Permanent Secretary in the Ministry of Finance, Timothy Antoine has given details on a local radio station about government’s debt restructuring with its US bondholders.
According to Antoine, the 50% haircut Grenada has received is only for the commercial debts with “powerful” bondholders, which amounted to about $700M and this group of creditors control most of the country’s bonds.
He said the island’s total debt is about $2.6 billion and of that amount almost 40 percent of the commercial debt was contracted with the bondholders.
The Keith Mitchell-led government in St. George’s took the decision in early March to default on payments to the bondholders as the island entered into a Structural Adjustment Programme (SAP) that is being closely monitored by the International Monetary Fund (IMF).
Antoine stressed that international financial agencies such as the IMF, World Bank, and the Caribbean Development Bank (CDB) do not give haircuts on debts owed to them.
He disclosed that the entire 50% percent haircut coming from the bondholders is not coming all at once.
The PS Finance said that Grenada is to immediately receive 25 percent, and the other 25 percent will take effect when the Structural Adjustment Programme ends next year.
However, he noted that the second portion of the haircut will come after the review of the programme takes place in 2017.
“They (the creditors) said to us, we need to make sure you continue to do what you say you’re going to do,” he told the programme host.
Antoine pointed out that Grenada was hard-pressed into agreeing to provide to the creditors a share of the proceeds netted from its passport-selling scheme known as Citizenship By Investment (CBI) Programme.
He said Grenada was able to get an agreement from the creditors that during the SAP there will be no sharing of the proceeds from the CBI Programme.
He added that if Grenada collects more than $40M in any given year from the programme after the SAP ends then the creditors will be provided with a percentage.
The island’s top civil servant noted that Grenada’s debt situation is now regularised with its creditors and the country is no longer in a situation of default and arrears.
Under the deal worked out, government will now have to make two substantial payments per year beginning in May 2016 with the other due in November.
THE NEW TODAY understands that only 94% of the total number of people in possession of the US Dollar Bond requested an exchange of the old bonds, which were due in 2025 for new instruments that are now due in 2030.
In addition, everyone holding EC Bonds that amount to $183M agreed to the debt exchange agreement, which was completed on November 12th.
During the 2008-13 rule of the National Democratic Congress (NDC) of Tillman Thomas, the administration failed on two occasions to pay the salaries of civil servants on time due to financial commitments with the US bondholders.
The late payment of salaries to civil servants coupled with bitter internal feuding within the Thomas government contributed to its massive 15-0 loss at the polls in February 2013 to the New National Party (NNP) of Prime Minister Dr. Keith Mitchell.