BRIDGETOWN, Barbados – The Barbados government has increased its borrowing limit from BDS$1.5 billion (US$750 million) to BDS$2.5 billion to make way for loans which it will seek from other governments.

The increase in the loan ceiling was achieved through an amendment to the Special Loans Act, and Finance Minister Chris Sinckler said that much of the approved increase in borrowing will be to build the country’s productive capacity in areas that include tourism and sugar cane.

Parliament’s amendment of the law, unopposed by the Opposition, comes against the backdrop of international rating agency, Moody’s, lowering Barbados’ credit rating from Ba3 to B3, which technically increases the country’s repayment rates for loans on the international market.

“Loans covered under the Special Loans Act will come with high concessionary rates, three per cent, with an extended gratuity period for repayment. It is the kind of loan we would want to incur because it is not an open market debt under the Foreign Loans Act, which attracts interest rates of eight or 10 per cent,” Sinckler said.

But Opposition Leader, Mia Mottley, contended that government was managing the economy poorly, triggering the Moody’s downgrade that now sees the administration making loan repayments at rates higher than its Caribbean neighbours.

She said while government is earning BDS$2.02 billion in revenue, it was spending BDS$1.45 billion to service its debt.

–CMC