Leader of the Opposition Ralph Gonsalves has formally called for an “appropriate rethink” of the government’s proposal to establish a new National Development Bank (NDB), cautioning that the institution could face immediate financial failure and unnecessarily duplicate existing services.
During a heated parliamentary debate, the Opposition Leader drew on historical parallels to warn the House that a similar attempt in 2000 resulted in a bank that was “stillborn” and “insolvent abinishio” (from the very beginning). He explained that the previous institution failed because it was capitalized with only $5 million while being saddled with bad loans that far exceeded its equity.
A central pillar of the Opposition’s argument is that the functions intended for the NDB are already being successfully managed by a network of specialized institutions. The Leader of the Opposition highlighted several entities that currently serve the sectors the NDB aims to target:
- The Student Loan Company: Which has lent approximately $100 million since 2001.
- The Farmer Support Company (FSC): Established in 2014 to provide low-interest credit to the agricultural sector.
- The PRIME Grant Program: Which offers grants of up to $40,000 for small businesses.
- The Center for Enterprise Development (CED): Providing essential training and technical advice to entrepreneurs.
Gonsalves expressed deep concern that establishing a centralized bank would create excessive administrative expenses. He suggested that to fund this new venture, the government might be forced to “close down” these existing, successful entities.
The debate also touched on the viability of the bank’s capital sources. Gonsalves questioned the logic of seeking “seed money” from the Afreexim Bank, noting that its interest rates—typically around 6%—are significantly higher than the 0.75% rates available through the World Bank’s IDA funding.
“A bank without money is an oxymoron,” the Opposition Leader stated, arguing that unless the government can secure funding on “excellent terms,” the bank will struggle to offer the preferential lending rates it promises without becoming a drain on the consolidated fund.
While acknowledging the “poetic utterances” of election campaigns regarding economic growth, the Opposition Leader urged the government to face the “real world” of financial management. He pointed out that the current banking system already possesses high liquidity and that rather than creating a new, costly bureaucracy, the government should focus on refashioning and streamlining existing instruments to better serve the public.
“You may well end up with your National Development Bank where the funding is just not available at rates of interest and on terms to make it viable,”.
Gonsalves said he could not support the motion as presented.