Prime Minister Godwin Friday of St. Vincent and the Grenadines (SVG) is holding firm to his administration’s flagship plan to launch a national development bank (NDB), pushing forward despite explicit warnings and opposition from the Washington-based International Monetary Fund (IMF). The proposal, a core campaign promise of Friday’s New Democratic Party (NDP) that won a landslide 14 out of 15 parliamentary seats in the November 2025 general election, is framed by the prime minister as a critical intervention to reverse years of economic stagnation and address the country’s soaring public debt crisis.
Speaking on NBC Radio this Thursday, Friday — who also holds portfolios for finance, legal affairs and justice, economic planning, and private sector development — explained that the NDB is designed to solve long-standing structural barriers that block small and non-traditional businesses from accessing affordable credit. SVG currently carries a public debt load equivalent to 113% of its gross domestic product, and Friday warned that without bold policy changes, that figure could climb to 145% or higher within five years, a trajectory he calls completely unacceptable.
While the prime minister acknowledges that the country’s debt profile is severe and requires careful management, he argues that accelerating inclusive economic growth is the fastest route out of the current crisis. He noted that even in discussions with IMF officials, the fund has agreed that growth is the most effective way to reduce debt burdens over time. The IMF has projected that SVG’s economic growth will moderate to 3.7% in 2025 as post-pandemic tourism and construction rebounds fade, and decelerate further to a medium-term average of 2.7% between 2026 and 2027 amid high global oil prices and a weaker global economic outlook. For Friday, this slow growth forecast makes the NDB a more urgent priority, not a less necessary one.
“This is the way we get out of the difficult situation that we are in, and we have to transform our economy,” Friday said. “We have to unleash the creative and business potential in our economy and make it available to ordinary people to start doing things to grow our economy.”
The IMF’s opposition, outlined by mission chief for SVG Sergei Antoshin in an April 28 statement, centers on three key concerns: risks to debt sustainability from adding a new quasi-fiscal institution to an already heavily indebted economy, the potential for contingent liabilities that could force the government to inject emergency public funds down the line, and the risk of political interference in lending decisions that has plagued regional development banks in the past, leading to high rates of non-performing loans. Antoshin also referenced a history of underperformance among similar institutions across the Caribbean.
Critics have also framed the new NDB as a revival of a failed 1970s-era development bank launched by a previous administration, which was eventually absorbed into the National Commercial Bank after being deemed a stillborn, unsuccessful experiment. Friday rejected these claims, emphasizing that the project is not rooted in ideology or a bid to redeem old failed political initiatives. Instead, he argued that continuing with the status quo of fragmented lending support has not worked, and the NDB is a pragmatic solution to the proven problem of limited credit access.
“Everybody identifies the problem, and we come back to the same thing — is to try to deal with what we have as if that is the perfection that we’re seeking. It doesn’t work. That’s what we have seen,” Friday said. “What we’re saying is what is the best way in which to achieve this, and that is why we are pursuing this objective, because we believe that, properly managed, properly established, that it can meet that need.”
Friday confirmed that his administration will take the IMF’s concerns into account during the institutional design phase to avoid the pitfalls that derailed past projects. He noted that well-governed development banks across the Caribbean have delivered tangible economic benefits, proving that successful operations are not an impossibility. When asked about the risk of political lending — where loans are approved based on party affiliation rather than viable business plans — Friday said the bank’s long-term survival depends on strict, consistently applied lending standards.
“For it to survive, for it to achieve its objective, it has to function on set principles that everybody understands,” he said. “You want to be generous and supportive of small investors and so forth… but the only way you can sustain that is if you’re also rigorous in terms of the standards that are applied to the lending of the money and the ways in which they are monitored and required to pay back. If you’re going to do it on a political basis, then you are not serious about the development of the country.”
Unlike commercial banks, Friday said the NDB’s success will not be measured by profit maximization, but by the growth and performance of its borrowers. Currently, scattered government lending and support schemes for underserved groups operate across multiple separate entities, including the Farmer Support Company and the National Student Loan Company, which serve borrowers that commercial banks routinely reject. Friday framed the NDB as a way to consolidate these fragmented functions, introduce professional management, cut overhead costs, and improve overall efficiency. Beyond lending, the new bank will also provide ongoing business support services to help borrowers succeed, rather than just disbursing funds and leaving borrowers to sink or swim.
On the topic of capitalization, Friday said the government has already identified initial seed funding in the national budget and has received positive feedback from external partners approached for support. The administration has reallocated approximately EC$1.5 million in seed funding to the project, and plans to grow the bank’s capital base over time without relying on expensive high-interest borrowing. Proceeds from the government’s upcoming citizenship by investment programme, which is set to launch soon, will also contribute to the bank’s capital, as these funds come with no interest obligations. The government targets raising at least EC$10 million in capital by the end of the year, a goal Friday calls entirely feasible.
“What we can’t do is borrow money at 5, 6 and 7% and then put in the bank and you have to lend [at] 12%. That is not going to work,” he added.
