Despite being bound by a stringent International Monetary Fund-backed austerity programme, Barbados has declared it will make good on its $14.8 million pledge to fund the Caribbean Community Development Fund (CDF), Prime Minister Mia Mottley has declared.
But the payout may be in a form of a mix of cash and Government paper, which the CDF is “seriously” considering, Barbados TODAY has learned.
Mottley made the payout promise on Tuesday as she addressed the eighth meeting of contributors and development partners of the CDF at the Accra Beach Hotel and Spa.
She complained that her administration was faced with a situation where the Democratic Labour Party (DLP) administration had made a commitment that it did not honour.
But, she said “Barbados will honour its obligation before the end of this second cycle in spite of dealing with an IMF programme, because fundamentally our future is inextricably linked to a successful CARICOM Single Market and Single Economy.
“We are working with the fund now to determine how best we can settle those arrears, which we have inherited.”
Based on its commitment for the second funding cycle, which runs from 2015 to 2020, Barbados, which is considered one of the More Developed Countries (MDCs), owes $14.8 million (US$7.4 million) to the CDF.
This was topped by Trinidad and Tobago, who owes $80 million (US$40 million). Other MDCs that owed were Suriname (US$4.4 million) and Jamaica (US$945,534). According to the CDF’s 2017 report, Guyana was the only MDC to have paid its entire pledged contribution of US$7.3 million.
Barbados TODAY understands that a part of the Mottley administration’s offer to clear its arrears is to issue the CDF with Government paper for up to half the portion of the sum owed, and pay the rest in cash at a later date.
But with the ongoing debt restructuring and less than favourable creditworthiness, it would unlikely to be a “straightforward decision” for the CDF’s board, we were told.
When asked about the development, Chief Executive Officer of the CDF, Rodinald Soomer, said he welcomed the Prime Minister’s promise to catch up on Barbados’ payment, even as he indicated that the fund was in the process of extending the cycle to allow owing member states to meet their obligation and for programmes to be designed and implemented.
Soomer declined to give details about the payment method Government had put forward at a recent meeting, but told Barbados TODAY he had been in ongoing discussions with Government since the new administration came to office a year ago.
He said: “There is a particular proposal that has been put to us at our last board meeting a few weeks ago. I shared that proposal with the board of directors and they have asked us to look into it.
“It is a bit of a departure from the traditional way in which the CDF gets its financing from the member states, but we are prepared to look at it given Barbados’ peculiar circumstance.”
When pressed, the CDF chief confirmed that the Government paper “is an instrument that they want us to consider but we are in discussions with them. So I can’t get into the details of it”.
But he gave the assurance that the CDF was looking at the proposal “seriously”, and without giving a time line said he hoped to get back with an answer “in the shortest possible time”.
Soomer also confirmed that Barbados was keen on making its payment in at least two tranches, and he was confident that once a decision was taken Government would pay “at least 50 per cent of the payment” within a few months.
Once Barbados pays at least half of what it owes, it would then be able to take part in the nomination process for directors to sit on the board of the CDF.
Soomer said: “I think there is a mutual interest in moving as quickly as we can to embrace the offer from Barbados and we are working diligently towards that.”
The CDF was established just over a decade ago to assist disadvantaged CARICOM states in making the transition to the regional single market, the CSME.