Barbados is to receive a $200 million (US$100 million) loan from the Development Bank of Latin America (CAF) to support fiscal management, introduced to mitigate the effects of COVID-19 on the economic, financial and social sectors, CAF has said.
These resources will contribute to achieving the timely execution of public resources to address the economic and social impacts caused by the pandemic in Barbados, the institution said in a short statement.
“With these financial resources, we hope to strengthen the countercyclical effect of fiscal policy through the temporary introduction of measures to protect the income of vulnerable households and to increase liquidity for firms, and preserve employment during the crisis”, said Luis Carranza Ugarte, Executive President of CAF.
Barbados has a grace period of six years and therefore will start repaying the loan in 2026.
Between 2015-2019, CAF approved operations to Barbados worth US$112 million, which represent an average of US$22 million in approvals per year.
In the same period, total disbursements amounted to $192 million (US$96 million), which represent an annual average of $38 million (US$19 million).
To cope with the effects of the pandemic in Latin America, in early March 2020, CAF offered a regional credit line of $100 million (US$50 million) per country to address the health emergency, a grant of $800,000 (US$400,000) and a regional emergency credit line of $5 billion (US$ 2.5 billion) to reinforce countercyclical economic measures.
The Mia Mottley administration has not disclosed how much money has been spent on COVID-19 mitigating measures to date or how much it is estimated to cost.
At the end of March when the country first implemented curfew measures and put protocols in place, the Unemployment Fund stood at just under $20 million, and by the end of June over $52 million had been paid out as a result of over 35,000 unemployment benefit claims.
Prior to those pay-outs, Mottley had indicated that “if push come(s) to shove, at the appropriate time we will recapitalize the Unemployment Fund if it comes under pressure.”
During the height of the pandemic, Government had also established a $20 million Household Survival Programme to assist vulnerable households.
The Small Hotel Investment Fund was also reinforced with $20 million to allow small hotels to borrow and refurbish their properties during the downtime.
The National Insurance Scheme (NIS) was also expected to provide about $8.5 million in a one-time Business Cessation Benefit to self-employed individuals and small business operators for the months of April and May. Under this measure, eligible individuals would receive $1,500 for each month.
A new $40 million VAT Loan Fund was also established to offer 12-month, interest-free loans to companies which are registered and pay VAT and who can show that their cashflow has been severely disrupted by the pandemic, and the measures they took to contain the outbreak.
The capitalization of that fund was to be capitalized with money from the Catastrophe Fund that has accumulated over the last 15 years.
A $20 million Small Business Wage Fund was also announced, that would be administered by Fund Access for firms considered too small to be eligible for VAT or VAT refunds. Under this fund, eligible businesses would receive $2,500 a month for two months – $500 per month per employee up to five employees. (MM)