As Finance Committee opened Wednesday, the minister explained the 10-year-old US$312 million bullet bond will be cleared at the end of the week with government’s cash reserves. But to remain compliant with the finance law, government must still re-borrow CI$153 million, which it has secured at a rate of 3.25% over 15 years.

Government gained the necessary approval from the Legislative Assembly to partially refinance this loan in 2017. While the public purse has sufficient cash to cover this due debt, the government would fall foul of its own public finance law if it did not replace a significant portion of the debt.

McTaggart explained that led to the decision to conduct a competitive tender for the re-borrowing of more than half of the loan over a fifteen-year period without any penalties for any early repayment of the principal. He said four financial institutions responded and Butterfield was selected after submitting the best value bid.

The finance minister said, given that the prime lending rate is currently over 4%, the rate of 3.25% offered by the bank demonstrated the confidence the bank has in government. He also emphasised that while government is taking on this new loan, paying off the bullet bond means reducing the overall public debt significantly.