Grenada Today - The National Newspaper of Grenada, Carriacou & Petite Martinique

The Grenada government is reportedly worried about not being able to cash in on the millions of dollars in aid promised to the country to assist it in its reconstruction following the passage of hurricane Ivan on September 7.

This was disclosed to GRENADA TODAY by Permanent Secretary in the Ministry of Finance Timothy Antoine during an interview on Monday. He was responding to a question from this newspaper about the recent ratings given to the country by international auditor Standards & Poors and the impact it will have on the economy.

Antoine spoke of the country not being bothered about the recent ratings since that was expected post Ivan. The Permanent Secretary stated that what is worrying is, Grenada not being able to access the aid promised in light of the situation that occurred in South-East Asia during the Christmas season.

He was referring to the massive earthquake that caused tsunami on the Asian coast line resulting in the death of thousands of people as well as millions in damages. A number of countries and international donor agencies have pledged millions in aid to help the affected nations in their reconstruction efforts.

Grenada received a D rating from the international Auditing Firm Standard & Poors (S&P) after the country failed to make its interest payments on a US$ 100 million bond which is due in 2012. GRENADA TODAY has learnt that this is the second downgrade since the country was devastated by hurricane Ivan on September 7 last year.

The rating has seen the country slipping from its B minus status to D after it was also unable to make interest payments on a US$41.5 million RBTT Merchant Bank Bond due in 2014.

The ruling New National Party(NNP) administration of Prime Minister Dr. Keith Mitchell had borrowed the US$ 100 million to meet External Obligations such as the National Stadium US$31.347, Ministerial Complex US$15.404, Bus Terminus US$2.209.

Some of the monies government said were also used for payments relating to Domestic Obligations such as overdraft facility (unpaid claims) US$17.9 million, National Insurance Scheme (NIS) Obligations US$8.0 million.

S&P said that it had lowered Grenada's long-term foreign and local currency ratings from BB- to B+. The country was also placed on CreditWatch with negative implications. RBTT on the other hand noted that the last 6-month results, reported unrealised marked-to-market losses of $74 million after Grenada's last downgrade in September.

In its latest action on Thursday, S&P lowered its long-term foreign currency sovereign rating from B- to Selective Default (SD) and its short-term foreign currency sovereign from C to SD.

A country is given a SD rating when S&P believes that the obligation has selectively defaulted on a specific issue or class of obligations but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. S&P also lowered its long-term local currency sovereign credit rating on Grenada from B- to CCC.

The long-term ratings, placed on September 17, have been removed from CreditWatch with negative implications and the local term local currency rating has been assigned a negative outlook. Antoine stated that government is not surprised by the S & P ratings given the impact of hurricane Ivan on the local economy.

He pointed out that the country experienced a $20 million shortfall in revenue in the aftermath of the devastation caused by the hurricane. According to the Permanent Secretary, government has begun a comprehensive programme aimed at restructuring the country's public external debt.

Among the obligations covered by this restructuring programme are Grenada's $100 million (US) Notes due 2012 and its $41.5 million (US) RBTT Merchant Bank Ltd. Bonds. Antoine disclosed that the country is currently in the process of retaining financial and legal advisors and is committed to working with its creditors to solve this unprecedented economic crisis.

The Permanent Secretary insisted that the issue of debt restructuring will be completed by the ending of the first half of this year and that once this is done, the country credit rating will improve.