A statement issued late Friday says that the economy of the southern Caribbean island has been severely affected by the global financial crisis and that its public finances are "currently unsustainable."
Grenada had to borrow to make a delayed $4.4 million payment on a September coupon for $193 million in bonds due in 2025. That prompted Standard & Poor's to downgrade Grenada's foreign currency credit rating.
Now, another payment is coming due on the 2025 bonds and the government says borrowing is not an option. Newly re-elected Prime Minister Keith Mitchell says the country needs a "fresh start" with creditors.