A $200 million Barbados Tourism Fund Facility is being established as part of Government’s $2 billion economic stimulus plan, which is aimed at helping the country to recover from the financial fallout caused by the COVID-19 pandemic.
According to Prime Minister Mia Amor Mottley, the Barbados Tourism Fund Facility will be a loan entity designed to provide urgent working capital, investment loans, and where possible blended finance for the upgrade of Barbadian hotels and tourism businesses.
However, she noted that funds under this entity would be disbursed based on the condition that these firms “hold on to as much staff and jobs as possible”.
Prime Minister Mottley made these announcements last night when she addressed the nation on the phased approached to reopening businesses and relaxing movement in the country, amid the COVID-19 threat.
She said that as Government was a shareholder in the Inter-American Development Bank (IDB), it was working with its private sector lending arm, IDB Invests, to establish the $200 million tourism facility.
“We will also encourage the commercial banks, credit unions and institutional and individual investors to participate in this facility, by offering co-financing from the IDB, and a 10 per cent guarantee from the Tourism Loan Guarantee Fund,” she added.
The Prime Minister also disclosed that in an effort to get the Barbados Tourism Fund Facility up and running in a speedy manner, that Government was working with ANSA Merchant Bank through bridge financing.
“The Government will seed this facility with $10 million towards the bridging as will ANSA for another $10 million until such time that we can conclude our discussions with IDB Invest and other institutional and individual investors. We will publish further details on the bridge financing in the near future and on the full facility thereafter. I would not normally have mentioned this until we had fully completed the facility, but I recognize that we are well on our way to settling it and that it is important that those in the tourism sector know we are seeking to work with them at this most vital of moments. This will not replace the need for them to have access to private capital, whether it is debt from banks and other financial institutions or equity from other investors locally and regionally,” she outlined.
Ms. Mottley stressed that even though “tourism will not be as quick to return” as some other sectors, it will remain a significant income earner for the country.
“Even as we work to diversify our economy to ensure that we have more global businesses operating from our country, tourism will still be a mainstay of our economy. All different types of tourism from the traditional sun and sea to medical and educational tourism; from new visitors to repeat visitors to those from the diaspora who may be interested in more long stay tourism,” she said.
The Prime Minister continued: “Many of our hotels are in urgent need of working capital. Their revenues have disappeared overnight, gone. They need support. In addition, some believe that now is the time for them to upgrade, expand, or modernize their facilities, so that they can return more profitably when things open back up. We also know that now is also a time when they cannot take on high-interest rates or short repayment periods. It will simply force them into bankruptcy.
“Accordingly, the Government is designing the facility to offer attractive interest rates, and repayment periods. It will focus also on lending for good development outcomes such as jobs retention, hotels that link better with local agriculture, conversion to renewable energy and the upskill local staff employed at the hotels.”