Thursday 22 August, 2019

Talk of LIAT closure not over, Caribbean governments seek foreign aid

Governments across several Caribbean territories are hoping to secure financial assistance from the European Investment Bank (EIB) for the regional transportation sector following concerns that shareholder governments might have to shut down the regional airline, LIAT, which has been experiencing financial difficulties.

Barbados Prime Minister Mia Mottley has confirmed that she has begun to engage with the EIB to support the region's transportation sector and that the bank has given indication that it is willing to assist with regional projects. 

“The EIB doesn’t only lend to the government, it also lends to private companies like the Barbados Light and Power in the past and it has also engaged here with not just national projects but also regional projects," Mottely said.

“And, as the lead prime minister for the single market and single economy, I also had to engage in discussions with them on opportunities within the transport sector in particular, with respect to the EIB and its role in the region,” she added. 

This update follows statements made earlier this month by St. Vincent and the Grenadines Prime Minister Ralph Gonsalves, who said that LIAT may be forced to shut down after Caribbean governments appeared to be reluctant to provide the necessary funds to keep the company functioning. 

Grenada was the only country who indicated a willingness to contribute to the for US$5.4 million to help the airline deal with its current financial problems.

“Prime Minister (Keith) Mitchell has put in approximately one million dollars towards emergency funding because he is interested in seeing LIAT remain in the sky,” Gonsalves said, hinting that LIAT, which has a complement of 10 aircraft will soon have to be made on the way forward.

Three of the aircraft are owned by the Barbados-based Caribbean Development Bank (CDB) that provided the funds to the regional government shareholders to purchase them and the seven others are leased.

“We probably will have to ask the CDB to sell those three aircraft and operate seven of them and then get another smaller airline, like One Caribbean, to fly between here and St Lucia, rather than get LIAT to fly on one of the routes which is going to Trinidad which is not economical.

“The governments have not been responding so the shareholders are reaching a critical point now and if you ask me, what is likely to happen … there will be a transitional restructuring leading to a closure of LIAT,” Gonsalves said during an interview.  

“The discussions with the EIB are preliminary but by the same token there are very few entities that the region, as a whole, can borrow from with respect to regional projects," Mottley said. "The Europeans, in spite of everything else, have remained engaged with us, they understand the dynamics of a single market because they themselves have literally managed a single market and single economy for decades. So, when we are ready to speak on that, rest assured we will be.” 

Barbados, St. Vincent and the Grenadines, Dominica and Antigua and Barbuda are the main shareholder governments of LIAT. 

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