The EC$334 million (US$125 million) that the government of St. Vincent and the Grenadines had borrowed from Taiwan to build the hospital at Arnos Vale will attract over EC$200 million in interest, says Central Kingstown MP St. Clair Leacock.
Leacock noted that the government recently obtained Parliamentary approval to draw down US$46 million from the US$125 million loan.
“But to get the 46 they have to bring 3 million. You know they go borrow the three,” Leacock said at his “Season for Reason” village meeting in Block 2000 on Saturday.
“They didn’t even have the $3 million to get the 46,” he said.
The opposition MP said that The New Democratic Party (NDP) candidate for South Windward, Andrew John made a statement that some people take lightly.
“He says that this government is mortgaging the future of generations unborn. It is so true. It ain’t funny,” Leacock said, referring to John’s statement.
“Let’s think about this. Here is the government so badly wants to stay into office, they go and they get a loan for $335 million from Taiwan. Don’t talk about 125 US — call the EC amount. It’s 330-something million dollars. And they so dumb and dotish. You know, I almost want to say jackassish.
“The people tell them you don’t have to pay back no money for the first 10 years. They say, ‘Ah, nice; 10 years free.'”
Leacock said Opposition Leader Godwin Friday asked if the interest rate was about 6%.
“… the Minister of Finance says, ‘Yes, it’s about 6%.’ Well, 6% interest on 300 and something million dollars over that period is about $200 million worth of interest — a lot of interest,” Leacock said.
“So, by the time they start paying that debt, it moved from 300 or something millions to half a billion dollars.”
Debating the loan bill in Parliament on Aug. 22, Minister of Finance, Camillo Gonsalves, said interest for the loan is set at the Secured Overnight Financing Rate (SOFR) plus 1% plus 0.2%.
The loan is to be repaid in 60 semi-annual payments.
“You have 30 years to repay the loan,” the finance minister told lawmakers, adding that the first payment is due 126 months or 10.5 years after the first drawdown.
“So, you have essentially 40 years and six months from the moment you draw down your first dollar to when you complete payment on the loan. Those are very generous terms in terms of the length of the repayment,” Gonsalves said.
But Leacock said on Saturday that that loan amount would not come due “for you”.
“All ah we here dead. When we grandchildren or great-grandchildren coming into being, that debt going hit them bam in the face. That’s the hook in the gill that Ralph talked about,” Leacock said.
“This guy is dangerous and he’s desperate. And I’ll tell you why Ralph is dangerous and desperate,” he said, referring to Prime Minister Ralph Gonsalves.
“I ain’t fooling with Ralph, you know. I ain’t fooling with Ralph. The problem with this government is that they have been so dishonest that they can’t afford to be out of office. … when you begin to see the amount of corruption you will run scared.”
Let me tell you something about this story. The people of SVG know that their children and grandchildren have to pay back this money that is why they won’t have children and the government said that birth rate gone down. This is the reason. He is asking for people to have children so as to help him pay back the loan. What a mess.
It would be a good deal if the government can invest proceeds from that deal in a venture that would yield a return above the 6% during the 10-year period before repayment starts. Such a return would be likely if the funds could be invested in high-risk investments such as stock options trading, stock day-trading, or short-term junk bonds. This type of investments would require savvy money managers who would invest the funds in international markets. The problem is there would be no guarantee that the junk bond issuers remain solvent to pay the principal and interest when the bonds mature, or investments in the stock market yield profits.
Do we have any idea on who manages the national financial investments?
Gigantic loans with astronomical interest rates is the carrot in front of SVG with Ralph Gonsalves riding on the back of the people who he is supposed to be defending. These figures will make your head spin. I only hope we wake up before we go off the cliff.