Dr Mitchell describes the allegations as "nonsense"

In an address broadcast to the nation, Dr Mitchell challenged the accusations made against him.

"This allegation that I collected US$500,000 in a Louis Vuitton suitcase is certainly not true. It is utter nonsense," he said.

"If those vocal members of the opposition can produce any credible evidence that I received US$500,000 in a briefcase or in any other way then, fellow citizens, I am prepared to put my political credibility on the line."

"I can assure you with utmost confidence fellow citizens, that your prime minister will be vindicated," Dr Mitchell said.

The Grenadian prime minister said he was taking legal action.

He went on to defend his record of achievement, saying during his tenure he had made Grenada "unrecognisable to returning nationals".

Speaking to BBC Caribbean Service, one political commentator and former attorney general, Lloyd Noel said the address had left many questions unanswered but there could be a reason Dr Mitchell had not elaborated further.

"He did not adequately in my view, explain the issues that were at stake. But then again it would not be fair to go into the issues at stake because he has instituted legal proceedings in Miami," Mr Noel said.

The opposition National Democratic Congress said it wants the prime minister to answer questions or explain the allegations made against him in the House of Assembly.

Mr Noel said that it seemed clear that the questions which had been put before the speaker of the House by the opposition would have to be answered in Parliament.

"The prime minister more or less said he has the information and evidence, so I don’t see why he cannot answer them in Parliament when the time comes," Mr Noel said.