As global borrowing costs continue a steady upward climb and market volatility intensifies, the Central Bank of Barbados is pushing the island nation’s government to act quickly to secure a large pool of low-cost financing from international capital markets before conditions tighten further. The call to action came Thursday from Central Bank Governor Dr. Kevin Greenidge during a press briefing that reviewed Barbados’ first-half economic performance for the current year.
Dr. Greenidge argued that delaying borrowing until project needs are urgent is a financially imprudent strategy, given the clear trend of rising interest rates that is expected to continue through the medium term. “When international capital markets offer more favorable terms than the direction rates are heading, we should be ready to seize that window of opportunity rather than wait,” he told reporters. “It makes far more sense to access financing earlier than to hold off until you are forced to borrow at much higher costs.”
While the governor declined to name specific infrastructure projects or social programs that the funding should target, he noted that it is standard for governments to plan ahead for ongoing priorities including public spending and social development. He explained that the current global economic outlook, marked by persistent price inflation, rising interest rates, and growing market volatility, means waiting to borrow until each project gets finalized is no longer an optimal approach.
Instead, Dr. Greenidge urged the administration of Prime Minister Mia Mottley to secure what he called a “large envelope” of pre-approved financing while market conditions remain relatively stable and interest rates are still more favorable than they are projected to be. Under his proposed strategy, the government would secure the full block of financing at locked-in low rates upfront, then draw down from the pool gradually as individual projects move forward.
If planned and executed carefully, this approach would not derail the country’s target of reducing its overall debt trajectory, the governor emphasized. Bringing financing forward to lock in better rates would simply allow the government to continue its planned debt reduction path while accessing capital at a far lower long-term cost.
“Right now, every cost is going up, and the cost of borrowing is no exception,” Dr. Greenidge said. “We don’t have to decide every project upfront. What matters is securing the envelope of financing at favorable terms now, then working through analysis to identify which projects make the most sense to fund from that pool down the line. Waiting just means we will end up paying more when we do need to borrow.”
He added that Barbados’ existing standby loan agreement with the International Monetary Fund (IMF) would be integrated into this financing strategy as the government develops its plan.