China Eximbank provides RMB 461 million government concessional loan for Maurice Bishop International Airport Upgrade and Runway Paving Project

In January 2017, China Eximbank and the Government of Grenada signed a RMB 461 million (USD 67,740,000 or EC$178.2 million) government concessional loan (GCL) agreement for the Maurice Bishop International Airport Upgrade and Runway Paving Project. The GCL carried the following borrowings terms: a 6.25 year grace period, a 21.25 year maturity, and a 2-year interest rate. The borrower is responsible for making semi-annual repayments between March 21, 2023 and March 21, 2038. According to the Ministry of Finance's Quarterly Public Debt Bulletin, the GCL disbursed $0 in quarter 4 of 2020, EC$45.76 million in quarter 1 of 2021, EC$4.28 million in quarter 3 of 2021, EC$2.99 million in quarter 4 of 2021, and $0 in quarter 1 of 2022. The GCL's (principal) amount outstanding was EC$54,192,542.78 as of December 31, 2021. The purpose of the project is to upgrade the Maurice Bishop International Airport (MBIA) by constructing a parallel taxiway, a bypass road, loading bridges, addition of a new runway, passenger tunnels, cargo center expansion, passport kiosks, and emergency center. The project site is located on a peninsula in the extreme south-western section of the island of Grenada, seven miles from the country's capital (St. George). China Harbor Engineering Company (CHEC) is the contractor responsible for project implementation. A formal groundbreaking ceremony took place on October 28, 2020. During calendar year 2021, the following activities were undertaken: (1) detailed designs of Bypass Road (1.3 km of asphalt pavement) and the EOC Building were received and reviewed by a consultancy firm; (2) detailed designs of the runway overlay were received and reviewed based on the requirements of the Grenada Airport Authority (GAA) — inclusive of the Terminal Enhancement (2) Passenger Boarding bridges, remodeling of airside arrival area, installation of elevators/ escalators/ stairs), Airfield & Lighting (9003ft x 148ft runway resurfacing, airfield lighting system upgrade, aircraft apron expansion, canopy installation); (3) procurement activities commenced for the PAPI lighting system and the Environmental Impact Assessment (EIA); (4) preparatory works for the installation of the asphalt plant were undertaken; (5) tender evaluation of consultancy firm was undertaken; and (6) a Project Engineering Consulting firm was appointed. Physical infrastructure works were expected to accelerate in calendar year 2022. At the October 28, 2020 groundbreaking ceremony, Grenada’s Prime Minister acknowledged rising public concern and scrutiny about the government’s capacity to repay the loan and the fact some local residents had criticized the project on the grounds that they country has more urgent infrastructure needs than an airport upgrade. Around the same time, Grenada’s Tourism and Civil Aviation Minister, Dr. Clarice Modeste-Curwen, was asked to address concerns about the country’s ability to repay such a huge loan, especially given the economic downturn brought on by COVID-19. She argued that Grenada would need the airport upgrade if the country is to attract more and bigger airlines. In November 2020, a former Chief Executive at Maurice Bishop International Airport (MBIA) raised questions about the wisdom of borrowing from China Eximbank to finance the airport’s expansion. He said ‘I am predicting default’ and noted that the airport ‘was barely sustaining itself with a little bit of profit’. Then, in April 2021, reports emerged that China Eximbank and the Government of Grenada were renegotiating the terms and conditions on the existing loan agreement.

Additional details

1. Maurice Bishop International Airport (M.B.I.A) is also known as Point Salines International Airport (P.S.I.A). 2. This project is also known as the St George’s Airport Runway and Road Upgrade and Rehabilitation Project, the Maurice Bishop International Airport (MBIA) Expansion Project, and the Airport Runway and Road Upgrade and Rehabilitation Project (ARRUR). The Chinese project title is 格林纳达莫里斯•毕晓普国际机场成功获得. 3. There are some indications that the Government of Grenada may have on-lent the proceeds of the loan to the Grenada Airports Authority (GAA). This issue warrants further investigation. 4. Maurice Bishop International Airport Upgrade and Runway Paving Project is separate from the Lauriston Airport Expansion Project. 5. The loan's interest rate (2%) is drawn from the World Bank's Debtor Reporting System (DRS) and the Government of Grenada's Estimates of Revenue and Expenditure for the Year 2022. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0 and https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=0 and https://www.finance.gd/docs/Estimate%20of%20Revenue%20and%20Expenditure%202022_final.pdf 6. The loan's (principal) amount outstanding in 2021 is drawn from Government of Grenada's Estimates of Revenue and Expenditure for the Year 2022. See https://www.finance.gd/docs/Estimate%20of%20Revenue%20and%20Expenditure%202022_final.pdf

Number of official sources

13

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