Above: Grenada (CJ Photo)

By the Caribbean Journal staff

The government of Grenada says it has reached a “comprehensive” agreement to restructure its debt to the Export-Import Bank of Taiwan.

The agreement reduces the principal outstanding on the $36.6 million loan by 50 percent.

In a statement, Grenada said the move “resolves Grenada’s decade-long dispute with EXIM and puts an end to the bank’s legal proceedings in the New York Courts.”

Under the terms of the deal, the post-haircut balance on the loan will be repayable over a 15-year period.

That includes a grace period of three and a half years, at an interest rate of 7 percent.

“We are very pleased that with this new agreement we have now been able to work out much more manageable terms to honour our debts with EXIM bank,” Grenada Prime Minister Dr Keith Mitchell said.

The agreement also includes a “hurricane clause,” meaning Grenada can defer payments for a predetermined period should a natural disaster impact the country’s ability to service its debt.

Grenada had diplomatic relations with Taiwan until 2005, when it severed those ties in favour of relations with China.

Taiwan had made a series of concessionary loan agreements during its period of relations, however, and demanded payment.

That ultimately led to a lawsuit by Taiwan’s EXIM Bank which the country won in 2007 for $28 million, a dispute that has continued to this day.