There is a need for St Vincent and the Grenadines to become an export-driven country, if the Port Modernisation project is to bear successful fruit in coming years.
This point was one of several made this week by Leader of the Opposition, Dr Godwin Friday as he contributed to a debate in Parliament on the Port Modernisation (Loan Authorisation) Bill (2022), which was successfully passed on July 25.
The Act approves borrowing of US$62 million from the Export Import Bank in the Republic of China on Taiwan, which will be used for the Port Modernisation project.
“We can’t be a very efficient port just to import otherwise it’s just going to be a very expensive proposition for us…” Friday said, adding that the country must focus on building “an export-led economy” to the extent that when the Port is completed, there will be considerable growth to match the scale of the project to be completed.
The opposition leader said the loan outlined seemingly comes with “pretty good terms” as the interest rate can be considered as concessionary financing.
The loan amount accounts for about 25 per cent of the the overall cost of the project, and is to be repaid over a 15-year period, following a five and a half year grace period, at an interest rate to be calculated at SOFR + 1.4 per cent.
As at July 25, 2022, the SOFR, a fluctuating rate, amounted to 1.34 per cent.
This means that the interest to be repaid on the US$62 million loan is approximately 2.93 per cent.
Friday noted however, that this can either increase or decrease, making loan repayments cheaper or more expensive.
“Let’s hope it is cheaper because I going be repaying most of this when we are in government…” the parliamentarian said as he highlighted the country’s debt situation.
Friday said executing a big project is not as critically important as it is to ensure that it will operate and bring in the revenue that makes it feasible.
“…whether its agriculture, manufacturing, seafood, any other commodity, it’s that we can export and using the efficiencies that are promised from this facility to make our goods more competitive,” he said.
“So in a sense, the overall assessment will be some years in coming as to the level of success of this project, and its ability, or its delivery of the promise that the minister outlined for it earlier today (July 25)”.
The Port Modernisation Project has three phases: construction of the primary cargo port, the construction of an inter-island port, and the construction on an intra-national port to facilitate movement between and among the Grenadines islands.
The other sources of financing for the project come from a CDB loan of US$110 million, UK Grant approximated at US$36 million and contributions from the Government of St Vincent and the Grenadines of about US$42.8 million.