Parliament on Thursday approved St. Vincent and the Grenadines’ membership in the Development Bank of Latin America and the Caribbean (CAF).
Prime Minister and Minister of Finance Godwin Friday presented CAF membership as a way to broaden the country’s financing options, support development, and help address fiscal pressures, but noted it would not automatically provide a loan.
The House of Assembly passed the CAF bill after a lengthy debate focused on whether joining a development bank would help SVG manage its economic challenges and invest in growth.
Friday argued that CAF could give the country another source of financing and technical cooperation as the government seeks to stabilise public finances, protect vulnerable people, and encourage economic growth.
“What CAF does, what it brings to us is that it enables us … [to have] another aspect of financing to help us to stabilise our fiscal situation, to protect the vulnerable in our country, and also to invest in growing the economy.”
What the bill does and what it costs
The bill implements two agreements signed between SVG and CAF on Oct. 8, namely a share subscription agreement and an agreement covering immunities, exemptions and privileges.
Friday said Parliament needed to approve the agreements to give them domestic legal effect.
Under the subscription agreement, SVG is to buy 141 Series C shares, valued at US$14,200 each, for a total of US$2,002,200.
The payment is due within 30 days of the agreement’s effective date, and Friday emphasised that it is a share purchase, not a payment toward a particular project.
“Membership does not, in itself, entitle us or grant us any loan or project,” he told the House. Any future financing would have to be considered on its own terms and in accordance with the applicable legal requirements,” he said.
Friday said the initial investment could provide access to about US$8 million in borrowing, or four times the subscription amount.
He described CAF as another option alongside existing development partners, with potential support for projects related to infrastructure, resilience and sustainable development.
“CAF is one more tool in our toolkit to get that done,” he said.
The bill also sets out how the Consolidated Fund handles payments and receipts related to the share agreement.
It gives domestic legal force to specified provisions of the immunities agreement, including protections for CAF’s property and official records, and certain tax and customs arrangements.
Friday’s case: more options, carefully managed
Friday placed the CAF membership within a broader effort to address the country’s financial position.
He told the House that government debt stood at about EC$3.6 billion, or roughly 113% of GDP, and argued that debt servicing leaves less public money for services and investment.
He said the government needed to manage its finances and support growth. “The seeds of growth must also be sown,” he said, adding that stabilisation should not come at the expense of “the most vulnerable people in our society”.
The prime minister said the government would engage CAF on a country programme aligned with national priorities, aiming to reflect it in the next budget.
He also said the government would consult the private sector, labour, civil society and communities about potential projects, and report to the House on borrowing and spending.
“Every dollar that we borrow will sit inside of our medium-term debt strategy,” he said, referring also to spending limits and planned fiscal responsibility legislation.
Friday described CAF financing as potentially “longer, cheaper, and tighter [to] projects that pay us back in growth and resilience.”
He presented that as a prospect, not a guaranteed outcome: specific loans and projects would still need to be negotiated and assessed.
Opposition backs the bill but questions the borrowing terms
Opposition speakers supported the bill while raising concerns about the cost and use of future CAF loans.
Senator Carlos James disputed the description of CAF financing as concessionary, arguing that borrowing costs could vary and be linked to market rates.
“[I]t is correct to say that it is not concessionary financing,” James said, describing it instead as “competitive” financing.
He warned that rates could exceed 5% and urged the government to use any borrowing for projects likely to generate economic value, rather than recurrent spending.
Meanwhile, Senator Keisal Peters also asked whether the government had identified projects for the funds and when it might seek to borrow.
She said the questions mattered even as she supported the bill: the legislation, she noted, did not amount to “a blank cheque”.
Friday responded that the government would decide whether each financing arrangement was in the country’s interest.