US$1.2M arrears on Canadian loan
Government has defaulted on a US$67.9 million loan, guaranteed by Canada, for the Barbados Water Authority (BWA) smart meter project.
It has, however, “remained current” on separate financing backed by China.
The International Monetary Fund’s (IMF) made these disclosures in “supplementary information” which accompanied its report to the Executive Board.
The information did not impact the board’s decision to approve US$290 million to support the Barbados Economic Recovery and Transformation plan under the IMF’S Extended Fund Facility (EFF).
In a new 89-page report released following the completion of its agreement with Barbados, the IMF said the governments of Canada and Barbados “have been in close consultation . . . seeking to reach an understanding on this debt”.
It elaborated: “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. 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.”
The IMF said based on an “understanding” reached, “Canada consents to [IMF] financing despite the arrears given that the government of Barbados has provided assurances”.
These assurances were:
if this loan is restructured, it will seek to restructure other bilateral debt and debt with creditorsovereign guarantees on comparable terms.
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. That first review is scheduled for May next year.
“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,” the IMF said.