Energy-saving light maker Caribbean LED Lighting Inc. is now seeing brighter days with its supplier in Canada, months after it became a casualty of Government’s foreign debt default.
But six months later, the Ontario-based export credit agency Export Development Canada (EDC) appears less sympathetic to the economic situation here.
The Government’s decision to suspend debt payments to international commercial creditors immediately after taking control on May 24, had resulted in suppliers in Canada asking Barbadian companies for prepayment for goods instead of extending credit terms.
In July, Caribbean LED’s founder and immediate past chairman, Jim Reid, had complained that the seven-year-old company was finding it more expensive to do business since the announcement of the debt restructuring.
“We get supplies from seven countries and one of those is Canada, and that contract for supply was underwritten by the export government corporation, which is now withdrawing support for Barbados, which means we cannot get credit terms from the supplier,” Reid then complained to Prime Minister Mia Mottley.
Due to the Government’s suspension of debt payments, EDC had implemented new restrictive measures to its credit insurance coverage for Barbados.
But during a brief media conference on Monday to announced Trinidad & Tobago-based HADCO Group’s takeover of Reid’s 70 per cent stake of his firm, Chief Executive Officer Gerard Borely said there had been a change in the situation.
“The arrangement that we had in place, we have been able to basically reopen,” he told Barbados TODAY regarding credit terms with the company’s Canadian supplier.
“So from the debt restructuring that Government had, the support credit that we would have gotten had been basically put back in place. So that has been a significant help to us,” he said.
It is not immediately clear how many other companies here were affected by the debt restructuring, or how many other creditors in Canada had given other companies here an ease, but last year the EDC provided assistance to 50 Canadian firms engaged in trade with Barbados.
But while the country was listed by the EDC as being “open on a restricted basis” back in July, the company has since changed it to “open on highly restricted bases”.
Barbados’s sovereign debt risk rating currently remains at ‘CCC’ – at “high risk” of default.
Describing the business environment here, the EDC had said Barbados is currently facing a “precarious economic and financial period”, pointing out that “the commercial environment is expected to be negatively affected by a potential domestic debt restructuring scenario, with IMF [International Monetary Fund] assistance to the banking system likely necessary”.
Since then, Government has entered into an IMF-backed programme, resulting in an injection of dollars into the once dangerously low reserves.
But Bridgetown is yet to finalize a deal with external creditors. Government is hoping that negotiations could be concluded before the end of March next year.