[China Co-Financing Fund] IDB administers $17.5 million loan from CHC for Barbados Enhanced Access to Credit for Productivity Project

On June 19, 2015, the Inter-American Development Bank (IDB) signed two loan contracts with the Government of Barbados for the Enhanced Access to Credit for Productivity Project: a $17.5 million loan that IDB issued from its ordinary capital (Loan 3389/OC-BA), and a $17.5 million loan from the People's Bank of China (Loan 3390/CH-BA) via the China Co-Financing Fund for Latin America and the Caribbean (CHC). The $35 million of loan financing authorized by IDB was designed to cover the total project cost. The IDB approval date for the loan financing was December 15, 2014, and it refers to this project as ‘BA-L1034 : Enhanced Access to Credit for Productivity Project’. The CHC loan carries the following borrowing terms: a 25-year maturity, a 5.5-year (66-month) grace period, a 0.75% commitment (credit) fee, no management fee, and an annual interest rate of 3-month LIBOR plus a 0.5% funding margin (also known as the ‘Bank’s Cost of Funding’) and a 0.85% IDB lending spread. As of December 2020, the IDB and CHC loan had jointly achieved an 99.95% disbursement rate (with $34,984,045.77 being disbursed and $15,954.23 not yet being disbursed). The purpose of the project was to increase the productivity of SMEs by facilitating access to credit for investment projects. It support the establishment of a partial credit Guarantee Fund in order to enable the Central Bank of Barbados (CBB) to provide credit guarantees on behalf of SMEs which encounter difficulty in providing commercial banks with adequate security for small loans.

Additional details

1. The CHC loan contract can be accessed in its entirety via https://www.dropbox.com/s/mefue47ky6xi8q9/EZSHARE-2056220512-842.pdf?dl=0. 2. AidData has estimated the all-in interest rate (1.63%) by adding average 3-month LIBOR in the second quarter of 2015 (0.28%) to the funding margin during the second quarter of 2015 (0.5%) and the IDB lending spread during the second quarter of 2015 (0.85%). 3. According to the CHC loan contract, the ‘Bank's Cost of Funding’ means a cost margin calculated quarterly relative to a three (3)-month LIBOR Dollar Interest Rate, using the weighted average cost of funding instruments applicable to the Flexible Financing Facility, expressed in terms of an annual percentage, as determined by the Bank. AidData identified this cost margin via https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=EZSHARE-1436601171-376. 4. The China Co-Financing Fund for Latin America and the Caribbean was established on January 14, 2013 with a contribution of $2 billion by the People's Bank of China. It is administered by the IDB. For more information, see umbrella Project ID#86526. 5. As of 2011, Barbados was no longer ODA-eligible. 6. The IDB lending spread data are drawn from https://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=EZSHARE-1436601171-376.

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