May 15, 2009
SVG applies for IMF loan

St Vincent and the Grenadines has applied to the International Monetary Fund (IMF) for a loan under its special Exogenous Shock Facility (ESF), which the Opposition Leader believes is an act of desperation on the part of Prime Minister Dr Ralph Gonsalves.{{more}}

“All the money that we can get in a tight liquidity situation is important,” Dr Gonsalves said when he made the announcement when he made a guest appearance on the “Issue at Hand” radio call-in show on WE FM last Sunday.

This country has requested US$5 million from the IMF.

The ESF provides policy support and financial assistance to low-income countries facing “an event that has a significant negative impact on the economy and that is beyond the control of the government,” the IMF website said. Such shocks could include commodity price changes (including oil and food), natural disasters and conflicts and crises in neighbouring countries that disrupt trade.

ESF loans carry an annual interest rate of 0.5 per cent, with repayments made semiannually, beginning 51/2 years and ending 10 years after the disbursement.

The Prime Minister explained that the Eastern Caribbean Central Bank (ECCB) countries are facing liquidity problems and said he wanted to lead so that other islands in the ECCB could follow.

“I went ahead because I believe that as a whole, I want to provide the lead to suggest to the ECCB countries that they should go (to the IMF),” he said.

“What he means by providing the lead? You going to tell other people they must borrow?” asked Eustace.

Eustace told SEARCHLIGHT that the economic situation is taking its toll and that the government should have followed the New Democratic Party’s advice to be more prudent in its spending in the first place.

“That should have been done a long time ago,” he said, responding to Dr Gonsalves statement that he also made on the radio programme that capital projects that demand significant input from the domestic revenue will be put on hold except “they are absolutely vital.” (KJ)