IDB ready to offer helping hand as prices hike amid conflict

As Barbadians brace for major price increases on several commodities as a result of the Russia-Ukraine conflict, one of the island’s main development financing partners says it stands ready to provide a cushion.

President of the Inter-American Development Bank (IDB) Mauricio Claver-Carone said the institution was ready to provide the necessary financing as energy, food and fertilizer prices, among others, are expected to skyrocket.

At the same time, he is encouraging the Mia Mottley-led administration and the private sector to take advantage of opportunities across several sectors, including agriculture and tourism.

Claver-Carone said this year the region can expect a record level of loan approvals from the IDB, adding that funding will triple.

“Let me give you a contrast with that. In 2021, the IDB Group approved US$435 million for Caribbean countries in a wide range of areas. Now, we expect this year to triple that to a record US$1.3 billion, and that will be in addition to the IDB Group’s current Caribbean portfolio which is about US$2.5 billion in 68 projects,” he said.

His comments came on Monday during a special online roundtable session with regional journalists, in which he identified several areas for opportunities and strategies for the Caribbean region to accelerate development and growth.

“Indeed, the rising oil prices are going to increase challenges for Barbados [like] we have seen historically,” the IDB official pointed out.

However, he said the IDB can provide short to medium-term support to relieve some of the pressure from increased energy prices.

Pointing to the IDB’s support for Barbados’ climate mitigation projects over the years, Claver-Carone acknowledged that the current geopolitical tension between Russia and Ukraine could put increased pressure on the island’s ambitious goal of relying 100 per cent on renewable energy sources by 2030.

“So, where we need to work, and I think this is where these new instruments and guarantees and financial innovations come in, is how we can serve as short or medium-term buffers or bridges . . . so that it does not impact the ambitious goals that Barbados and other countries like Barbados have set forth on an energy transition path,” he said.

Agreeing that the Russia-Ukraine conflict will be far reaching, the development official pointed out that it will impact the island’s debt to gross domestic product (GDP) ratio and pile on other fiscal pressures.

“There is also going to be inflationary pressures in regards to wheat and other food prices, and you are already seeing that the commodity prices of wheat, soy and corn are increasing pretty dramatically,” Claver-Carone said.

“Where the Caribbean is going to feel a lot of pressure is in regards to those imports for the packaging and manufacturing . . . and it is not only wheat but it is also for agriculture fertilizer. Russia is actually one of the largest providers of fertilizer to Latin America and the Caribbean so we have to help again, minimise those impacts. So, I agree, energy and food prices we are going to see those pressures and that is where we need to play a bigger role to help minimise and mitigate that impact.”

Claver-Carone said he believed, however, that Barbados and other tourism-dependent states have an opportunity to capitalise on the tourism and travel industry.

He pointed out that while most North American tourists were “minimising their length of stay” in the region due to the pandemic, the rise in geopolitical tension in Eastern Europe could cause more people to want to come to the Caribbean and spend longer periods.

“That is also why we here at the IDB are doubling down in creating an entire tourism sector support initiated by IDB Invest. We are very focused on helping the tourism sector stay afloat, so that the entire ecosystem with small and medium-sized enterprises that also live and thrive off tourism can also stay afloat. As that recovery takes place, we need to expand that and help have that greater impact,” he said.

Claver-Carone said this will require greater supply linkages with other sectors, including agriculture. He stressed the importance of further development of the agriculture sector and expansion of hydroponics.

Singling out the Barbados Welcome Stamp initiative, which allows eligible people from around the world to live and work from Barbados for up to a year, he said digital nomads will be an area on which to focus over the coming months.

He added that there was a “huge opportunity” for the region to capitalise more on eco-tourism, noting that the rest of the Caribbean could replicate what was taking place in the rapidly expanding global business sector in Jamaica.

The IDB official also touted vaccination against COVID-19 as an important pillar in helping to drive the return of the tourism sector.

“As you know, higher vaccination rates will protect health but also it is going to help promote that economic growth, encourage that return of tourism which is key. So, we are clearly working with countries in the Caribbean to look for creative ways to continue to accelerate vaccinations which right now are the lowest in the Americas,” Claver-Carone said.
marlonmadden@barbadostoday.bb