The Inter-American Development Bank (IDB) has approved a US$30-million loan to support the short-term financial sustainability of micro, small and medium-size enterprises (MSMEs) in Barbados in maintaining employment in the face of the COVID-19 crisis and its effect on the productive sector.

The loan will help the MSMEs affected by the pandemic overcome temporary liquidity problems, protect jobs and, at the same time, allow business continuity and operations.

“Even though the health emergency has been controlled so far, the crisis created by COVID-19 has resulted in severe social and economic challenges. Due to the pandemic, the economy contracted 14.9 per cent in the first semester of 2020 and the expected outlook for 2020 is an 11.6 per cent contraction,” the IDB stated.

“MSMEs comprise 96.3 per cent of formal enterprises in the country. A large majority are micro (45.3 per cent) and small (46.9 per cent), while mid-size firms (26 to 50 employees) account for 4.1 per cent of firms. MSMEs contribute to 64.1 per cent of the national added value and account for approximately 60.7 per cent of employment,” the bank said.

The programme will support credit guarantees for individual investment loans to be undertaken by eligible MSMEs. Guarantees may support working capital loans for expenses, including supplies or merchandise, payroll and utilities, among others.

The idea, IDB said, is to ensure the recovery, improvement and maintenance of economic activity in the short term.

The resources under this intervention will be directed both to MSMEs affected by the COVID-19 crisis and to their overarching strategic chains, giving priority to sectors identified in the vulnerability assessment.

The loan has a repayment period of 25 years, a grace period of five and a half years, and an interest based on the London Interbank Offered Rate.