Washington – The World Bank board of executive directors approved yesterday a US$100 million COVID-19 Response and Recovery Development Policy Loan for Barbados. The operation will support the COVID-19 relief efforts and promote a resilient economic recovery from the crisis.
“The COVID-19 pandemic has severely affected Barbados, which had been successfully implementing its economic reform programme,” said Tahseen Sayed, World Bank Country Director for the Caribbean.
“There have been serious impacts on key sectors such as tourism, leading to an increase in unemployment, with disproportionate effects on women. The World Bank’s assistance will contribute to the country’s efforts for a resilient and inclusive socioeconomic recovery.”
The pandemic has had severe socioeconomic impacts in Barbados due to the heavy dependence on tourism, which accounts for about 40 per cent of jobs, more than half of which belong to women.
The economy contracted by an estimated 18 per cent in 2020, and unemployment claims reached roughly one third of the workforce last year. This operation aims to help Barbados strengthen the response to COVID-19, enhance macroeconomic and fiscal management, and promote financial resilience for a sustainable recovery.
Measures supported include the adoption of a COVID-19 vaccination strategy and a programme that helps tourism-related sectors sustain employment. It also supports reform actions to strengthen payment systems and adopt an enhanced legal framework for customs and a new Central Bank Law. The operation supports the Government in strengthening disaster risk financing and resilience policies and in improving the regulation and supervision of the insurance industry’s disaster risk exposure.
This Development Policy Loan provides support on an exceptional basis to Barbados, which has graduated from the International Bank for Reconstruction and Development (IBRD).
The financing responds to an emergency request from the Government for one-off IBRD assistance to respond to the COVID-19 crisis, given the disproportionate and severe economic effects on Barbados due to its vulnerability, small size, and dependence on tourism. The financing has a final maturity of 19 years, including a grace period of five years, and is part of a coordinated assistance effort by international financial institutions during the pandemic.