Barbados will strengthen the efficiency and effectiveness of public policy and fiscal management in response to the health and economic crisis caused by COVID-19 pandemic, with a $100 million loan from the Inter-American Development Bank (IDB).
This operation is the second in a Programmatic Policy-Based (PBP) series consisting of two contractually independent but technically connected loans. The first operation was approved in December 2020.
The first operation supported the countercyclical effect of fiscal policy through temporary measures to protect vulnerable households and increase liquidity for businesses during the health and economic crisis.
This second operation ensures the timely availability of financial resources to respond to the health crisis and attain the required level of health services to manage and/or suppress future COVID-19 cases. It also includes measures to increase health personnel to support COVID-19 efforts and promote the economic and fiscal recovery during the post-pandemic period in the country.
The program also supports increased cash transfer benefits to vulnerable populations and credit for low-income households to build or buy a home. It also supports financial assistance for self-employed and small and medium enterprises (SMEs) to strengthen business continuity in an online environment and the design of an industrial development plan and a capitalization plan for the National Insurance Scheme.
To promote economic recovery during the post-pandemic period, the project is supporting the appointment of the Jobs and Investment Council to contribute to policy response during and after COVID-19 and measures to strengthen tax revenue collection, tax, and customs administration as well as macro fiscal management.
This operation continues to build climate resiliency and decarbonization through green tax incentives for electromobility adoption. It also further strengthens the capacity of the Ministry of Finance in climate finance and the mainstreaming of climate considerations.
The IDB loan has a 20-year repayment term, a 5.5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR).
