Antigua & Barbuda has received a debt ease with six of its Paris Club creditors restructuring the re-payment of US $117 million or 90 per cent of a total of US $133 million outstanding from as far back as 40 years.
The agreement was brokered last Thursday in Paris when Finance Minister of Finance and the Economy Harold Lovell and his team held one day of “intense and very long negotiations” with representatives from France, USA, UK, Netherlands, Brazil and Japan.
Lovell said the next step is to enter bilateral agreement with each individual creditor. This will provide Antigua and Barbuda with an opportunity to negotiate for even more concessionary terms including debt relief.
He said at least one country has expressed a willingness to write off significant portions of Antigua & Barbuda’s debt, but declined to identify the nation.
The finance minister revealed that under the “baseline accord” Antigua & Barbuda does not have to repay the principal (US $47 million) for up to seven years and an additional “breather” is that the creditors will stop accumulating penalty interest (which stands at US $86 million).
He said if you have a debt stock of US $133 million and you do nothing about it, at an average interest of 10 per cent a year, you would be adding in excess of EC $40 million.
Lovell said that interest of EC $40 million could be used to finance education, infrastructural works, health care. But he said that is the burden that the twin-island state would have had to carry as a result of the non-payment of these debts.
Government is also able to lower the original interest cost on some loans to the current European market rate which stands at 3.5 per cent without any margin, when compared with 11.2 per cent which some of Antigua & Barbuda’s debts previously attracted.
The agreement allows an extended term of 12 years for repayment, including loans that have already matured and are due to mature in the next year and are eligible for full payment. It also gives government the ability to swap up to EC $ 15 million per creditor, for projects that the government would carry out for the same amount.
A breakdown of the debt owed to each country shows that in most cases, accumulated interest and penalties far outstripped the original loans.
For example, a US $7.9 million loan from Credit Lyonnais of France in 1986 and rescheduled in 1999 at US $22.09 million has now been reconciled at US $33.9 million.
Lovell noted that because a previous government defaulted on paying this particular debt, France was adamant that the International Monetary Fund should not have approved the US $117 million it has with this country.
In 1982, Banco de Brasil lent Antigua & Barbuda US $5.1 million and 28 years later the Paris Club has reconciled the amount at US $22.5 million.