BRIDGETOWN, Barbados, CMC – A delegation from the International Monetary Fund (IMF) Wednesday said it had reached a staff-level agreement with the Barbados government that could result in US$57 million in funding after discussing the implementation of the island’s Economic Recovery and Transformation (BERT 2022) plan, supported by the IMF under the Extended Fund Facility (EFF).
The delegation, headed by Michael Perks, ended its seven-day visit here on Wednesday. It also discussed the implementation of reform measures under the Resilience and Sustainability Facility (RSF) arrangement.
“Following productive discussions, the IMF team and the Barbadian authorities reached a staff-level agreement on the completion of the fourth reviews of the EFF and the RSF arrangements with Barbados,” Perks said.
He said the agreement is subject to approval by the IMF Executive Board, which is expected to consider the reviews in December.
“The completion of the reviews will allow the authorities to draw the equivalent of about US$19 million under the EFF arrangement and about US$38 million under the RSF arrangement,” he added.
Perks said that between January and September this year, the Barbadian economy grew by an estimated 3.9 percent year over year, driven by dynamism in the tourism and construction sectors.
He said that while Hurricane Beryl caused significant damage to some coastal infrastructure and the fishing sector, its macroeconomic impact is expected to be moderate, in part because it occurred during the off-peak tourist season.
“Inflation continued to slow with the easing of international commodity prices and lower domestic service prices, offsetting higher prices of particular domestic food and agricultural products and rising freight costs.
“The external position strengthened further, with the current account deficit narrowing to five percent of gross domestic product (GDP) through September, down from 9.5 percent of GDP during the same period in 2023.”
Perks said that international reserves remained ample at US$1.6 billion at the end of September, equivalent to around seven months of imports, continuing to support the exchange rate peg.
“The near-term economic outlook remains positive, but Barbados is still vulnerable to global shocks and natural disasters, as demonstrated by the impact of Hurricane Beryl,” Perks said, adding that program performance remains strong.
“All quantitative performance criteria and indicative targets for the fourth review of the EFF were met. Having comfortably met the primary surplus target during the first half of the fiscal year 2024/25, the authorities are on track to meet the end-year target of 3.8 percent of revised GDP.”
Perks said public debt declined to around 105 percent of revised GDP by September 2024, and the authorities remain firmly committed to bringing debt down to 60 percent of GDP by fiscal year 2035/36.”
“The Barbadian authorities continue to advance structural reforms, supported by technical assistance from the Fund and development partners. Key structural benchmarks were met, including measures to strengthen tax and customs administration, improve public financial management, and enhance public investment and procurement.
“Efforts envisaged in the BERT plan to strengthen growth and the business environment are also progressing,” Perks said, noting that the government is making good progress with its ambitious climate-policy agenda, supported by the RSF arrangement.
He said a new Electricity Supply Bill has been tabled in Parliament. The bill aims to enhance competition in the electricity market and encourage local participation in renewable energy investment.
“To safeguard financial stability and economic resilience, the Central Bank of Barbados has adopted a strategy for building its capacity to monitor and assess climate change risks.
“The authorities also continue to advance efforts to mobilize climate finance, supported by the IMF and other development partners, including the new debt-for-climate conversion, which will generate savings for upfront green investment to enhance water supply and resilience,” Perks said.
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