Taiwan pledges US$2 million grant for St. Vincent development bank, PM says

Taiwan has committed at least US$2 million in grant funding to help establish a national development bank in St. Vincent and the Grenadines, Prime Minister Godwin Friday said following a recent visit to Taipei.

Friday told reporters that the funding would help capitalise the proposed bank, while Taiwan has also indicated that additional financing could be made available on soft terms.

“We can say there’s a commitment of at least two million US dollars as a grant to help to capitalise the bank with other funding available on soft terms,” Friday said.

The prime minister said discussions about the development bank had already begun before his delegation travelled to Taiwan and that Taiwanese officials were aware of the government's plans.

He said the government had approached its international partners for assistance after considering concerns raised by the International Monetary Fund (IMF) about the proposed institution.

Friday said he was less enthusiastic about borrowing at concessional rates but acknowledged that the government would have to determine whether such financing would benefit the economy.

“We have to balance the benefit of that with the advantage or the good that it will do in the economy and to see whether it makes sense to borrow three or 3.5 per cent and then lend on,” he said.

The government is now working on legislation to establish the development bank, with public consultations already held on the initiative, Friday said.

The proposed institution is intended to address what the prime minister described as a long-standing lack of access to capital, particularly for ordinary Vincentians and small businesses that have struggled to obtain financing through the existing financial system.

However, Friday stressed that the development bank would operate as a commercial institution rather than a charity.

“It’s a bank; it’s not a charity,” he said. “We are going to manage it on business principles, but it will be much more supportive to small businesses.”

He said the bank would provide an environment of encouragement, support and mentorship to help small and medium-sized businesses succeed.

Friday also said the institution's success should not be judged primarily by the dividends it pays to the government, but by its broader impact on the economy.

The bank's structure will take into account IMF concerns about governance and the potential for development banks to increase government debt, he said.

Taiwan pledges additional annual funding

Beyond the development bank, Friday said Taiwan has also agreed to provide US$1 million annually in grant funding for social and community empowerment programmes.

Part of the funding will be used to seed the long-discussed constituency development fund, with support targeted at groups including women and young people.

Friday said the goal was to use the funding to increase economic opportunities and help people become more productive.

“This is all, you know, very, very good opportunity for us to be able to, as we say, put money into people’s pockets by making them productive,” he said. “So that if we invest $100, they can make $200 from it. That’s the way you do it.”

The prime minister described his Taiwan visit as producing a range of opportunities for St. Vincent and the Grenadines, although he acknowledged that some initiatives would take longer than others to materialise.

“This trip gave us a lot of possibilities. Some of them will bear fruit more quickly than others, but we are moving towards that,” he said.