The cash-strapped ruling New National Party (NNP) Government of Prime Minister Dr. Keith Mitchell is due to take a new proposal to the National Insurance Scheme (NIS) as it seeks to get some form of debt forgiveness from the State-owned institution.
An approach that was made to NIS by government last year for a 50% debt reduction was met with stiff resistance from a number of interest groups including the Grenada Trades Union Council (GTUC).
With the implementation of the three-year Structural Adjustment Programme (SAP), the Mitchell-led government has been seeking a 50% debt reduction from its major creditors.
Permanent Secretary in the Ministry of Finance, Timothy Antoine told a radio programme the request made to NIS for debt reduction was clearly not their preferred option and will soon be discussing with NIS an alternative option that allows for it to be part of the comprehensive debt restructuring process.
Antoine recalled that government has already restructured its long outstanding loan repayments with Taiwan.
Between 1990 and 2000, Grenada contracted four loans from the Exim Bank of Taiwan with debt payments now costing the country close to EC$100 million.
Taiwan, regarded as a renegade province by Mainland China, moved to recover the loans after a Mitchell-led government in 2005 decided to dump Taipei in favour of a lucrative package offered by Beijing.
According to PS Antoine, the agreement that was recently reached between Taiwan and Grenada provides for a grace period of three and a half years with payments to be made every six months over a 15 year period.
This means, he said that Grenada will now have to commence repayments to Ex-Im Bank from June 2018 right up to 2029 at an interest rate of 7%.
The Permanent Secretary disclosed that the national debt currently stands at $2.5Bn.
He said the Mitchell government is both paying and restructuring its debts.
“We are paying on some debts, we are restructuring others,” he added.
Antoine said that last year alone the Barbados-based Caribbean Development Bank (CDB) was paid over $20M, and other major institutions such as the International Monetary Fund, and World Bank were also paid sums of monies on loans extended to Grenada.
Finance Ministry officials told this newspaper that the CDB, IMF and World Bank often demand loan repayments to be made to them before any of the other creditors.
The PS Finance acknowledged that the commercial debts contracted over the years which is about 37% of the total debt of the country is being restructured.
The NNP has been singled out as the government that borrowed most of the monies owed by Grenada at high commercial interest rates in the 1999-2003 period.