Barbados’ efforts to resuscitate the ailing economy received a major injection today, when Prime Minister Mia Mottley signed off on a multimillion dollar policy based loan with the Caribbean Development Bank (CDB) at its Wildey, St Michael location.
Under the agreement, the country will soon receive US$75 million loan to support the Barbados Economic Recovery and Transformation (BERT) plan.
The loan, which was approved on Thursday after a meeting of the board of directors, will have a five-year grace period and 12 years in which the principal is to be repaid.
The CDB’s interest rate is linked to that of international benchmark LIBOR, which fluctuates.
CDB President Dr Warren Smith said the loan formed part of a broader assistance strategy for Barbados.
“This policy base loan focuses on strengthening fiscal sustainability, enhancing the doing business environment in order to strengthen the country’s competitiveness and productivity, building resilience to climate change, improving disaster risk management and improving social protection systems and bolstering social development,” said Smith.
He said the bank was cognizant of the Barbados’ weak economic state, adding the financial institution was very committed to providing assistance to help the country get out of its economic challenges.
“It is yet another statement of CDB’s unwavering commitment to our partnership and to supporting your government’s efforts to stabilize and transform your economy,” said Smith.
“We at the CDB are pleased that we have been able to respond quickly the government of Barbados’ call for assistance and support for the Barbados Economic and Transformation plan,” he said.
Since 1970 the CDB has provided loans totaling more than US$480 million to Barbados to support economic and social development.
Smith also announced on Friday that the CDB also approved a loan of US$40.4 million for “upgrade of infrastructure and services” at the Grantley Adams International Airport (GAIA).
Prime Minister Mia Mottley said the loans from the CDB were an indication of the bank’s confidence in the government and people of Barbados.
She said she was satisfied that Barbados was on the correct path to economic recovery, adding that a major part of achieving economic sustainability hinged on the assistance being offered by the CDB, the International Monetary Fund (IMF) and other institutions.
“I am now satisfied that we are on a trajectory that will allow us to be successful over the course of the medium term to the benefit of the people of Barbados,” said Mottley.
The IMF has approved the BERT plan and has provided a stand-by facility of US$290 million, US$49 million of which has already been disbursed.
Insisting that the BERT plan would give confidence to financial entities and allow Barbados to access funding at favourable rates, Mottley said failure was simply not an option.
She said her administration needed about three to four years to rebuild the economy and have fiscal space to do what was needed.
Turning her attention to the loan for the development of the airport, Mottley said this was absolutely necessary.
“This for me is a very special moment because in asking the CDB to give us this loan we probably have saved the country almost another $30 million that we were on track to spend,” she said.
The Prime Minister said work on the airport should begin towards the end of the first quarter of next year, adding that the procurement process would begin soon.