THE Grenada government has been strongly advised to rethink plans to seek a US$107 million loan from China to finance the construction of a 100-room luxury hotel in the island.

The International Monetary Fund (IMF) has told the country that a loan of that magnitude, which translates into 17 per cent of the country’s GDP, could jeopardise debt sustainability.

The lending agency offered that advice in its ‘Staff Report for the 2009 Article IV Consultation, Fourth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility’.

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