Loan of US$35 million will help modernize businesses and boost the country’s productivity
The Inter-American Development Bank (IDB) has approved a loan of US$35 million, of which US$17.5 million come from its ordinary capital and US$17.5 million from the China Co-financing Fund for Latin America and the Caribbean, to help boost productivity in Barbados.
The Enhanced Access to Credit for Productivity program to be executed by the Central Bank of Barbados in collaboration with financial institutions and small- and medium-sized enterprises (SMEs) will contribute to increased productivity by providing a guarantee mechanism to promote investment projects facilitating SMEs’ access to medium and long-term credit, and will assist companies with upgrades to their business models.
Finance and access to credit have an important link to productivity in Barbados. Barbadian firms need to improve their performance to preserve or increase their competitiveness, particularly in key economic sectors such as tourism. This program will also allow these firms to diversify in the services, construction and manufacturing sectors. The guarantee mechanism will support those companies that are credit constrained because they did not have eligible guarantees.
It is expected that within five years, the program will provide over 200 new guaranteed loans for SMEs that will allow them to modernize and remodel their businesses. Each guarantee could provide coverage of up to 80 percent of the individual loans amount for up to 10 years.
The IDB US$35 million loan to be implemented in 5 years has an amortization schedule of 25 years, with a five-and-a-half year grace period and an interest rate based on LIBOR.