Gov’t borrows from Republic Bank to pay off ‘restrictive’ Banco loan
The government has taken out a $17,000,000-plus loan from Republic Bank in Road Town to fast-track the repayment of a loan with Banco Popular whose lending conditions it said had become unfavourable.
Premier and Minister of Finance Andrew Fahie said in a recent statement to the House of Assembly that this move will save the government “about $1.6 million” over the next five years when the new loan payments are expected to conclude.
He said this is because of significantly reduced interest rates from Republic Bank. He said these reduced rates mean “a decrease in the government’s debt service cost” and a subsequent reduction in the territory’s forecasted debt service ratio under the Protocols for Effective Financial Management.
READ: More about the Effective Financial Management deal between BVI and UK
The government had opened the $45 million loan account with Banco Popular back in October 2009 for the construction of what was the ‘New Peebles Hospital Project’. And in 2018, it conducted a in a legal review of the government’s debt profile.
“It was opined that the terms and conditions under the agreement were unnecessarily restrictive and onerous given that the BVI is a sovereign borrower … The review recommended that early repayment or refinancing would remove the contractual requirement to maintain all government bank accounts with Banco Popular. This would enable the diversification of banking risk, and render the ability to negotiate lower fees, and potentially higher deposit interest rates, with other financial institutions,” the Premier explained.
The Premier said the government had made “numerous attempts since 2018 to renegotiate the restrictive terms and conditions” for the Banco Popular loan. He, however, said, the negotiations were unsuccessful in eliminating the critical clauses as requested.
The Ministry of Finance, therefore, began the process of developing a strategy to immediately repay or refinance the loan immediately.
“The strategy chosen was to pay off the balance of the loan on 31st May 2021, which was $17,250,000, and accrued interest for the period in the amount of $57,750. Therefore, the amount of the repayment was $17,307,750. However, to ensure the amount being repaid was replaced in short order, a restricted tender was arranged for a new five-year loan facility for $17,250,000 to be signed and drawn after the repayment of the Banco Popular loan. Mister Speaker, Republic Bank Limited emerged as the successful bidder for this new loan facility,” said Fahie who explained that there is no increase in Central Government’s debt stock.
This new loan would only be replacing the recently settled loan with Banco Popular. Therefore, the value of the loan remains unchanged at $17,250,000, but at a fixed interest rate of 1.51 percent offered by Republic Bank compared to the four percent floating interest rate of the recently paid-off Banco loan.
Going hand-in-hand with the savings from this refinanced loan, Republic Bank also accepted the suggestion to add a moratorium option so that the government can postpone loan payments for six months in the event of catastrophic events, such as natural disasters and economic shocks.
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What was this loan for $17,250,000 used for?. In other words what was the purpose of this loan? A lot of hidden dirty laundry is being exposed by the COI. Dear Her Majesty Queen Elizabeth, please rescue us from these criminals.
Who Elizabeth? Let her cart her ‘rarm from here. They stole so much from Africans already, who needs her to rescue us? Tell her go give her grandchild Archie a title and mind her ropey business in UK. I hate it when people calling on thiefing Monarchy to come and do us good when they first started the evil.
You sound like the 2 cr@ckp°+s who does be on a certain radio program …ranting and raving about England and babylon…instead of blaming YOUR OWN people who cause the inquiry SMH
yikes
They, the brit, and the rest of the europeans abhor truth. They can’t stand the to hear the truth told to them.
They pretend, for example, that these islands were owned cleanly, when in fact they were stolen. The history of the UK as well as the rest of europe is nothing but theft, looting, killing and taking other people’s stuff. That is how they built their empires and gained control of the world to this this day.
Of course those are true facts that will drive them crazy. Watch them and their group post a thousand thumbs down.
Today, he, the brit, wants to brexit control of the power and money that we the Black eople of thse islands currently are in control of. They want it all for them greedy selves.That is what all the fuss is about, believe it or not.
Greed, money, power and control of them must always be in their hands only. It bothers them to te core to see money and power in a Black man’s hand.
The man’s mind is bad.
Did you read the article?
This is a wise move by Government.
You either illiterate or incompetent. They refinanced the loan. Meaning they took the loan from Republic to pay off the remainder of the loan at Banco.
The story really is Banco! Glad that Gov’t is making public the unfriendly, borderline a——, un——ing service of Banco. I find the customer service d——–. The ATM is always — of money. They obviously have more business then they need.
I live in St Vincent and the grenadine. I am only a small business and I tried to get a loan from the bank of which I’m a member. I only wanted a small amount to pay for stock and I was technically refused is it because I’m only a small business.?
Impressive that they got. 1.5 rate. I doubt it. A small bank not operating here no tender, is 60% less than big BPop, a local operator?