The World Bank has suspended disbursements to Grenada after seven loan defaults in February.
The Washington-based financial institution said no new loans would be issued to Grenada unless the island makes good on the overdue payments amounting to $750,000.
The payments were due on February 15 and the World Bank has written to Prime Minister Dr. Keith Mitchell saying failure to make the loan payments on time is hampering its ability to assist other member countries. “As of today, March 18, 2013, we have not been advised by our Depository Banks that the payments cited above have been paid into our accounts,”said the Bank in a letter Mitchell, whose New National Party (NNP) won the February 19 general elections by sweeping all the 15 seats.
“Our ability to mobilize resources for the benefit of our member countries depends critically on the punctual servicing of loan and credits. For this reason, we insist on settlement of all payments when they fall due”. The loans, covering projects such as disaster management, Organization of Eastern Caribbean States (OECS) education, skills for inclusive growth and Hurricane Ivan recovery, also include separate overdue amounts of more than US$300,000.
The Washington based institution told the new government that it has been forced to take this action since the seven payments are more than 30 days overdue.
The World Bank’s action against Grenada comes on the heels of similar decisions taken against the island in recent months reflecting concerns about the general management of the local economy.
The Kuwaiti fund suspended disbursement to the island after the government fell behind on payments to existing loans, and last December Standard and Poor’s lowered its credit rating on the Caribbean Development Bank blaming CDB’s public-sector loan portfolio.
Standard and Poor’s said one government borrower, known to be Grenada, is more than 180 days in arrears to CDB on interest and principal.
The new government has embarked on an aggressive program on making current, overdue payments on outstanding loans so as to save the country from these embarrassing situations.
A government statement issued Wednesday said that Prime Minister Mitchell held talks with members of the Grenada Bankers’ Association, indicating that the relationship between them has to be one of partnership.
“We have to work together as partners in this process of economic revival, if we want to move Grenada forward,” he said, proposing the establishment of a Growth and Competitiveness Council, to advise government on economic policy and initiatives that will promote economic growth.