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Taiwan writes off half of Grenada debt

Published:Thursday | January 8, 2015 | 12:00 AM

Prime Minister Dr Keith Mitchell says Taiwan has agreed to reduce by 50 per cent the EC$60 million owed for loans contracted over a decade.

Speaking on television Monday night, Mitchell, who is also finance minister, said Grenada will only have to repay approximately EC$30 million of the loans, which became an issue when St George's severed diplomatic relations with Taipei in 2005.

"The Taiwanese government has agreed to a 50 per cent haircut. They have also agreed to look into a period of payment that will make it easy for us," Mitchell said without providing much details with regard to the terms and conditions agreed.

Last year, during his budget presentation, Mitchell told legislators that on the matter of the outstanding debt to Taiwan, his administration had reached agreement with Taiwan on a standstill of the legal proceedings in New York.

In December, a government statement noted that Grenada had reached, in principle, an agreement with Taiwan's Export-Import Bank on the restructuring terms to be applied to Grenada's indebtedness to Ex-Im, regarding loans in default since 2004.

In 2007, the bank sued the Grenada government in the United States District Court in New York to recover four loans that had gone into default.

The bank was seeking to recover US$21.6 million from the government plus interest payments for the loans that were used to finance construction of the first sporting stadium at Queen's Park, the Ministerial Complex at the Botanical Gardens, the agricultural sector, and for road-construction projects on mainland Grenada and the sister isle of Carriacou.

The bank had loaned the money for infrastructure projects during a period when Taiwan was battling Chinese efforts to strip it of international recognition.

China regards Taiwan as a renegade province and has called on all countries to embrace the One China policy.

Grenada established diplomatic relations with China in 2005 after severing ties with Taiwan.