Barbados is to be the first country in the Americas to benefit from the Inter-American Development Bank’s (IDB) newest lending facility for nations in economic crisis, the bank’s Barbados representative announced today.
The IDB board is expected to approve by mid-November US$100 million as a single tranche from its Special Development Lending (SDL) window to finance the fiscal deficit, IDB Country Representative to Barbados Juan Carlos De la Hoz Vinas announced this morning.
De la Hoz said during an online panel discussion on the International Monetary Fund-supported economic transformation plan that the IDB had done its homework on Barbados financial predicament and found that it had the right instrument to assist.
Disbursement of the money would be made immediately after approval and would add to loans from the IMF and the Caribbean Development Bank (CDB), he said.
“We believe that its a burden that has to be shared . . . . We have been working with all the relevant parties . . . . I think it is important to mention that we are working on our country strategy that will accompany the country for the next four to five years . . . and one pillar definitely will be support for the macro situation . . . . because, besides support for the short run, we believe in the medium and long-term policies that will support a macro stability situation, and obviously, to support the social gains,” said De la Hoz.
He recalled that after the announcement of BERT, the recovery and transformation plan, his bank held extensive talks with the Government and found that it had the right instrument available to address the most pressing short-term needs and give it breathing room to make the necessary adjustments.
The SDL loan to Barbados would cover two per cent of the gross domestic product (GDP) and is geared for budget support, financing of the fiscal deficit, settling the accumulation of arrears and building foreign reserves.
“I think [this] will give all the investors and all the parties involved the necessary credibility . . . patience . . . to go about the potential investments and for the Government to go about all the reforms,” the IDB executive told the panel discussion which also involved Special Economic Advisor to the Barbados Government Professor Avinash Persaud.
“The SDL is designed to provide macro stability, to create a path for sustainable fiscal situation and to safeguard social gains. We believe that it is a package which should include all the relevant factors that are important to a country that is going through a macro crisis and is willing to invest, make the necessary adjustments and have a clearer path for the future,” the IDB representative added.