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Working with a $100 million loan from the Inter-American Development Bank (IDB), the Government of Barbados seeks to regain macroeconomic stability, implement fiscal adjustment measures that foster a sustainable fiscal balance in the short and medium term, and protect social spending programmes for the most vulnerable Barbadians.
The structure and content of the IDB loan programme are aligned to the recently approved International Monetary Fund (IMF) Extended Fund Facility (EFF) for Barbados.
Government is seeking financial and technical assistance from the IDB and the IMF to help formulate a comprehensive economic reform programme to stabilise public finances after years of increasing debt and to address the country’s macroeconomic and fiscal crisis. This financing, in conjunction with corrective economic and fiscal measures, aims to give short-term relief and allow the government to advance on important and difficult reforms to place the public finances on sustainable footing.
This support is part of a broader effort to stabilise the Barbadian economy in coordination with the IMF and the Caribbean Development Bank (CDB) during the four-year programme.
The key elements of the programme are: (1) fiscal reforms to address structural weaknesses in the nation’s fiscal framework; (2) restructuring and privatisation of state-owned enterprises; (3) protecting vulnerable groups by strengthening the nation’s safety nets; (4) reform of the Central Bank of Barbados to grant it with more autonomy and limit financing to the government; (5) debt restructuring; and (6) the liberalisation of labour, product and service markets to promote growth.
The loan is funded from the IDB’s Ordinary Capital, will disburse in a single tranche within one year, with a grace period of three years, and an interest rate based on London Interbank Offered Rate (LIBOR). The executing agency will be Barbados Ministry of Finance, Economic Affairs and Investment (MOFEI). (PR)