$200 million World Bank loan for pandemic fight, recovery

The Government’s anti-COVID-19 coffers were Thursday boosted by $200 million (US$100 million) in a World Bank “Response and Recovery Development Policy Loan.

During Tuesday’s House of Assembly debate on the Companies (Economic Substance) (Amendment) Bill, Minister in the Ministry of Economic Affairs Marsha Caddle revealed that Government had applied for “exceptional” financing to help support the country’s response to the COVID-19 crisis and to promote the post-crisis economic recovery.

The financing has a final maturity of 19 years, including a grace period of five years, and is part of a coordinated assistance effort by international financial institutions during the pandemic.

Barbados does not qualify for loans from the International Bank for Reconstruction and Development (IBRD) – the World Bank’s lending arm which offers loans to middle-income developing countries – given that it was graduated to middle-income level based on GDP per capita.

But the World Bank Group launched exceptional IBRD financing to respond to the COVID-19 pandemic.

Tahseen Sayed, World Bank Country Director for the Caribbean noted that the COVID-19 pandemic has severely affected Barbados, which has however successfully implemented its economic reform programme.

“There have been serious impacts on key sectors such as tourism, leading to an increase in unemployment, with disproportionate effects on women,” Sayed declared. “The World Bank’s assistance will contribute to the country’s efforts for a resilient and inclusive socioeconomic recovery.”

The loan is intended to help enhance macroeconomic and fiscal management and promote financial resilience for a sustainable recovery, according to the Washington-based international financial institution.

The World Bank said: “Measures supported include the adoption of a COVID-19 vaccination strategy and a programme that helps tourism-related sectors sustain employment. It also supports reform actions to strengthen payment systems and adopt an enhanced legal framework for customs and a new Central Bank Law.”

But the World Bank loan was also tweaked to take into account the natural disasters that could knock back economic development and post-COVID recovery by decades in an era of climate change.

The loan is also to help strengthen disaster risk financing and resilience policies and improve the regulation and supervision of the insurance industry’s disaster risk exposure. (SD)