Finance Minister Nazim Burke says he has ordered an investigation into whether loans from Taiwan totaling EC$76 million (US$28.1 million) to Grenada before it broke off diplomatic relations in 2005 had been approved by parliament.
The opposition, meantime, has called for Burke to resign or be fired, saying he was mishandling the financial row that has developed.
"Because of his mismanagement, he has plunged the country into the worst financial disaster that ever experienced by any of our people," said former attorney general Elvin Nimrod of the main opposition New National Party (NNP).
"We are calling on the prime minister to fire the minister," said Nimrod, who served in the cabinet of former prime minister Dr Keith Mitchell, who led the government at the time the loans were secured.
Burke, who has accused Taipei of trying to cripple the Spice Island's economy as it attempts to recover the funds, said parliamentary approval is required for big loans. The aim of the investigation, he said, is to confirm whether that had been done by the former Keith Mitchell administration.
"The laws of Grenada do provide for the minister of finance to raise funds for the country, but loans must receive the approval of parliament," said Burke.
"The former administration should have brought the loans for approval and we look forward to see what the investigations will reveal," he said during an interview aired on the Grenada Broadcasting Network.
Burke, who is currently acting as prime minister in the absence of Tillman Thomas, said that Taiwan is trying to seize Grenadian properties in the United States in an attempt to collect the outstanding money and has refused proposals for a negotiated settlement.
Taiwan has also filed legal petitions demanding that cruise ships and airlines servicing Grenada pay over any monies due to the country into a special account in the United States.
Taiwan claims the loan, made through an export bank in Taipei, was negotiated by the former Mitchell administration between 1997 and 2000 before it suddenly broke off diplomatic relations in favour of Beijing.
Former finance minister Anthony Boatswain said the Mitchell administration should not be blamed for Taiwan's subpoenaing these institutions. Efforts to deal with the debt, he said, was interrupted by general elections.
"We started to negotiate a repayment plan but it was not complete because of the 2008 general elections. What happened is that this Tillman Thomas administration did not continue with the negotiations," said Boatswain.
He said Burke is trying to deflect blame.
"So if this government had done the right thing by continuing the negotiation with the Taiwanese as regards to establishing a repayment schedule, and at the same time servicing the loan, as was done under NNP, this situation would not have happened, that's an undisputed fact," Boatswain said.
"He has to accept full blame for what is happening ... because he had three years. He presented three budgets and not one penny in repayment of a loan."
According to official government figures, the Taiwan debt was last serviced in 2006 under the NNP administration.