Parliament has authorised the government to borrow the further US$30 million it says it needs to build a US$94 million new acute referral hospital in Arnos Vale.
The International Development Association (IDA) — the part of the World Bank that helps the world’s poorest countries — has approved a loan of US$63.8 million to go toward the project.
The money is to be repaid over 40 years, with 10 years’ grace, at 1% interest.
“And they are giving us, upfront, US$51 million to start the project. And that’s 80% of the money. And they will give us the remaining 20% of that $63.8 million, two years down the road to finish up the project,” Minister of Finance, Camillo Gonsalves told Parliament.
“But you have a US$94 million project and the World Bank is only giving us $64 million. So, we have a gap of 30 million US dollars,” Gonsalves said.
He said the government decided not to cut back on the hospital, the planned reforms in the healthcare system or the equipment it wants to buy for the hospital, but rather to seek additional financing to close the gap from US$64 million to US$94 million.
The government is borrowing the US$30 million from the OPEC Fund for International Development (OFID).
The minister said that when OFID approved the loan on Sept. 15, “we had all the money we need to construct a modern state-of-the-art hospital, equip it fully, reform our healthcare system, establish new management practices and have a hospital that is fit for purpose in this era of climate change and non-communicable diseases and natural disasters”.
He said the OFID loans has been negotiated at “very favourable terms”, with an interest rate of 1.5% per annum” and then there is a commitment fee of a quarter per cent on money not drawn down and a front-end fee of a quarter per cent.
“So, in all in all, you’re under 2% for this loan,” Gonsalves told Parliament, adding that the loan has a maturity of 20 years, with a grace period of five years.
“So, assuming we pass this loan authorisation today, we will begin repayment five years from now in 2027/2028, and we will pay off the loan in 2043,” he said at last Monday’s meeting of Parliament, where he secured bipartisan approval of the borrowing.
He said the World Bank has given the government a five-year window to execute the project, with the hospital itself being a three-year project.
“… by the end of 2025, [at the] very latest the beginning of 2026, we will have a state-of-the-art hospital that will be the envy of hospitals and healthcare systems all across the Caribbean,” Gonsalves said.
“And we will have not just a building, not just equipment, but structures and reforms in place to make sure that the hospital is not run like hospitals of yesteryear. That it is run in a modern and efficient way and that it is run with patient care, patient interests at the heart of its service delivery,” Gonsalves said.
“… we brought this bill because we need the approval of the Parliament now, this discreet and specific approval for the $30 million from OFID, 20 years repayment, five years’ grace, less than 2% interest rate.
“You can’t get much better developmental finance than that. And you can get a much better health system resilience project than the one that the Honourable Minister of Health and his team have devised with the World Bank and the OPEC Fund for International Development.”