The Inter-American Development Bank (IDB) and the Government of Barbados have formalized a historic loan agreement for US$100 million to support the Barbados Economic and Recovery Transformation (BERT) Plan.
Having pledged the IDB’s support to the Barbados Government during an official visit in June 2018, IDB President Luis Alberto Moreno returned to the island on Sunday, November 18, 2018 to participate in the signing ceremony of the Special Development Lending (SDL) loan agreement with Prime Minister Mia Mottley at Government Headquarters in Bridgetown.
Barbados is the first IDB borrowing member country to receive approval for an SDL, which is a new budget support lending instrument intended to help address the effects of a macroeconomic crisis on a country’s economic and social progress.
This SDL support is part of a broader effort within the BERT Plan to stabilize the Barbadian economy in coordination with the International Monetary Fund (IMF) and the Caribbean Development Bank (CDB). It significantly expands the IDB’s already robust investment loan portfolio with Barbados. The IDB’s portfolio in Barbados has nearly doubled from the US$12 million disbursed in 2017 to US$20 million in 2018 in key sectors, such as road rehabilitation, renewable energy, coastal management, climate change resilience, and private sector competitiveness. Taking into account the disbursal of US$100 million in SDL financing, total disbursement from the IDB to Barbados for 2018 will represent 2.4% of the national Gross Domestic Product (GDP).
President Moreno underscored the IDB’s commitment to assisting the Government of Barbados in successfully executing its economic restructuring plan, which aims to stabilize public finances while strengthening the social safety net and pursuing key development goals. Successful implementation of these development goals will ensure that Barbados maintains its favorable social security achievements and continues to be a thriving small developing island state.
IDB President Moreno stated, “Today’s signing of this unprecedented Special Development Lending (SDL) loan agreement reaffirms the IDB’s strong and deep commitment to Barbados and its people. This SDL agreement demonstrates in very real terms that the IDB continues to develop innovative and practical solutions to meet the needs of its borrowing member countries.”
Prime Minister Mottley expressed her gratitude to President Moreno as well as the senior management and staff of the Inter-American Development Bank for the short turnaround time for approving and signing the SDL, noting that this agreement was one of several indications that Barbados was heading in the right direction as it seeks to address its economic challenges. In addition, PM Mottley emphasized that the IDB will continue to support Barbados’ development in a range of sectors, noting, “Without prejudice to this loan of budgetary support, there are a number of other loans that we are currently discussing and working on, as well as seeking to increase the pace of execution on the existing loans.”
The SDL is funded from the IDB’s Ordinary Capital, and will disburse in a single tranche within one year, with a grace period of 3 years, and an interest rate based on LIBOR. The executing agency will be Barbados Ministry of Finance, Economic Affairs and Investment (MOFEI).