St Lucia’s parliament borrowing habits return in confidence

By Caribbean News Global contributor

CASTRIES, St Lucia – The parliament of Saint Lucia is scheduled for Tuesday, July 12, 2022, to commence at 10:00 am in borrowing habits, presumably in confidence, with papers to be laid by the prime minister and minister for finance; minister for tourism; minister for health; minister for commerce; and minister for infrastructure; meanwhile, parliament will authorize the minister of finance to write off the debt in the sum of EC$546,264.00 owed to the government by the Fond St Jacques Credit Co-operative Society Ltd., with respect to the Mocha Housing Development Project.

However, many unanswered questions accompany concerns of the Mocha Housing Development Project and the government’s decision to write off the debt – “a precarious decision/precedent and lazy thinking, the derivative of plausible political group-thinking, is astounding,” says an economist.

St Lucia parliament to convene Tuesday: Extends barrel exemptions, borrows for capital, current expenditure

The parliament of Saint Lucia press release, July 8, 2022, outlined four borrowing instruments. In the normal operation of parliament business, members will be expected to pass all of the financial instruments that comprise a 15 -2 House of Assembly, as stated:

“(a) To authorize the minister of finance to borrow USD10M from the Export-Import Bank of the Republic of China to finance the implementation of national development projects and initiatives; (b) borrow from the European Investment Bank the sum of EUR 13.5M to finance emergency operating expenses in the health sector related to the COVID-19 Virus Pandemic; (c) borrow USD8M from the International Development Association to finance the Organization of Eastern Caribbean States Data for Decision Making Project, and (d) borrow USD18M from the International Development Association for the implementation of the Unleashing of the Blue Economy of the Caribbean Project.”

In times past, parliament was converted into nothing more than an ATM, for members to simple acquiesce to a borrowing marathon at the expense of taxpayers. But albeit a borrowing lull, the process resumes, with confidence, in a country with unsustainable debt, little export products and balance of payment concerns with tourism as its primary economic pillar.

Export-Import Bank of the Republic of China USD10M for development projects and initiatives;

“(a) The loan is repayable in thirty consecutive equal or as nearly equal as possible semi-annual instalments, the first of which must be made on the last day of the sixty-sixth month from the date the first advance under the loan is made by the Export-Import Bank of the Republic of China, and thereafter, on the last day of each successive six-month period;

(b) if the full amount of the loan has been drawn down, each principal instalment must be in the amount of USD333,334.00, except that the last principal instalment must be in the amount of USD333,314.00, otherwise the amount of each instalment shall be adjusted by the Export-Import Bank of the Republic of China;

(c) interest is payable at a rate of the six-month Secured Overnight Financing Rate plus zero point two zero percent plus one point five percent per annum;

“(d) the loan is repayable in twenty years commencing from the date of first disbursement of the loan inclusive of a grace period of five years.”

European Investment Bank the sum of EUR 13.5M emergency operating expenses in the health sector related to the COVID-19 virus pandemic;

“(a) the loan is repayable over a period of twenty years from the date of first disbursement of the loan inclusive of a four-year grace period;

(b) the loan payments shall be made in consecutive equal semi-annual instalments;

(c) the loan payments shall commence after the grace period of four years expires;

“(d) the interest is payable —

(i) at a fixed rate of 1.35% to 1.45% to be determined by the European Investment Bank at the time of disbursement for each Tranche,

(ii) at a floating rate of three months Euro Inter-Bank Offered

Rate plus one hundred and ten basis points to one hundred and twenty basis points per annum.”

International Development Association USD8M – for decision-making project;

“ (a) the service charge is the greater of —

(i) the sum of three-fourths of one percent per annum plus the

Basis Adjustment to the service charge, and (ii) three-fourths of one per cent per annum on the withdrawn credit balance;

(b) the maximum commitment charge is one-half of one per cent per annum on the unwithdrawn financing balance;

(c) the loan is repayable in forty years commencing from the date of disbursement of the loan inclusive of a grace period of ten years;

(d) the principal amount of the loan is repayable on each 15th day of March and 15th day of September each year commensurate with the following terms —

(i) one per cent of the loan amount commencing on the 15th day of September, 2032 to and including the 15th day of March, 2042,

“(ii) two percent of the loan amount commencing on the 15th day of September 2042 to and including the 15th day of March, 2062.”

International Development Association USD18M for unleashing of the Blue Economy of the Caribbean Project;

“(a) the service charge is the greater of —

(i) the sum of three-fourths of one percent per annum plus the

Basis Adjustment to the service charge, and

(ii) three-fourths of one percent per annum on the withdrawn credit balance;

(b) the maximum commitment charge is one-half of one percent per annum on the unwithdrawn financing balance;

(c) the loan is repayable in forty years commencing from the date of disbursement of the loan inclusive of a grace period of ten years;

(d) the principal amount of the loan is repayable on each 15th day of May and 15th day of November each year commensurate with the following terms —

(i) one percent of the loan amount commencing on the 15th day of May, 2032 to and including the 15th day of November, 2041,

(ii) two perent of the loan amount commencing on the 15th day of May, 2042 to and including the 15th day of November, 2061.

The following Bills are down for consideration:

1. Banking (Amendment) Bill;
2. Public Debt Management Bill;
3. Income Tax (Amendment) Bill;
4. Recording of Court Proceedings Bill;
5. International Banks (Amendment) Bill;
6. Eastern Caribbean Securities Regulatory Commission Agreement Bill;
7. Firearms (Amendment) Bill;
8. Youth Economy Agency Bill;
9. Special Prosecutor Bill.

St Lucia’s 2022/23 budget of $1.842B styled ‘the peoples budget’