Abstract
Request for an Extended Arrangement Under the Extended Fund Facility-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Barbados
1. Since the staff report was issued, new information has become available to the staff. This information does not alter the thrust of the staff appraisal.
2. Barbados is now in arrears to Canada. On September 21, 2018, Citigroup called the guarantee that had been provided by the government of Canada through Export Development Canada (EDC) on Citigroup’s loan to the government of Barbados, discussed in paragraph 3 of the staff report. EDC accepted this claim on September 27, 2018. Arrears on this loan for an amount of US$1.2 million had been accumulated after the government of Barbados announced its intention to seek a restructuring of its public debt on June 1, 2018. Given these arrears, the arrangement and the proposed decision have been revised to reflect the inclusion of the financing assurances review.
3. The governments of Canada and Barbados have been in close consultation this week seeking to reach an understanding on this debt. Based on the understanding reached, Canada consents to Fund financing despite the arrears given that the government of Barbados has provided assurances regarding the following: (i) if this loan is restructured, it will seek to restructure other bilateral debt and debt with creditor-sovereign guarantees on comparable terms; and (ii) the government of Barbados will clear the arrears it has accumulated on this loan, in the amount of US$1.2 million, to Canada before the first review under the EFF arrangement. The Executive Director for Canada and Barbados, Ms. Horsman, confirmed to staff that both countries have agreed to this approach.
4. It is staff’s understanding that the intention of the government of Barbados remains to restructure this loan. The terms for restructuring that have been proposed by the government of Barbados and its debt advisors have been reflected in the staff’s macroeconomic framework. In the event that the loan is not restructured, staff is of the view that the program remains fully financed, as the authorities retain the ability to seek more ambitious restructuring of external debt to commercial creditors, and higher inflows from international financial institutions are now expected—since the issuance of the staff report, the Caribbean Development Bank has indicated that it is likely to increase its contribution over the program period, and the World Bank has also indicated its willingness to explore financing to Barbados.