Barbados yesterday deposited the Inter-American Development Bank’s (IDB) $200 million “cheque” significantly boosting the island’s struggling international reserves in stark contrast to the position a year ago.
News of this has come from Government’s Economic Advisor Dr Kevin Greenidge, who signalled: “Barbados is back”.
“The IDB just signed $200 million and today (on Wednesday) it went into Central Bank,” Greenidge said, as he addressed the Society of Trust and Estate Practitioners (STEP) Christmas Cheer event under the theme Trusting BERT: Understanding Barbados’ Roadmap to Recovery at the Champers restaurant.
“The good news is that with the inflows of the IDB money our reserves have now reached $1 billion. So we are back. Of course some of it is borrowed money but it allows you the space to feel comfortable. So when investors look they can say ‘look, Barbados is back’. That is the word in the international community,” boasted Greenidge.
At the end of December last year the reserves reached an all-time low of about $410 million or approximately 6.6 weeks of import cover. The international benchmark is 12 weeks.
However, after reaching a staff level agreement with the International Monetary Fund (IMF) in early September for the Barbados Economic Recovery and Transformation (BERT) programme, and approval of an extended fund facility of about US$290 million in October, the island received pledges from other international lending agencies.
In late October the Caribbean Development Bank (CDB) approved its pledged $150 million policy-based loan to support the implementation of the BERT programme and in mid-November the IDB signed a loan agreement for $200 million to support the BERT plan.
At the end of September this year the reserves stood at $577.1 million or 7.4 weeks of import cover. Barbados then benefited from the IMF’s first disbursement of about $98 million, the IDB’s $200 million, and $150 million from the CDB pushing the country’s reserves over the billion-dollar mark.
Greenidge, who pointed out that Barbados would also be getting two more tranches of $150 million over the next three years from the CDB, recalled that the country’s reserves had reached a dangerous position at the end of 2017 making it one of the worse performing economies in the region at that time.
“We had one of the lowest reserves cover in the region at the end of 2017. Just one-and-a-half months of reserves cover . . . Two tins of sardines and a pack of biscuits and we hurt up. This was no way to live . . . even Haiti and Jamaica beating us. These are countries that have done reforms. So we have to build back our reserves,” said Greenidge.
“So what was the problem? No growth, unsustainable debt position, unsustainable fiscal position and you are literally out of money to feed yourself. So any programme put together must address these issues and here comes BERT,” he said.