PRESS RELEASE

IDB bolsters Barbados' macroeconomic emergency program

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Tuesday, November 6, 2018

Press release by the IDB

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November 6, 2018

Relying upon 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 programs for the most vulnerable Barbadians. The structure and content of the IDB loan program are aligned to the recently approved International Monetary Fund (IMF) Extended Fund Facility (EFF) for Barbados.

The Government of Barbados is seeking financial and technical assistance from the IDB and the IMF to help formulate a comprehensive economic reform program to stabilize 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 introduced by the government, 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 stabilize the Barbadian economy in coordination with the IMF and the Caribbean Development Bank (CDB) during the four-year program.

The key elements of the program are as follows: (1) fiscal reforms to address structural weaknesses in the nation's fiscal framework; (2) restructuring and privatization 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 liberalization of labor, 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 3 years, and an interest rate based on LIBOR. The executing agency will be Barbados Ministry of Finance, Economic Affairs and Investment (MOFEI).

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.