The new year 2015 has started of with a mixed bag -some good news and some very bad news.
The first bit of good news is that the government has seemingly reached some kind of an agreement with Taiwan on millions of dollars owed to the Import/Export Bank of Taiwan in outstanding loan payments spanning the best part of 25 years.
The official bulletin released by the Ministry of Finance puts into perspective the deal that was worked out with Taiwan.
It reads in full: “The Government of Grenada announced today that it has concluded a comprehensive agreement to restructure its US$36.6 million (EC$98.8 million) indebtedness to the Export-Import Bank (EXIM) of the Republic of China (Taiwan).
This landmark Agreement, which reduces the principal outstanding on the loan by 50%, resolves Grenada’s decade-long dispute with EXIM and puts an end to EXIM’s legal proceedings in the New York Courts.
“Under the terms of the Agreement, the post-haircut balance on the loan will be repayable over 15 years – including a grace period of three and a half years – at an interest rate of 7%. The Agreement also includes a ‘hurricane clause’, which will allow Grenada to defer payments for a predetermined period should a natural disaster compromise the Government’s ability to service debt in a timely manner in the future.
“Commenting on the development, Grenada’s Prime Minister and Minister of Finance, Dr. The Right Hon. Keith Mitchell, said “We are very pleased that our relations with the Republic of China (Taiwan) have now been normalised through the conclusion of this important Agreement with EXIM. We are grateful to the Bank for recognising the extent of Grenada’s debt relief requirements, and for supporting the Government’s efforts to restore viability to Grenada’s public finances.”
THE NEW TODAY would be very much interested in seeing the reaction of the U.S bondholders grouping to Grenada’s call on them for a 50-60% haircut on payments due to them in light of the announcement in St. George’s on the Taiwan loan issue.
This newspaper has taken careful note of the comment from PM Mitchell that his government is very much committed to restoring “viability to Grenada’s public finances”.
There is a true saying – “Better late than never”.
Those who are still looking for the kinds of largesse of the past under Dr. Mitchell and his ruling New National Party (NNP) should take note because it cannot be business as usual in the Spice Isle.
The country’s Structural Adjustment Programme (SAP) will be rolled back if the administration deviates from its current course and seeks to engage in another spending spree like 1995-2008 that is largely responsible for the financial quagmire that the island found itself.
If the wasted millions of the past on experimental projects like the failed Garden Group of hotels, the unfortunate guarantees given to E.J Miller and the so-called Ritz Carlton hotel at Mt. Hartman and the Marketing & National Importing Board (MNIB) project on the Lagoon Road – were spent more productively the country’s finances would have been far more healthier.
Quite frankly it would have been a win-win situation for Grenada if the Mitchel government of yesteryear had utilised these monies on a major brand hotel all on its own and bring in a reputable hotel chain to manage the property.
The proof in the eating can be seen from the impact that the Sandals/La Source will have on our economy over the next few years.
The other issue which is both good and bad relates to the continuing drop in the price of oil on the world market.
It is good news for consumers as in the coming months the public should benefit more and more from the current trend in oil prices.
The significant drop in prices will most likely impact negatively on the so-called exploration for oil and natural gas resources in Grenadian waters by the Russian group of private investors of Global Petroleum.
There has been a deafening silence from those in authority on the status of these oil exploration in our waters.
The other bit of bad news relates to the current stand-off between government and the Grenada Union of Teachers (GUT) on a number of outstanding issues.
The issue of money will make or break any government in the current prevailing circumstances in Grenada.
The scarcity of money under the Congress government of Tillman Thomas helped to undermine the regime as it was gripped by bitter internal feuding among key players.
This newspaper gets the sense that a lot of people who voted for Mitchell’s NNP in the last general elections are watching closely at those who are getting the limited jobs around after nearly two years in office plus the little money that is around at their expense.
The issue of money in circulation will play a role in the political developments that will unfold in the island over the next coming months.
And being a politician who will do anything to win elections, PM Mitchell will be very mindful of the fact that if the people continue to see their disposable income continue to dwindle then a serious backlash is possible down the road.