The Government of St. Vincent and the Grenadines says that the main external loans contracted since January 2026 were already in train under the Unity Labour Party (ULP)administration, which was voted out of office in November.
Speaking in Parliament on Thursday, Prime Minister and Minister of Finance Godwin Friday said that his government’s room to borrow is limited by what he described as the narrow fiscal space inherited from the ULP government.
Responding to questions from the opposition, the prime minister said the country continues to rely on a mix of external project financing and domestic bond issuance to meet capital and recurrent needs.
The prime minister told lawmakers that two external loans have been contracted so far this year, in addition to EC$30.4 million raised in local bonds between April and June.
He said the Caribbean Development Bank (CDB) loan for the Canouan Airport Rehabilitation Project was being negotiated by the former government and was finalised by the current administration.
That loan amounts to US$46,715,100 at 5% interest, over 21 years with a three-year grace period.
The project covers full runway rehabilitation, drainage and lighting upgrades, coastal protection, a new fire station, and a new air traffic control tower, and is supported by a US$125,000 CDB grant.
The second facility is a US$20 million budget support and disaster risk management loan from the OPEC Fund for International Development (OFID) at 1.25% interest, with a 21-year maturity and a five-year grace period.
Friday said this represents the repurposing of an earlier US$30 million loan contracted by the previous government in October 2023 to co-finance the modern hospital with the World Bank.
That arrangement was later discontinued by the then-ULP administration, which turned instead to financing from Taiwan.
The CDB financing is intended to address “structural problems, cracking, potholes, depressions, surface ravelling and cumulative weather-related damage” to the Canouan runway.
Friday said the current situation at the airport constrains both commercial and private aviation and limits the type and size of aircraft that can operate there.
The upgrade is expected to allow operations by larger, more modern aircraft, such as the Airbus A320, and improve direct connectivity to major hubs.
The prime minister told Parliament that the Disaster Risk Management Policy Loan represents the repurposing of an earlier OFID loan.
The original agreement, signed on Oct. 6, 2023, by the former administration, was for US$30 million to co‑finance the modern hospital project with the World Bank.
That prior financing structure was discontinued by the ULP government when it shifted to a different loan arrangement with Taiwan in the run‑up to general elections.
The current administration negotiated with OFID to repurpose part of the original facility into the present US$20 million budget-support and resilience‑focused loan.
Friday noted that the government had sought to repurpose the full US$30 million, but OFID ultimately agreed to US$20 million; hence, the Loan Authorisation Bill was brought before Parliament on Thursday to formally authorise the borrowing.
Meanwhile, the prime minister reported that between April and June 2026, the government raised EC$30.4 million in local loans under the heading of government bonds.
The government bonds were placed on domestic and regional markets via private placements and were for 6, 8 and 10 years at coupon rates of 5.75%, 6.5%, and 7.25%, payable semi‑annually.
Friday said the borrowing terms were consistent with the government’s debt management strategy of lengthening the maturity profile of domestic debt.
Regarding the use of proceeds, the prime minister told Parliament that approximately EC$6.38 million (about 19% of total capital spending in the second quarter) was allocated to capital projects.
The remaining EC$23.66 million was used for current expenditure.
Gonsalves asked in a supplementary question for a breakdown showing how much of the EC$30.4 million was raised at the 7.25% coupon and the precise amortisation terms for that tranche.
However, the prime minister said that that level of detail was not available in Parliament at the time but could be provided subsequently.