As Barbados seeks ways of getting out of its present economic difficulties, the European Union has come to its assistance.
EU Ambassador Mikael Barfod has told the country it can get $65 million this year to help it fund its massive fiscal deficit.
News of this came during a recent meeting which Minister of Finance Chris Sinckler held with Ambassador Barfod and other officials to review aspects of the EU’s cooperation and to discuss other issues such as public finance management, as well as the island’s economic outlook.
The European official informed Barbados that at present there was a more than $100 million grant funding available to this island, and once certain macroeconomic and public finance criteria were fully met, the union could release $65 million of that sum this year.
“The EU would like you to know that it could assist Barbados in leaving the present crisis behind,” Ambassador Barfod told Sinckler, who asked the EU if it could also assist with the financing of infrastructure projects outside of the traditional grant it provides Barbados.
In reply, the Ambassador informed him that the Government should seek to access financing from the Caribbean Investment Facility, in addition to EU funds allocated to CARICOM for regional projects and programmes.
The European diplomat called for more information on how the Government intended to manage its debt in the medium term, saying he wanted to hear more about the package of reform that the Freundel Stuart administration had started.
In relation to a question about economic growth, Sinckler said that most of the revenue-raising measures of the restructuring programme would not take effect until the next fiscal year, considering that it was a 19-month initiative.
“The present adjustment exercise will not be the end of the restructuring period, since the restructuring will extend to a reform of state entities outside of Central Government, as the goal is to bring the deficit down below five per cent,” declared the minister.
With respect to the country’s foreign reserves, he told the EU officials that at present, the cover was 15.2 weeks, as they were boosted by the Credit Suisse loan in December 2013.
He noted that the foreign component of the debt was currently about six per cent of foreign exchange earnings, which was manageable; and going forward, it would remain below ten per cent.
Sinckler said the larger part of Barbados’ debt was held domestically, and with high liquidity in the local financial sector, roll over risks are low.
He stated that the EU’s support to human resource development in Barbados, was “absolutely” central to what the Government was doing, as it took on a larger role at this time, when the country was seeking to enhance economic growth and competitiveness.
Last year, the Europeans released $28 million for the Barbados Human Resource Development Programme, while another $15 million was provided through the Barbados Renewable Energy Programme, all in the form of non-reinbursable grants.
The two sides agreed to have more regular talks that could help resolve budget support issues.