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Grenada expects amicable debt relief talks

Published:Friday | August 8, 2014 | 8:00 AM
Prime Minister of Grenada Dr Keith Mitchell. - File

The Grenada government says it remains optimistic that an amicable solution will be found as it seeks to honour its debt with national and international creditors in the wake of a recent ruling by a United States court instructing Argentina to meet its financial obligations to its creditors.

There have been suggestions that the decision by Argentina to default on its payment could also have an impact on Grenada, since both countries have the same creditors.

In 2013, Grenada defaulted on its payment to its international creditors, resulting in a sharp rebuke and demands for payment.

Prime Minister Dr Keith Mitchell told the Caribbean Media Corporation (CMC) that as far as the debt is concerned, the more debt relief the island is able to attain, the better for the future development of the country.

"We are hopeful we will work things out with every single debtor," he said, noting that the court ruling "would not have the damaging effect (on Grenada) as the Argentina situation would have had on Argentina itself".

Argentina's debt-to-gross domestic product (GDP) ratio stands at over 101 per cent, and as a result of its decision to default on its payment, was given a selective default grade by the US-based rating company, Standard & Poor's.

Negotiating debt relief

Grenada's foreign debt is estimated at US$679 million, 83.7 per cent of its GDP, and Prime Minister Mitchell told CMC that his administration, which is implementing a "home-grown" structural adjustment programme with the support of the International Monetary Fund (IMF), is also in the process of negotiating debt relief and forgiveness with a number of local and international creditors.

But that request has sparked much debate from trade unions and non-governmental organisations here and Prime Minister Mitchell describes the opposition as much to-do about nothing.

"Unfortunately, all the noises in the streets were clearly unnecessary. Some of it was being ill-informed and some of it was definitely politically motivated. I can understand for the union members and workers, they would have to be concerned if you are talking about haircut from monies they are hoping to take care of themselves in their retirement days," said Mitchell.

"I understand their concerns, but the fact is, as we indicated, if the country is looking at debt relief it cannot ask one set of people and don't ask all," the prime minister said. "Our call was for all debtors ... we can't exempt the local debtors when we are asking the foreign persons. Charity begins at home."

- CMC