Government’s financial commitments have just gotten bigger, with Barbados having to repay an unknown share of US$65 million the Caribbean Development Bank is lending LIAT.
Both the CDB and the regional airline announced the financial support today, and indicated that the relevant loans were provided to the four shareholder governments Barbados, Antigua and Barbuda, St. Vincent and the Grenadines and Dominica.
The funding from the Barbados-based financial institution is to “assist with the purchase of aircraft in the context of a Fleet Modernisation Project”.
“The loan agreements provide for the loans to be on-lent to, and repaid by, LIAT over a 13 year period, following a grace period of two years,” the bank said.
“Co-financing for the project is being provided by shareholder equity contributions and from the sale of LIAT’s existing aircraft. The loans were approved by the Bank’s Board of Directors during a meeting at its Headquarters in Barbados on July 18, 2013,” it added.
It was pointed out that the Fleet Modernisation Project “involves the replacement of LIAT’s aging fleet through a combination of lease and purchase of aircraft; the transition costs associated with the changeover; the upgrade of maintenance facilities; and other institutional strengthening activities”.
“The project provides LIAT with the most cost-effective means of improving the reliability of its service and consequently its contribution to the socio-economic development of the region. It will have significant impact on the operational efficiency and financial performance of the airline. Realisation of these results will require the involvement of all stakeholders,” the CDB said.
“Reliable and efficient air transportation is essential for connectivity, mobility and accessibility within the region, and for some of CDB’s borrowing members, LIAT provides the only air links with the rest of the region. This project is consistent with CDB’s strategic objective of supporting regional cooperation and integration and contributes to CDB’s overall mandate of reducing poverty in the region through social and economic development.”
This latest commitment by Government comes at a time when it is crippling with a fiscal crisis, but even before the US$65 loan was secured Prime Minister Freundel Stuart was justifying the island’s participation.
At a recent shareholders meeting here he said despite Barbados’ own difficulties it could not afford to withhold support from the carrier.
“Yes we have been going through very, very difficult times financially, budgetary constrains … are not a pipe dream they are a reality, but the other reality is that CARICOM is the third largest source market for Barbados’ tourism and it is LIAT that brings the tourists here and we cannot haggle over figures indefinitely and lose sight of that very stubborn reality,” he said.
“We also have to make sure that the airline remains viable and it can only remain viable if it is properly financed and Barbados therefore has had no difficulty committing itself to that course of action. So as the largest shareholder at the present time we felt it was our duty to live up to our regional obligations.” (SC)