by Linda Straker
- Grenada’s first loan from Saudi Fund for Development
- Dennis Cornwall signed US$100 million loan agreement with SFD
- Loan expected to help develop climate-smart infrastructure
Approximately 2 months after the Government sought authorisation from the Lower and Upper Houses of Parliament to borrow US$100 million from the Saudi Fund for Development (SFD), Finance Minister Dennis Cornwall signed the loan agreement with the Fund.
The signing took place on the sidelines of the 2023 Annual Meetings of the World Bank Group and the International Monetary Fund held in Marrakech, Morocco, from 9-15 October. This is Grenada’s first loan from SFD and as a result, the country has become the 91st nation to receive financial assistance from SFD.
According to a news item on the Arabnews website, the loan is expected to help develop climate-smart infrastructure in St George’s, Grenville, and neighbouring areas in Grenada.
“The project will include constructing breakwaters, developing hydro and sewage networks, modernising the waste treatment system, and using remote sensors to monitor air pollution, thus helping the Caribbean nation become more environmentally friendly and climate-smart,” said the news item which quoted from a release disseminated by the Fund.
“The assistance provided by the organisation is expected to generate both direct and indirect employment opportunities in the region. The project also reflects the importance that SFD places on mitigating climate change through smart and environmentally friendly projects,” said SFD in a press statement.
The Government of Grenada has yet to issue a news release about the terms and conditions of this new loan agreement and it is unclear whether the document will be tabled in Parliament. However, during the Lower House debate of the Loan Authorisation Resolution, Prime Minister Dickon Mitchell told the House that his Government is not keen on borrowing money. “And, if we do borrow, we will ensure that it is concessional as we can get and that is the reason why there is no loan at this pointing time because we are ensuring that if we do get to the point where there is actually a loan, it must be on the best terms possible,” he said.
Prime Minister Mitchell who gave up the role as Finance Minister as of 1 April 2023, said that no financial institution would press his administration to sign a loan agreement that is not favourable for the country. “I will not be badgered into signing a loan because it’s been offered to me. All kinds of people are offering money all over the place if you are prepared to borrow money on non-favourable terms,” he said during his contribution to the debate on the resolution seeking the authorisation.
“We are acutely aware of our commitment to ensure that our debt to GDP ratio remains low and continues to be lowered. Any loan agreement to be signed will first be put through the debt management team to give us their counsel as to whether or not it’s an appropriate borrowing,” he told the House on 25 August.
Important rule: Do not take out loans you may have trouble paying back. It seems that Grenada has borrowed money from many countries, should Grenada default then what? Other countries then take the land used to secure the loan? I see trouble on the horizon…
$100m to spend on “Climate Smart infrastructure “now this is a description I can interpret anyway I like but I am sure within the agreement the terms are favourable to Grenada.