St Vincent seeking US$6 million in emergency IMF financing

The St. Vincent and the Grenadines government is seeking more than six million US dollars in emergency financing from the International Monetary Fund (IMF), Prime Minister Dr. Ralph Gonsalves said Monday.  He told a news conference that a letter of intent would be sent to the Washington-based financial institution and he is hopeful that the funds would be disbursed in June when the IMF board of directors meets to discuss the request.

Gonsalves said, “I am making a request for emergency financing from the IMF amounting to 4.15 million special drawing rights (SDR), equivalent to US$6.4 million.  I am asking for 25 per cent of our quota under the Rapid Credit Facility …which is five years with three and a quarter years grace period at 1.13 per cent interest.”

Gonsalves told reporters he held talks with an IMF delegation that had visited the island “at our request” and the use of the funds “as I am saying in the letter is for rehabilitation.  “The IMF assistance will meet the urgent foreign exchange needs stemming from the disaster and ease the pressure on our balance of payments,” he said, adding that the funds would represent a blend between the Rapid Credit Facility and the Rapid Financing Instruments.

Gonsalves was insistent that the island would not be entering into any agreement with the IMF that would result in structural adjustments to the island’s macro-economic policy.  “This is not any money with any conditionality,” he said, telling opposition politicians that they have no idea as to how the IMF functions.

He recalled that in 2011, the island benefitted from two Rapid Credit facilities from the IMF because of the destruction caused by the hurricane and tropical storms in that year.  Gonsalves said the funds being sought would help the island in its recovery from the last Christmas floods where damages and losses were estimated hundreds of millions of dollars.

Gonsalves also said, “As the World Bank pointed out 15 per cent of gross domestic product (GDP) is the damage and loss, but the damage is 12 per cent of GDP and the loss is three per cent. The actual physical damage is US$86.3 million and the loss US$22 million…  But we used the figure of EC$330 million (One EC dollar = US$0.37 cents) because the World Bank figure …which the IMF has accepted,….”

Meanwhile, Gonsalves said that the local economy had grown by estimated 2.4 percent and recalled he was scoffed at when he told legislators that the economy would have grown by at least two per cent last year.  He said preliminary figures released by the Department of Statistics in the Ministry of Finance and Planning showed that the economy had indeed grown to 2.4 per cent last year as compared with 1.2 per cent the previous year.

“This year, 2014, I had said in our budget that we will expect to get in the region of about two per cent or thereabouts, of course we can get more, less, depending on our we implement our program,” he said, noting that the economic growth last year was much better than what had been recorded by several Caribbean countries.

Source: Caribbean360