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Gov’t refinances Peebles Hospital loan & realises $1.6M in savings

-Ends high interest Banco Popular loan in favor of Republic Bank’s lower rates
The Government of the Virgin Islands (VI) has refinanced the New Peebles Hospital construction project (Dr. D. Orlando Smith Hospital), buy ending a $45M loan agreement with Banco Popular signed in 2009, in favor for a new lower interest loan agreement from Republic Bank. Photo: VINO/File
Premier Andrew A. Fahie (R1) made the announcement during the Ninth Sitting of the Third Session of the Fourth House of Assembly on June 18, 2021, at the Save the Seed Energy Centre in Duff's Bottom, Tortola. Photo: HoA/Youtube
Premier Andrew A. Fahie (R1) made the announcement during the Ninth Sitting of the Third Session of the Fourth House of Assembly on June 18, 2021, at the Save the Seed Energy Centre in Duff's Bottom, Tortola. Photo: HoA/Youtube
 Premier Andrew A. Fahie said with the new Republic Bank interest rate, the Government realised projected savings to the tune of $1.5 million over the period June 2021 to June 2026 and a further $100,000 in annual fees normally paid on the Banco Popular Loan. Photo: Internet Source
Premier Andrew A. Fahie said with the new Republic Bank interest rate, the Government realised projected savings to the tune of $1.5 million over the period June 2021 to June 2026 and a further $100,000 in annual fees normally paid on the Banco Popular Loan. Photo: Internet Source
DUFF’S BOTTOM, Tortola, VI – The Government of the Virgin Islands (VI) has refinanced the new Peebles Hospital construction project (Dr. D. Orlando Smith Hospital), by ending a $45M loan agreement with Banco Popular signed in 2009, in favor for a new lower interest loan agreement from Republic Bank.

Premier Andrew A. Fahie (R1) made the announcement during the Ninth Sitting of the Third Session of the Fourth House of Assembly on June 18, 2021, at the Save the Seed Energy Centre in Duff's Bottom, Tortola. 

Loan was costly in terms of interest - Premier 

“Mister Speaker, the balance on this loan [Banco Popular] which would mature in 2026, as of 30th April 2021 [was] US$17,250,000.00 and it had a variable interest rate comprising US Prime Rate (currently 3.25 percent) plus a margin of 0.75 percent, currently totaling 4.00 percent.” 

He said in a legal review undertaken in September 2018, it was opined that the terms and conditions under the agreement were unnecessarily restrictive and onerous given that the BVI is a sovereign borrower and the loan was among the Government's most costly in terms of interest commitments.

Premier Fahie told the House that the repayment or refinancing would also remove the contractual requirement to maintain all Government bank accounts with Banco Popular.

“This would enable the diversification of banking risk, and render the ability to negotiate lower fees, and potentially higher deposit interest rates, with other financial institutions,” the Premier detailed.

Banco Popular loan repaid 

According to the Hon Fahie, giving the benefits, the Ministry of Finance began the process of developing a strategy to repay or refinance the loan and the strategy decided on was to pay off the balance on May 31, 2021, which was $17,250,000, and accrued interest for the period in the amount of $57,750.

“To ensure the amount being repaid was replaced in short order, a restricted tender was arranged for a new five-year loan facility for $17,250,000 to be signed and drawn after the repayment of the Banco Popular loan. Mister Speaker, Republic Bank Limited emerged as the successful bidder for this new loan facility,“ he said. 

The Premier revealed that since the new Loan would only be replacing the recently settled loan with Banco Popular, their was no increase in Central Government’s debt stock.

“Therefore, Mister Speaker, the value of the loan remains unchanged at $17,250,000, but at a fixed interest rate of 1.51 percent offered by Republic Bank compared to the 4.00 percent floating interest rate of the recently paid off Banco Loan.”

He said with the new interest rate, the Government realized projected savings to the tune of $1.5 million over the period June 2021 to June 2026 and a further $100,000 in annual fees normally paid on the Banco Popular Loan. 

15 Responses to “Gov’t refinances Peebles Hospital loan & realises $1.6M in savings”

  • voter (20/06/2021, 11:18) Like (18) Dislike (29) Reply
    Thank god for the vip they not going no way soon
  • economist (20/06/2021, 11:22) Like (10) Dislike (4) Reply
    This makes great bznz sense and will drive down cost doing cost doing bznz with banks I hope. Thank You Jeremiah Frett, you are a great finance Wiz Kid.
    • @ economist (20/06/2021, 19:45) Like (2) Dislike (1) Reply
      it was Andrew fhaie idea from in the NDP time. Happy he was able to direct and execute it
  • Yes (20/06/2021, 11:33) Like (6) Dislike (0) Reply
    great job
  • wondering (20/06/2021, 12:02) Like (19) Dislike (3) Reply
    What about the rest of us sitting with 6% loans, which are killing us slowly????????
    • Really (20/06/2021, 18:32) Like (9) Dislike (0) Reply
      Why don’t you refinance your mortgage??? You people are sickening. Stop looking to government for everything and use basic common sense!!!
      • @Really (21/06/2021, 07:27) Like (4) Dislike (0) Reply
        Sometimes, not easy for individuals especially when these worthless banks want to charge high exit fees. A borrower wanting to leave should be able to do so freely after 2-3 years with any bank. This is where government lobby comes in! These damn banks are thieves! The prime rate drops and the interest they charge is at the old high prime rate still.
  • Salary Vs Vaccine. (20/06/2021, 12:11) Like (14) Dislike (13) Reply
    How long before they run out of money to pay salaries....If those Civil servants who refusing to take the vaccine and also bad mouthing the vaccine holding the country hostage from moving forward think their every two week salary is secure and safe , they are very wrong...This Loan is just a creative way to get money for salaries,,,, We do not print money., Pls, get vaccinated so we can open up the country so we can get money to pay salaries...
  • oh hoh (20/06/2021, 12:54) Like (4) Dislike (9) Reply
    When its good its foy when its bad its the civil servants
  • BuzzBvi (20/06/2021, 14:13) Like (4) Dislike (0) Reply
    Got to love the new name. "Peebles Hospital construction project (Dr. D. Orlando Smith Hospital)"

    I wondered if we would ever be able to read the sign that said "Dr. D. Orlando Smith Hospital" if it were to ever be put there. But this new name is going to be no bigger than 18 in a word document. Even with lights it is going to be small. Maybe we can just ask the Doctor (maybe as part of the COI) if we can't just go back to calling it Peebles. It is easier. Trips of the tongue and how bad was the guy that he started a hospital that it can't still be "The Former Commissioner, ((now known as Governor of the British Virgin Islands) but really the Virgin Islands)) Peebles Hospital" or maybe better the "H.R. Penn Hospital" or maybe better yet let it be a Cottage Hospital. Worst part is "The Speakers Hospital" is what I see in our future! Did I say our?

  • FIRE (20/06/2021, 14:15) Like (5) Dislike (1) Reply
    Where is the people stimulus so long
    • resident (20/06/2021, 15:27) Like (22) Dislike (0) Reply
      @fire: and where are the four years of increments? You hearing everything about money except when they plan to give some sort of increment. They are long overdue.
  • cold (21/06/2021, 12:13) Like (0) Dislike (1) Reply
    What a name first we need to know how much it going take to change the name and to get it erected so watch the numbers you will see, would it be hundreds, thousands or million plus and the workers can't get a raised in pay


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