Policy-Based Loan - St. Lucia
May 17, 2010 No. 19/10-BD CDB APPROVES ADDITIONAL TRANCHE OF POLICY-BASED LOAN FOR ST. LUCIA The Government of St. Lucia is to receive a loan equivalent to USD15 million from the Caribbean Development Bank (CDB). The Bank's Board of Directors approved the loan, which will constitute the third tranche of a loan already approved for St. Lucia. In July 2008, CDB's Board of Directors approved a Policy-Based Loan (PBL) to the Government of St. Lucia in an amount not exceeding the equivalent of USD30 million, which was to have been paid in two tranches of USD18 million and USD12 million. The original PBL was designed to pre-empt fiscal distress in light of planned capital investments that were intended to place the country on a higher growth trajectory. However, since approval, the global economy entered a deep recession which has led to lower revenue collections. At the same time, the recession has increased the need to provide some stimulus to the economy and maintain social expenditures. This environment has required that authorities shift focus from long-term macroeconomic development, to mitigating the effects of the crisis and stabilising the economy in the near term. The revised loan amount is USD45 million. The first tranche of the PBL was disbursed in March 2009. Many of the conditions precedent to the second disbursement have been met, while there has been good progress on others.