BRIDGETOWN, Barbados, CMC – A delegation from the International Monetary Fund (IMF) Tuesday ended a nine-day visit to Barbados, reaching a staff-level agreement with Bridgetown on the completion of the third reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangement.
The IMF’s executive board is expected to consider both reviews in June.
The Washington-based financial institution said that Barbados’ economy has recovered to pre-pandemic levels, with 12 consecutive quarters of growth, driven by a rebound in tourism and related sectors.
It said that the implementation of the ambitious, home-grown Barbados Economic Reform and Transformation (BERT 2022) program continues to be strong.
“The authorities remain committed to maintaining fiscal consolidation and debt sustainability while advancing structural reforms to achieve more inclusive and sustainable growth and increase resilience to climate change,” said Michael Perks, who led the delegation that visited here from May 13-21.
He said following productive discussions, the IMF team and the Barbadian authorities reached a staff-level agreement on the completion of the third reviews under the EFF and RSF arrangements.
He said that upon successful completion of the reviews by the IMF executive board, Barbados will receive US$19 million under the EFF arrangement and US$37 million under the RSF arrangement.
“The economy grew strongly in 2023 and continues to expand in 2024, driven by the rebound in tourism and related activities. Real gross domestic product (GDP) has recovered to pre-pandemic levels with tourist arrivals in the first quarter surpassing the 2017-19 average.”
Perks said that although inflation has moderated with the easing of international food prices, this was somewhat offset by the higher prices of certain domestic crops due to adverse weather conditions and higher domestic demand.
He said the current account deficit narrowed to nine percent of GDP in 2023, down from 11 percent in 2022. International reserves rose to US$1.6 billion at the end of March 2024, covering about seven months of imports.
However, Perks said that risks to the outlook could arise from an abrupt slowdown in key tourism source countries, an intensification of regional conflicts leading to higher commodity prices and inflation, a further increase in external financing costs, and/or natural disasters.
“Barbados continues making good progress in implementing its home-grown BERT 2022 plan. All quantitative targets for end-March 2024 under the EFF were met. The primary fiscal balance recorded a surplus of 3.7 percent of GDP in the financial year 2023/24, up from 2.5 percent of GDP in the financial year 2022/23.”
Perks said that for the financial year 2024/25, Barbados’ budget targets a primary surplus of four percent of GDP, in line with programme targets. He said the authorities remain firmly committed to gradually reducing public debt to 60 percent of GDP by the financial year 2035/36.
“Important structural reforms are being implemented. The authorities have met structural benchmarks to reform state-owned enterprises, amend the public pension scheme, reform the tax and customs exemption regimes, enhance the public procurement framework, and strengthen public financial management.
“ Meanwhile, significant progress has been made in strengthening the AML/CFT framework, enabling Barbados to exit the Financial Action Task Force (FATF) grey list earlier this year,” Perks said, adding that the island’s economic reform program also contemplates further steps to strengthen growth and the business environment.
He said Barbados continues advancing its ambitious climate policy agenda, supported by the RSF arrangement.
“To improve flood resilience, the authorities have tabled a new Stormwater Management Act in Parliament. The Cabinet has also approved an Energy Efficiency and Conservation Policy Framework covering all government agencies and public lighting.
“Efforts to green the economy and move away from fossil fuels are progressing. The authorities are taking steps towards increasing private investment in battery storage further to integrate renewable energy sources into the energy matrix and ensure a stable electricity supply.”
Perks said that ongoing efforts to mobilize climate financing include:
- A new debt-for-climate swap.
- Aiming to generate savings to finance new loans from the IDB and Green Climate Fund for upfront green investment.
- The preparation of legislation to enable the government’s capital contribution to the Blue Green Bank.
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