The Grenada government says it is hoping to start negotiations soon with a bank in Taiwan on how best it can repay a delinquent loan now accumulating interest at a rate of more than US$5,000 a day.

Finance Minister Nazim Burke said a repayment plan on the US$25-million loan from the Export Import Bank is being developed after a strongly worded letter from the Asian financial institution demanding its money in full.

The letter to the 10-month-old Tillman Thomas administration said the bank was proceeding with court action to enforce an earlier judgment against the Grenada government, which it accused of refusing to service the loan.

"Since receiving this letter we have contacted the bank. We have said to them 'Look, we are first of all seeking to retain lawyers in the United States to represent us there, but that we are also trying to devise a plan as to how we are going to approach this debt'," the finance minister explained.

"It is quite clear that the judgment will have to be satisfied. It is quite clear that we cannot pay these monies in one shot - so there will have to be some restructuring of this obligations, with the consent and acquiescence of the bank to see how best this can be done, under the circumstances."

The multimillion-dollar loan, backed by the Taiwanese government, was obtained in four tranches over an 11-year period from July 1990 to January 2001.

The Taiwanese bank demanded immediate payment after the previous Keith Mitchell administration re-established diplomatic relations with the People's Republic of China in the wake of Hurricane Ivan, which devastated the country in 2004.

"We have to blame the current administration in that they never followed up on that arrangement. They never continued the dialogue with Taiwan," declared former Finance Minister Anthony Boatswain, as a debate rages here over who is responsible for the loan not being serviced.

Ongoing discussion

"Ten months passed and they never even acknowledged that there was an ongoing discussion with Taiwan to settle that debt. When they took over the reins of government, they did not continue that kind of dialogue with Taiwan," said Boatswain, whose New National Party lost the government in general election last July.

However, the finance minister quoted from several letters written by lawyers for the bank to the previous government suggesting that their efforts to resolve the matter were being ignored.

"How can Mr Boatswain come to us and say to us now 'he was negotiating at the time he left and that what we have failed to do is continue those negotiations'?" said Burke.

"Was he negotiating with a ghost? Who was he negotiating with? It was quite evident that as far as the (Taiwanese) bank is concerned, this judgment has been completely ignored by the former government."

- CMC