Minister of Economic Affairs and Empowerment, Innovation, Trade, Industry and Commerce, Dr. David Estwick (FP)
Minister of Economic Affairs and Empowerment, Innovation, Trade, Industry and Commerce, Dr. David Estwick, has sought to set the record straight on government’s borrowing of monies from Trinidad and on the international market.
This comes in response to a story carried in the Monday, October 5, edition of the Daily Nation, which quoted him as saying that the loan from Trinidad was for capital works such as the upgrading of the Barbados National Standards Institution (BNSI). ??Dr. Estwick pointed out that the BDS $150 million loan was not for the BNSI’s upgrade, but to execute a number of important capital works programme on a continuous basis.?? These include a coastal improvement project and a Barbados Water Authority mains laying programme.
He also explained that the road works programme, which forms part of government’s stimulus package, would provide employment opportunities for Barbadians and local construction companies.
Given the current economic situation globally, Dr. Estwick noted that government had also secured a US$120 million loan from Scotia Bank and Trust to "shore up the balance of payments of the country, so that we would have enough foreign reserves if the economic crisis prolongs".
In addition, the Minister said government had successfully negotiated another US$150 million loan from the World Bank to provide additional support to the balance of payments, if needed.
He added: "Given that there are no predictions as to when the recession will come to an end, we [government] thought it necessary to add additional security, by negotiating with the Inter-American Development Bank to become part of its sustainable liquidity programme.?? Thus, those funds would become part of a safety-net, if we need it.?? Additionally, as a member of the International Monetary Fund, we have access to a special deposit reserves to the tune of US $80 million, which can be drawn down."
Dr. Estwick further stated: "These are measures designed to protect our balance of payments and to maintain our net foreign reserves if the economic crisis is protracted past 2010."
He also mentioned initiatives under the short and medium term action plan, formulated by a Special Working Group on the Economy, to outline a "road map for the development and implementation of several policy initiatives to stabilise the economy".
Among the proposals to be undertaken by government are measures to improve the level of competitiveness and to maximise the opportunities which may emerge from the crisis; the provision of resources to assist the productive sectors in riding out the current period; and the allocation of a fiscal stimulus to sustain economic activity and sustain jobs.
Dr. Estwick noted that the Central Bank had reduced its benchmark minimum deposit rate on three occasions which, would not only ease the cost of borrowing for business, but also reduce the risk of credit default in the event of reduced cash flow.
Since August, this year, minimum interest paid on deposits was reduced by 1.5 per cent per annum and now stands at 2.5 per cent.?? Additionally, there was a reduction in the cost of borrowing last year from 12 per cent to the present rate of 7 per cent.
The Central Bank has also expanded the range of entities that are eligible for credit guarantees under the Small Business Guarantee Scheme, to include medium-sized companies with capital of BDS $2 million and gross revenue of BDS $4 million in the tourism and manufacturing sectors. Hotels with between 15 to 50 rooms now have access to short-term loans of up to $150 000 and $300 000 over the medium-term.