Thursday 20 September, 2018

CDB approves US$50M loan for BVI reconstruction efforts

(Photo: The British Virgin Islands were devastated by the passage of Hurricane Irma, a category five and the most powerful hurricane ever recorded in the Atlantic. Weeks later, the island was again battered by Hurricane Maria.)

(Photo: The British Virgin Islands were devastated by the passage of Hurricane Irma, a category five and the most powerful hurricane ever recorded in the Atlantic. Weeks later, the island was again battered by Hurricane Maria.)

The Board of Directors of the Caribbean Development Bank (CDB) has approved a USD50 million (mn) loan to the Government of the British Virgin Islands.

The bank said in a release that the funds will support efforts to restore economic stability and build resilience following the passage of Hurricanes Irma and Maria in 2017.

Damage and loss as a result of the natural disasters were estimated at over USD3.6 billion, equivalent to more than 300 percent of the British Virgin Islands’ annual gross domestic product (GDP).

“This policy-based loan came about as a result of consultation and collaboration between CDB and the Government of the British Virgin Islands. It responds to the urgent need to restore livelihoods and essential services following the impact of the 2017 hurricanes. The funding will provide immediate liquidity support to the Government, as well as lay the foundation for wide-ranging reforms to enhance the country’s resilience and growth,” said Dr. Justin Ram, Director of Economics, CDB.

The policy-based loan is structured around two themes:

1. Restoring economic stability

The loan will be used to strengthen fiscal management, by providing immediate funding to help to close the Government’s financing gap for 2018; as well as support governance framework improvements and labour market flexibility

2. Building resilience

To further improve resilience-building, the loan will support the Government’s housing reform efforts, to ensure access to safe and affordable housing solutions for all residents. It also seeks to strengthen the country’s ability to cope with future natural disaster events by incentivising parametric insurance.

In the immediate aftermath of the disasters in 2017, CDB provided a total of USD67.6 mn to the British Virgin Islands, on highly concessional terms, through a combination of emergency relief grants, immediate response loans, and a rehabilitation and reconstruction loan.

These funds were targeted towards the provision of emergency relief supplies and humanitarian assistance, cleaning and clearing debris, as well as the restoration of critical infrastructure and essential public services.

A report by analytics firm Corelogic estimated a total of US$65 billion in damages to the Caribbean region from the passage of Hurricane Irma.