The Mia Mottley-led Government will seek to revive over $200 million in loans that had already been approved by the Inter-American Development Bank (IDB), including for road rehabilitation, but which the Freundel Stuart-led administration failed to access, the Prime Minister announced on Wednesday.
Following discussions Wednesday at Government Headquarters on Bay Street, St Michael with IDB President Luis Alberto Moreno and other bank officials, the Prime Minister expressed disbelief at the 13 per cent disbursement rate with the development financing institution.
“We have a loan portfolio with the IDB of U$191 million, and US$135.7 million of that remains undisbursed in spite of the fact that many of these loans have been in place for three, four or five years. And as a result there are at least three major loans that are at risk that we are going to have [to] undertake with the bank to try to put them in good shape again, even if it means some tweaking,” Mottley revealed.
Of those, she said, were a human and social development loan signed September 2015, of which 90 per cent remained undisbursed, and a US$34 million loan for the deployment of cleaner fuels programmes and renewable energy signed almost two years ago, of which US$32.2 million had not been disbursed.
“There is the road rehabilitation programme, which is US$25 million, and US$24.7 million remains undisbursed. In other words, we spent US$300,000 even though that loan was signed in November 2015, and I am sure Barbadians would be surprised given the state of our roads today,” said Mottley.
An upbeat Mottley said her administration and IDB officials agreed that it was an “untenable situation” for Barbados to have development loans available and not make use of them.
“I am not sure how a country that needs concessional funding can engage in the luxury of having loans cancelled and we promised that that has to be a thing of the past, that we need to be able to reposition our country,” she said.
The Prime Minister indicated that the Ministry of Finance was currently in the process of getting the loans functional again, adding that a system would be put in place for Government to effectively monitor the disbursement and use of the funds.
The Prime Minister said it was agreed Wednesday that “some urgent measures and tweaking with respect to how we function and the need as to how to better monitor delivery” was needed.
Wednesday’s discussions also touched on the island’s pending agreement with the International Monetary Fund (IMF) for a stabilization programme and the planned debt restructuring exercise.
Mottley said the IDB agreed to make two per cent of the island’s gross domestic product (GDP) – or just over $190 million – in loans available upon completion of negotiation with the IMF.
“That two per cent of GDP on top of whatever agreement we reach with the IMF is going to be important in helping us to finance our way out in terms of Government programme . . . without prejudice,” she said.
She also pointed out that the IDB had a credit contingent facility through which the country could access another two per cent of its GDP in loans in the event of a hurricane or any natural disaster.
Meanwhile, Moreno welcomed Wednesday’s meeting, saying the Washington-based financial institution was willing and ready to help Barbados strengthen its social safety net, given that Government was “confronting” the issues of the country head-on.
He urged the private sector to also play its part in rebuilding the ailing economy.
“If you are a long-term businessman in this country this is the time to tighten the belt, but at the same time think that you should be able to have more employees, you should be able to make a bigger effort,” Moreno said.
“This is an effort where everybody has to chip in. This is an effort of the whole of the society of Barbados . . . I am convinced that you have the leadership in place,” said Alberto, who also pointed out that he had discussions with IMF officials regarding Barbados’ economic situation and how both the IDB and IMF could “collectively help”.