, and interest payment, and the capital or investment expenditure subdivided into administration, economic services and social services.

The operations of the Government could result in a surplus due to the collection of more revenue than expenditure or a deficit as a result of more expenditure than revenue. The financing component of the national budget shows how the Government would dispose of a surplus or how the Government would finance a deficit. This section includes all financial transactions of the Government with financial institutions and agencies to deposit funds or for transactions related to disbursements and repayments on public debt.

The content of the national budget is summarised in the Budget Statement. The details of the national budget are presented in the Estimates of Revenue and Expenditure, which is submitted with the Appropriation Bill for approval by Parliament of expenditure for the financial year.

Therefore, the core of the budget encompasses the Budget Statement, the Estimates of Revenue and Expenditure and the Appropriation Bill.

The provisions for financial management are outlined in the Constitution and the Public Finance Management Act, as amended. The Constitution, subsection 77, makes provision for the establishment of the Consolidated Fund. It specifies that all revenues must be deposited in the Consolidated Fund and all expenditure must be made from the Consolidated Fund.

Provisions have also been made for the establishment of special funds under the Consolidated Fund. All expenditure by the Government must be approved by Parliament. In cases where the Government has to incur expenditure that is not in the approved budget, the Constitution makes provision for a supplementary budget to be approved by Parliament.

The Public Finance Management Act stipulates that no more than two (2) supplementary budgets must be approved in one fiscal year.

The Constitution also makes provision for a Contingencies Fund from which expenditure could be made to cater for urgent and unforeseen expenses, following which a supplementary budget must be approved by Parliament. On approval of the supplementary budget, a supplementary Appropriation bill should be enacted for replenishing the Contingencies Fund.

The Public Finance Management Act stipulates that 2 percent of revenue must be reserved for contingencies. In relation to the oversight and monitoring of the implementation of the national budget, the Public Finance Management Act makes provision for the preparation of a Mid-Year Fiscal Policy Review, within two months of the end of the period, for the consideration of Cabinet, and to be laid in Parliament together with the next supplementary budget. Regular reporting on the public finances and the public debt is provided for in the Public Finance Management Act and the Debt Management Act.

The legislation make provisions for financial accountability. In this regard, an important constitutional requirement of the budget process is the auditing of the public accounts. The Constitution, in Section 82 stipulates:

(2) It shall be the duty of the Director of Audit to audit and report on the public accounts of Grenada, the accounts of all officers and authorities of the Government of Grenada, the accounts of all courts in Grenada (including any accounts of the Court of Appeal or the High Court maintained in Grenada), the accounts of every Commission established by this Constitution and the accounts of the Clerk to the Senate and the Clerk to the House of Representatives.

The constitutional provisions for preparing the national budget and for financial management are detailed and made operational by the Public Finance Management Act as amended, the Debt Management Act as amended and the Audit Act.

It is the responsibility of citizens to understand the budget and monitor its preparation and implementation and review the reports on its evaluation in the context of the legislation for financial management.

Knowledge is power and Experience is the greatest teacher.

Disclaimer: This article is written in my personal capacity and not in my capacity as Chairwoman of the Fiscal Resilience Oversight Committee.

29th August 2025