CDB supports Antigua and Barbuda financial sector reforms

A stable financial sector is central to sound economic growth, and a motivation for the approval of a policy based loan to the Government of Antigua and Barbuda by the Board of Directors of the Caribbean Development Bank (CDB) on December 10.

The loan of USD50 million will help with efforts to stabilise the financial sector and encourage greater fiscal reforms.  The funds will be disbursed in two tranches of USD30 million and USD20 million based on meeting of agreed conditions.

“This approval by the CDB will go a long way in terms of helping us resolve our financial sector issues. This is a critical milestone not only for Antigua and Barbuda but the OECS as a whole. It will help us to maintain financial sector security, which is the ultimate goal of the Government in this regard, shared by CDB and the other stakeholders,” said Mr. Whitfield Harris Jr., Financial Secretary and Antigua and Barbuda’s Director on the Board of CDB.

The loan is in line with CDB’s Strategic Objective to promote good governance, as reflected in CDB’s Strategic Plan for the period 2015 to 2019 and aligns with the 2015 – 2018 Country Strategy developed for Antigua.

Despite some improvement in economic growth, Antigua and Barbuda continues to face significant fiscal and debt challenges. 

The country’s fiscal position and high debt stock make it difficult to access adequate resources through commercial options, or on the international financial markets. The fiscal reform agenda in Antigua and Barbuda is geared towards improving fiscal and debt sustainability. Strengthening the fiscal regime to accommodate the cost of the resolution strategy will add credibility to the resolution and help in returning confidence to the financial system. The overarching target is to achieve a debt-to-GDP ratio of 60% by 2030. 

“Stability of the financial sector is a necessary condition for increasing investment and improving financial intermediation. It will be very important for ECCU economies to accelerate economic growth as an essential element of the strategy to restore commercial bank soundness. Critical to accelerating output growth is the need to improve access to financing, especially by micro, small and medium-sized enterprises (MSMEs) and, in that regard, it is highly desirable to develop other financing options, including venture capital to allow enterprises to better structure their balance sheets and, consequently, become better commercial bank clients,” said Dr. Justin Ram, Director of Economics, CDB.