We need grants, not loans, PM Browne tells IMF

Prime Minister Gaston Browne (file photo)
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By Shermain Bique-Charles
[email protected]

“It has nothing to do with us”, said Prime Minister Gaston Browne, about a decision by the International Monetary Fund (IMF) to approve US $65.6 Million for Dominica, Grenada and St Lucia to address Covid-19 challenges.

Browne, who has had a wishy-washy relationship with the IMF, wrote to the financial entity earlier this month, requesting debt write-offs and grants to help the twin island state fight the coronavirus pandemic, but received no favourable response from the world body.

“We requested debt write-offs and grants. That is what the Caribbean needs, not loans,” he said

While the prime minister appeared to be grateful for what he called “small concessional loan windows”, he insisted that it cannot solve “our problem”.

“That cannot solve our financial problems that have been created over decades, by and large by repeated hurricanes recovery costs and exogenous shocks,” he added,

Furthermore, an adamant Browne said high debt and debit service ratios requires debt relief and grants to place these countries on a sustainable fiscal and financial pathway.

Meantime, the funding for Dominica, Grenada and St Lucia is being made available under the Rapid Credit Facility.

IMF financing support provides resources to the countries’ authorities for essential health-related expenditures and income support to ease the impact of Covid-19 on the population.

Dominica will receive US $14 million, while St Lucia gets US $21.4 million, and US $22.4 million goes to Grenada.

Tao Zhang, deputy managing director and acting chair of the IMF, said these countries are small states that are very vulnerable to shocks, including large natural disasters, with Dominica in particular still recovering from the devastation of Hurricane Maria in 2017.

Tao Zhang, deputy managing director and acting chair of the IMF (file photo)

“The Covid-19 pandemic poses a major challenge to Dominica, Grenada, and St Lucia. Their key tourism sectors have been hit hard by the shock. The contraction in tourism is expected to have a major impact on their economies, by causing ripple effects across all economic sectors, eroding fiscal revenues, and creating urgent balance of payments pressures. In addition, these three small states are also highly vulnerable to natural disasters,” Tao said.

The IMF, according to him will continue to engage these countries and stands ready to provide policy advice and further support as needed.

Dominica, Grenada, and St Lucia are members of the Eastern Caribbean Currency Union (ECCU), and the disbursements would support macroeconomic stability and facilitate the subsequent economic recovery of the region.

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