THE?CARIBBEAN?DEVELOPMENT?BANK (CDB) is preparing to negotiate a major policy-based loan with Barbados.
And though incoming president Dr Warren Smith would not disclose the size of the loan, he said it follows a recent $50 million advance to the country as it tries to take control of a worrying fiscal situation.
Policy-based loans carry with them a number of conditions that the country must meet.
However, Smith, who takes over from Dr Compton Bourne on May 1, said Barbados’ homegrown prescription for cutting the deficit and slowing public spending has already got the thumbs-up from CDB.
“What we did is to look at the series of reforms that the Barbados Government crafted. We assessed them from the standpoint of their adequacy and their suitability to addressing the underlying concerns in the economy. The fact that we have accepted those conditions are indicative of our general approval of the steps that are being taken,” Smith told BARBADOS BUSINESS AUTHORITY.
Following a CDB/Institutional Investor Roundtable 2011 at Wyndham Nassau Resort in The Bahamas, Smith said: “We are not going to have any quarrel with the pace of the adjustment.
“What we are comforted with is that Barbados has a commendable track record of doing what is necessary in difficult economic times to correct its fiscal position and to take the necessary measures. Our expectation is that it will be no different this time around.
”Commenting on the measures in the last Budget and their possible impact on economic activity, Smith, a PhD graduate of Cornell University in the United States, said: “We think that the Budget was perhaps a good first step.
“One might argue about whether it went far enough but on the question of whether it was contractionary or expansionary, I think that an attempt was made to achieve some kind of balance in a difficult situation.”He stressed too that the island’s open economy made it vulnerable to major economic shocks.
However, the incoming CDB boss said creating the right policy environment was crucial to generating economic activity and encouraging foreign direct investment.
