The Inter-American Development Bank (IDB) has approved a US$120-million loan to Barbados in effort to reactivate its economy.

The loan will facilitate the strengthening of the country’s health and economic responses to the COVID-19 crisis, support household income and business liquidity.

“The proceeds will be used to promote macro-economic stability and finance measures to address the pandemic, including the purchase of medicine, medical supplies and equipment. Resources will also be used to support temporary measures to protect household income and provide businesses with working capital as the pandemic continues to hurt the economy, especially tourism, one of the country’s biggest economic sectors,” stated IDB.

In addition, it will also support the planning and design of a social, economic and fiscal plan that will help the country recover in the post-pandemic period, including measures to simplify taxes, increase government revenues, control spending and improve tax management and customs enforcement capabilities.

According to IDB, the US$120-million loan is the first of a two-step programme with Barbados to improve the efficiency and effectiveness of the country´s public policy and fiscal management in response to COVID-19 crisis, through the design and implementation of effective and fiscally responsible policy measures.

The loan has a repayment term of 20 years, a grace period of five and a half years and an interest rate based on the London Inter-Bank Offered Rate.