WASHINGTON, CMC – The executive board of the International Monetary Fund (IMF) Friday said it had concluded the fifth and final reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with Barbados.
The Washington-based financial institution stated that, following the completion of the reviews, Barbados will be permitted to draw down US$19 million under the EFF arrangement and US$39 million under the RSF arrangement.
It said this brings the total disbursements under the EFF arrangement to US$116 million and US$193 million) under the RSF arrangement.
According to the IMF, economic activity in 2024 remained robust, with growth estimated at 4 percent, driven by tourism, construction, and business services. Inflation moderated to an average of 1.4 percent due to easing global commodity prices and prices of domestic goods and services.
The IMF said that the external position strengthened further, with the current account deficit narrowing to 4.5 percent of gross domestic product (GDP), supported by tourism receipts, declining import prices, and one-off current transfers.
It stated that gross international reserves reached US$1.6 billion at the end of 2024, equivalent to over seven months of import cover, providing continued strong support to the exchange rate peg.
According to the financial institution, Barbados’ near-term outlook is stable, with growth expected to reach 2.7 percent in 2025, supported by the construction of tourism-related projects and government investment.
It stated that inflation is expected to rise in 2025 due to the increasing cost of non-fuel imports and certain domestic agricultural products.
“Nevertheless, risks to the outlook are tilted to the downside amidst the highly uncertain external economic environment and Barbados’ continued vulnerability to global shocks and natural disasters,” the IMF warned.
It said program performance has remained strong. All quantitative performance criteria and indicative targets were met. The authorities exceeded the primary fiscal surplus target for the financial year 2024/25 and are targeting 4.4 percent of GDP for the financial year 2025/26.
Public debt has fallen below 105 percent of GDP, and the authorities remain committed to reducing it to 60 percent of GDP by the end of the financial year 2035/36.
The IMF said Barbados met the EFF structural benchmarks for the review, including completing the assessment of human resource needs at the Barbados Customs and Excise Department, preparing a public-private partnership (PPP) framework, and developing a daily liquidity forecasting framework.
“Both reform measures for the RSF fifth review were also implemented. Key elements to strengthen the integration of climate concerns into public financial management have been completed, including the development of project appraisal guidelines, the deepening of fiscal risk analysis, and the preparation of the PPP framework. The Central Bank of Barbados has also included physical climate risk analysis in its bank stress testing,” it added.
IMF Deputy Managing Director Bo Li said the implementation of Barbados’ homegrown Economic Recovery and Transformation program has remained strong, supported by the EFF and the RSF arrangements. ‘
Li said the completion of the fifth and final reviews marks the successful conclusion of the Fund arrangements.
“While the outlook is stable, risks remain tilted to the downside, given the highly uncertain external economic environment and Barbados’ vulnerability to shocks and natural disasters. The authorities remain strongly committed to ensuring macroeconomic stability and implementing structural reforms to boost potential growth and build resilience.”
Li said maintaining substantial fiscal surpluses will be necessary to achieve the public debt target of 60 percent of GDP by the financial year 2035/36.
“The authorities’ focus on strengthening revenue mobilization and improving public financial management is appropriate. These measures will be crucial to maintaining fiscal sustainability and creating room for public investment. Finalizing ambitious reforms of state-owned enterprises is a priority. The authorities are taking the necessary steps to mobilize external financing.”
Li stated that the exchange rate peg remains a crucial anchor for macroeconomic stability, supported by substantial international reserves.
“Measures have been taken to strengthen the monetary policy framework and financial safety nets. Efforts to enhance the local payments market and infrastructure are progressing to transition to a digital payments system by 2026.
“Reforms to improve the business environment and boost growth potential are key. Important measures include advancing the digitalization of government services and investing in skills and education. The authorities focus on boosting macroeconomic resilience to natural disasters and facilitating the transition to renewable energy is welcome,” Li added.
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