Two loan motions of significant amounts and importance was passed during Friday’s Sitting of the Senate. One of the loans approved was for twenty million US dollars from the Caribbean Development Bank for the Development Finance Cooperation. Senators first debated this loan.
“The effects of correspondent banking relationships, excess liquidity in the market resulted in several restructuring across the banks and even increased unemployment Mr.President. The excess liquidity is as a result of the high cost of finance, a lesser performing economy which indicates a high risk investment environment so we ask that the motion for this line of CDB credit include commitments on behalf of the government and the DFC to see a direct pass through of the access to cheaper capital to the community that bears the real burden of a government guarantee, the stable sector for economy, the business community, the NGO community.”
“Now while we support the work of the DFC because we understand and we know that persons who are really in need are the persons who benefit from the DFC and so we cannot help but support that those persons be given assistance. We look at this motion here and we see that it’s going to be used for four sectors; small and medium sized enterprises, the student loans, low income housing and then the energy efficiency and renewable energy; and our first thought was ‘so how will these funds be distributed amongst these four areas. If we look at dividing them equally it would mean that each sector would get roughly about $10 million. So we look that the cost of the low income home and that would be probably around $40,000 over a regular low income home. If we were to allocate $10 million for that sector it would mean that 250 homes would be built from that $10 million. Secondly Mr. President we look at the grant of $185,000US and it says ”to finance consultancy services and so we are trying to figure out what do we mean by that? Not that we don’t know what consultancy means but really and truly the DFC has been in existence for a while now and we are sure that the DFC has certain capacities and it may need some more; so what are the areas they need to strengthen? We are not aware of that, we are not sure what those areas are.”
“I believe that when we are given motions it is our responsibility to find the sense in what is presented to us and in our deliberation talking with some of the representatives of our church we felt that the two entities in question have done tremendously in representing fiduciary responsibility as it relates to loans. The DFC has been known to have done exceptionally well in the last period they have rebound from the last situation they found themselves in; the SIF have been known to do some stellar work as it relates to school development and other things of that sort and so the intricacies of the motion I don’t know that we’ve been able to touch that but I don’t know that that is our responsibility. I believe the technocrats who are given this responsibility to assume what will happen with the loan to make sure that it is used in a way that will bring clarity and guidance and sustainability to our country are the real issues and so we lend our support to the motion relating to the loans for the DFC and SIF.”
“In a loan motion of this nature the type of details that the senators are requiring are not the types of details that you can give at this stage. Why? Because the DFC is a statutory body, the DFC determines who will get what and how those monies will be dispersed, there are only so many details that we as government can do. What people have to understand before you grandstand is this; all the government is doing with the CDB is guaranteeing a loan from the CDB that will go to the DFC as it says here for all lending. How the money is divided is totally up to the DFC.”
DR CARLA BARNETT
“DFC has a particular role that it plays, it finances where development of business cannot be easily accommodated within the commercial banking sector. Higher risk yes, higher risk and longer gestation period for projects so an agriculture project that requires seven to nine years before it reaches peak performance would be better served by an institution that can lend for a longer period of time and the commercial banks tend to lend for a shorter period of time. So DFC has a particular niche.”
The second loan motion that was debated was one for ten million US dollars. That money is going for the Social Investment Fund in order for it to finance more than 20 social development projects in rural areas.
“We are happy to see that these projects that they are working on will be for poor rural communities because we are quite aware that these communities do need this type of assistance in those areas and so we are happy for that. The institutional strengthening as well we note that it says here recommendations for reform and so this is something good in our view it is something good because there is always room for improvement and so seeing that there is a plan to reform tells us that they have been doing some sort of revision of the SIF to see how they can better their organization and so we hope that that will be done quickly and that the necessary changes will be made. We also felt that SIF having been in existence for quite some time now we were just a bit concerned of these areas because we felt that some of these capacities would have been there already and we know that yes we need to strengthen but for (E) where it says project management we were looking at all that comes under that, it seemed to us that that would be a project management unit with all the work that it has listed there that they need to get done. None the less as I said we are happy to see that some of the areas that are of concern to us will be addressed, our pool areas will be assisted and so my organization is supporting this motion.”
“They have what it called an indicative sub-project pipeline. There are more than 100 applications coming from all over the place to SIF so SIF doesn’t have the money but they know that they have to continue to lend so they put this proposal and say okay when we look at these sub-projects we from a big broad brush are satisfied that we will be able to lend into education, water and sanitation, health, social services and also organizational strengthening project. They can’t list the projects because then people will think ”well I got my loan approved”; they have not gotten their loan approved because they have to go through the details etc. They can’t get the loan approved because SIF doesn’t have the money yet and they haven’t done that detail. It’s not a loan its projects that they are doing for these people. We get the loan, it goes to SIF, SIF does these projects; water in this place and that but they can’t announce that yet because they’re not sure of that yet and how it’s going to go.”
“What Senator Smith was saying, and I make reference to what is before us now, if there is a proposal before us right now for the sum of $20 million dollars to finance 24 small medium sized community projects where did this number 24 come from? Certainly it did not come out of the air. Certainly these projects have been identified one would hope and we know exactly where these projects are going to be done and for what purposes so what is the problem with providing us with the details that Senator Smith, myself and other senators continue to call for. Why can we not be given the materials that we need in advance so that we can rise and gladly support all those projects that are needed. That is simply what we ask for.”