Parliament has approved a government guarantee for an EC$87 million loan to the Antigua and Barbuda Transport Board, following debate over how much of the financing will be used for road rehabilitation and how much will refinance existing debt.
The resolution authorizes the government to guarantee the loan from a syndicate of local and regional financial institutions at an interest rate of 6.5% per year.
The financing involves ACB Caribbean, Antigua Mortgage and Trust Company Limited and ACB Grenada Bank Limited.
According to the resolution, the facility is intended for “refinancing existing liabilities and for financing development and rehabilitation of the national road infrastructure.”
The government guarantee covers the full EC$87 million and includes an undertaking by the government to meet any shortfall in monthly installments. Parliament’s authorization was sought under Section 54 of the Finance Administration Act 2006.
The resolution prompted questions from Opposition Leader Jamale Pringle, who challenged the government over the structure of the financing.
Pringle noted that EC$67 million of the EC$87 million facility was earmarked to cover existing debt, leaving EC$20 million immediately available to the government.
“Out of this $87 million, $67 million is to cover existing debt,” Pringle said. “So the only amount that they have at their disposal, according to this document, is $20 million.”
He questioned how that squared with previous statements that approximately EC$100 million would be borrowed to rehabilitate roads across Antigua and Barbuda.
Prime Minister Gaston Browne rejected the suggestion that only EC$20 million would ultimately be available for the road programme.
Browne explained that the EC$87 million arrangement is a bridging facility. He said EC$67 million would be used to pay off liabilities to the Finance and Development Company, while EC$20 million would be advanced to the government.
“This is a facility in the amount of $87 million to cover the $67 million to pay out FDC, plus an advance of $20 million to the government,” Browne said.
He said that once the wider loan arrangement is completed, an additional EC$80 million would become available.
“Upon completion, that is a further $80 million that will come to the government, giving the government a net of $100 million,” Browne told Parliament.
The prime minister said the additional financing would allow the government to continue its national road rehabilitation programme and complete substantially more roads.
“We now will have additional funds that we can complete them,” Browne said, asking residents affected by poor road conditions to be patient.
He added: “And now that we’re getting $100 million, clearly, practically all of those roads will be completed.”
Browne also defended the decision to bring the guarantee before Parliament, saying the government was seeking the required parliamentary authorization before drawing on the financing.
“This is the discipline of my administration, coming before to get the necessary parliamentary approvals before we take one cent from the bank,” he said.
The resolution authorizes the government to enter into the guarantee arrangement with the syndicate of banks, guarantee the full EC$87 million facility and execute the relevant security documents associated with the financing.
After the debate, the resolution was put to the House and passed.
This article was originally published by Antigua News Room. Read the original article here: Parliament Approves EC$87 Million Government Guarantee for Transport Board Loan.