Demand for financing from the Caribbean Development Bank (CDB) declined once again in 2012 due to the lingering effects of the global financial crisis.
During a recent Press conference at the bank, president Dr Warren Smith said total approvals for loans and grants in 2012 were pretty much flat compared to 2011.
“If you separate out loans from grants, what has happened is that loan approvals actually declined by 28 per cent. That decline, however, was offset by a steep increase in grants. The increase in grants was largely due to the commitment of approximately $43 million to our basic needs trust fund programme.
“What we do is, we commit the entire bloc of resources up front, so that was to some degree a little bit of an aberration,” he said.
In a news release highlighting its activities in 2012 and prospects for 2013, the bank said loan approvals and loan disbursements were lower than originally anticipated, declining by US$40 million (BDS$80 million) and US$82 million (BDS$164 million) respectively.
Approvals in 2012 amounted to US$104 million (BDS$208 million), while disbursements totalled US$85 million (BDS$170 million).
The Barbados based development finance institution said the decline was due to the difficult economic environment, reduced fiscal space for undertaking capital expenditure and strict control over public sector spending across the region.
Smith noted that 65 per cent of total approvals went to Guyana, Jamaica and St Vincent and the Grenadines.
He said six sectors accounted for 97 per cent of approvals, led by road rehabilitation and upgrade (53 per cent), education (21 per cent) and disaster rehabilitation and emergency relief (11 per cent).
The bank noted that among the noteworthy approvals in 2012 was the largest loan of US$34.2 million (BDS$68.4 million) which was made to Guyana for the West Coast Demerara Road Improvement Project.
In addition, a technical assistance loan for US$3.6 million (BDS$7.2 million) was approved to assist the Government of Barbados in improving the efficiency and effectiveness of revenue administration through the establishment of a Central Revenue Authority.
The bank said responding to concerns raised by international credit rating agencies about risk and risk management in the CDB dominated the attention of management during the year.
“The uncertain global environment, tentative economic growth across the region and declining creditworthiness of some of CDB’s borrowing member countries were among major concerns raised by international credit rating agencies and influenced the credit downgrades received by CDB from both Moody’s Investors Service and Standard & Poor’s Ratings Services during the year,” it said.
The bank noted that it moved swiftly to put in place a comprehensive risk-management framework, including creating the supporting institutional framework and building internal capacity in the area. (NB)
