$100M in CAF shares gives Gov’t access to more loan funds

By Marlon Madden

Barbados’ increased shareholding in the Development Bank of Latin America and the Caribbean (CAF) is expected to cost the Government just over $100 million and open up the country’s access to double that amount in loans from the financial institution.

Barbados is subscribing to 3 522 additional shares in the Venezuela headquartered financial institution at a rate of US$14 200 (BDS$ 28 400) per share.

“The Government considers it expedient to subscribe to 3 522 further additional Series ‘C’ shares of Common Capital Stock of the Bank for a value of US$14 200 each, and a total value of US$50 012 400 (BDS$100 024 800), in order to increase the level of participation of Barbados in the ownership of the Bank and increase access to funding for sustainable development projects from US$200 million (BDS$400 million) to US$400 million (BDS$800 million),” according to a resolution before Parliament.

It was in late 2017 that the Government passed a law paving the way for the Government to subscribe to additional common shares in CAF.

On August 11, 2023, Prime Minister Mia Mottley who is also Minister of Finance signed the Common Capital Stock subscription agreement with CAF’s Executive President Sergio Diaz-Granados.

At the time, officials noted that approval for increasing Barbados’ shareholding in the financial institution was given at the shareholders’ meeting in March 2022, making Barbados the 16th shareholder to increase its contribution.

Mottley said that the agreement spoke volumes to the confidence that CAF officials had in the country as a domicile and safe jurisdiction.

It is proposed that Barbados will make the payment for the Series ‘C’ Common Capital Shares over three years in three equal instalments of US$16 670 800 (BDS$33 341 600), increasing the shares by 1 174 each time.

Payments are due to start before November 30, 2023, and again before September 30, 2024, with the final amount payable before September 30, 2025.

CAF said with the strengthening of its equity, which will double by 2030, the bank will focus on four key areas – increased green financing to Latin America and the Caribbean, promotion of regional integration, enhancement of the role of the non-sovereign sector and support of governing entities at the subnational level.

Earlier this month during CAF’s presentation of its flagship report on economic development, Inherent Inequalities, Diaz-Granados pledged a US$15 million investment in the Barbados-led Blue Green Bank.

He also announced that CAF would be setting up an office in the Caribbean “in the near future”, as the institution seeks to strengthen its relationship with the region, starting with current shareholder countries – Barbados, Jamaica, Trinidad and Tobago – and then reaching out to the rest of the Caribbean Community (CARICOM).

marlonmadden@barbadostoday.bb