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A view of St George's, the capital of Grenada. (Photo: Britannica)

Paris Club approves suspension of Grenada’s debt payment

A view of St George's, the capital of Grenada. (Photo: Britannica)

Paris Club on Monday announced that it has agreed to facilitate Grenada’s suspension of debt payments between May 1 to December 31 this year.

“In application of the term sheet of the Debt Service Suspension Initiative (DSSI) also endorsed by the G20, the Paris Club recognised that Grenada is eligible to benefit from the initiative,” a release from the organisation stated.

The Paris Club said it believes the Government of Grenada will utilise “the resources freed by this initiative to increase spending in order to mitigate the health, economic and social impact of the COVID-19 crisis”.

The group also believes that Caribbean country’s Government will pursue similar debt service arrangements from its bilateral partners.

“This initiative will also contribute to help Grenada to improve debt transparency and debt management,” the release stated further.

Help from the CDB

Paris Club’s approval for the moratorium comes on the heels of the Caribbean Development Bank (CDB) announcing that it would release US$5.9 million in emergency loan to Grenada.

In a release from the CDB last Friday, president of the regional bank Dr William Warren Smith noted that the emergency loan “would keep critical government services and operations running [and] is urgent to halt the economic decline and minimise social hardship while giving focused attention to the most vulnerable people” during the coronavirus (COVID-19) pandemic. The bank also revealed that for 2020, it estimates that Grenada’s real gross domestic product will decline by 10 per cent.

President of the Caribbean Development Bank Dr William Warren Smith
(Photo: NOW Grenada)

Welcoming the announcement of the loan disbursement, Prime Minister of Grenada Dr Mitchell said his “Government can focus more on bolstering the health care system for the ongoing fight against the COVID-19 pandemic”.

A cry for help

Mitchell had also announced earlier this month that his Government would request the suspension of debt repayment, amounting EC$60 million for the period April to December 2020, from its international creditors.

At that time he explained that his Government faced balancing the needs of the population during the ongoing pandemic with meeting the country’s debt obligations. All this while Grenada’s revenues had fallen below budget targets.

Dr Keith Mitchell, prime minister and minister of finance, Grenada. (File photo)

Just a week later the prime minister announced that the Government will proceed with making payment on May 12.

In the meantime, Paris Club creditors said they “will continue to closely coordinate with other stakeholders in the implementation phase of this initiative, in particular when considering a possible extension of the suspension period”.

The members of the Paris Club which participated in the reorganisation of Grenada’s debt are the governments of France, the United Kingdom, and the United States of America.