Opposition Senators Senator Kisel Peters and Senator Carlos James have voiced formal support in the House of Assembly for the Development Bank of Latin America and the Caribbean (CAF) Bill 2026, while issuing strong warnings regarding floating interest rates, national debt strategy thresholds, and the government’s plans for unlocked loan funds.
The legislation enables St. Vincent and the Grenadines to join CAF as a Class C shareholder member by purchasing 141 shares valued at $14,200 each, requiring a single equity subscription payment of US$2 million within 30 days to access an initial fourfold borrowing envelope of US$8 million.
Rising to lead the opposition’s critique, Senator James corrected statements made by the government regarding the nature of CAF financing, clarifying that the institution’s loan portfolio is commercial and competitive rather than concessionary.
Key points raised by Senator James include:
Variable Interest Rates: CAF loans are pegged to the Secured Overnight Financing Rate (SOFR), making interest rates floating rather than fixed. With SOFR standing at approximately 4.2% alongside standard CAF spreads and fees, effective borrowing costs will likely reach 5.5% to 6% or higher.
Breach of Debt Strategy Benchmark: Borrowing at rates above 5.5% exceeds St. Vincent and the Grenadines’ longstanding national debt management strategy, which strictly defines concessionary financing as interest rates at or below 5%.
Strict Warning Against Recurrent Spending: James urged the government not to utilize the US$8 million draw-down to pay public sector salaries, cover recurrent budget deficits, or capitalize proposed state development banks. He insisted that loan proceeds must be invested exclusively in capital infrastructure projects yielding a positive Net Present Value (NPV) to generate economic growth.
Historical Origins of Membership: Presenting a November 2, 2023 letter from CAF’s Executive President to former Minister of Finance Camillo Gonsalves, James corrected assertions that the current administration initiated CAF integration, noting that formal expressing of interest and CARICOM regional integration with CAF were spearheaded three years prior under the previous government.
Despite rate concerns, James acknowledged CAF’s structural advantages, including rapid resource drawdowns within 3 to 4 months, uniform sovereign spreads that resist Moody’s credit downgrades, strong climate adaptation frameworks, and prior emergency grant assistance following Hurricane Beryl.
Echoing concerns over interest rate benchmarks, Senator Peters pressed the government to disclose its specific expenditure roadmap for the US$8 million borrowing envelope.
Defending the national debt record against government accusations of past reckless spending, Peters detailed how debt accumulation under the previous administration was directly tied to protecting the public during unprecedented national shocks:
Social Safety Net Support: Monies borrowed were funneled directly to citizens through unprecedented income support, production support, housing grants, and rental assistance programs.
Successive Natural Disasters: Borrowed funds financed national recovery across a series of compounding crises, including the COVID-19 pandemic, the 2021 La Soufrière volcanic eruption, Hurricane Elsa, Tropical Storm Bret, and Hurricane Beryl.
Missing Assessment Figures: Peters criticized the administration for failing to present Parliament with a preliminary damage assessment figure following the tropical wave that struck at the start of October 2026, contrasting it with past practices of delivering rapid technical estimates to development partners.
Both senators linked the parliamentary debate to broader economic pressures facing Vincentian households.
Senator James highlighted growing public frustration over soaring VINLEC electricity fuel surcharges and rising supermarket prices. He called on the administration to fulfill its pre-election commitments—specifically promises that state money would be directed “where the pain is” and that electricity fuel surcharges would never be allowed to exceed base consumption rates.
Concluding their contributions, both opposition senators reaffirmed that their critiques were intended to ensure fiscal discipline, cautioning the government to deploy CAF resources transparently for the direct benefit of working citizens.
