One of the first moves undertaken by the Keith Mitchell-led New National Party (NNP) of Prime Minister, Dr. Keith Mitchell after presenting the 2013 budget is to make moves to borrow EC$200 million in an effort to try and give a boost to the island’s ailing economy.
The NNP-dominated House of Representatives passed the 2013 Budget Loan Authorisation Act, which gives authority to the Minister of Finance to raise the funds.
The bill, which was passed in the House last week Thursday gives the Minister of Finance the go-ahead to borrow specified amounts of money from various sources to reduce the level of unpaid claims in the Treasury, estimated at 93 million dollars.
Government also said that the funds will be used to cover the financing gap for the 2013 Budget believed to be over 100 million E.C dollars.
The proposed lenders include China Harbour Engineering Company, US$5.1million, Alba Bank, up to US$15 million. The interest rates, terms and repayment and fees are to be negotiated.
Leader of Government Business in the House of Representatives (HOR), Gregory Bowen said, the intention is to secure financing with the most favourable grace period.
“Financing with the greatest grace period and repayment and also with the smallest interest rate Mr. Speaker”, Minister Bowen told Parliament about the monies that are needed to be raised.
He said, the Ministry of Finance has been given the mandate to go out and get the monies with due diligence, and to only accept the best financing terms for the Country.
With the large amount of unpaid claims in the Treasury, Minister Bowen said, if Grenada gets external financing and some local financing, a significant amount of monies can be paid out.
Bowen said, Government will not be increasing the loan burden/debt on the country, but will be causing monies to circulate in the country; increasing economic activities and bringing benefits to the people of Grenada.
Prime Minister and Finance Minister, Dr. Keith Mitchell has confirmed, that requests have been made to friendly countries and agencies for some resources to meet that obligation.
Grenada’s current national debt stands at EC$2.3 billion.
The island was forced in March to default on a coupon payment of EC$19 million E.C due to bondholders under a Paris Club agreement.
The two-month old Mitchell government has signaled its intention to seek the second restructuring of the island’s debt with creditors due to dwindling revenue intakes in recent years.