St Vincent’s government announced on Thursday that the administration’s flagship project is the establishment of a National Development Bank, designed to help small businesses and entrepreneurs access essential credit that traditional lending institutions often deny.
The move comes as the nation faces a stagnant economy and a heavy debt burden, with the debt-to-GDP ratio currently standing at 113%.
The International Monetary Fund (IMF) has expressed concern over this undertaking, warning that the debt ratio could climb to 145% in the next five years and advising the government against taking on obligations that might jeopardize debt-reduction plans.
However, Prime Minister Godwin Friday countered these concerns by arguing that rapid economic growth and transforming the economy is the fastest and most effective way to resolve the current debt crisis.
To finance the initiative, the government has already located approximately $1.5 million in initial seed funding, with a target of securing $10 million for the bank by the end of the year.
Additionally, the Prime Minister revealed that capital raised through a soon-to-be-rolled-out Citizenship by Investment (CBI) program will be utilized to help seed the institution.
Addressing historical criticisms that previous state-run banks failed due to political favoritism, Friday assured the public that the new institution will be insulated from political interference.
He emphasized that loans will be granted based strictly on the merit of viable business plans and the borrower’s ability to carry the loan, rather than political affiliation.