WASHINGTON, CMC – The International Monetary Fund (IMF) is to make available US$38 million to Barbados after the Caribbean island completed the first reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with the Washington-based financial institution.
The IMF said Barbados is implementing an ambitious homegrown economic reform and climate policy agenda aimed at strengthening fiscal sustainability, advancing structural reforms, unlocking the economy’s growth potential, increasing resilience to climate change, and greening the economy.
It said these policies are supported by the EFF and RSF arrangements, approved on December 7, 2022, equivalent to US$304 million.
IMF’s First Deputy Managing Director and Acting Chair of the Executive Board, Gita Gopinath, in a statement issued after the reviews, said following a series of shocks in recent years, the Barbadian economy has recovered strongly amid a rebound in tourism.
She said while inflation has increased with the rise in global food and fuel prices, it is projected to moderate in the coming months.
“Fiscal performance has significantly improved, public debt is downward, and reserves have risen. The focus on reducing debt through higher primary surpluses while maintaining adequate social and capital expenditure is appropriate,” said Gopinath.
She said significant progress is being made on the structural reform agenda, including strengthening the duty and tax exemptions framework, enhancing tax compliance and risk management, and unlocking the economy’s growth potential.
“Continued progress on state-owned enterprise and pension reforms is important. The newly created Fiscal and Growth Councils are critical to helping monitor the implementation of the authorities’ fiscal strategy and support the growth agenda”.
The IMF official said that the authorities are focused on enhancing the monetary policy toolkit and taking steps to safeguard financial stability, adding that it will be necessary to develop liquidity management instruments and strengthen the AML/CFT framework.
“The authorities are advancing their ambitious climate policy agenda to increase resilience to climate change and green the economy. Ongoing efforts to incorporate climate policy goals in the fiscal process, including discussing climate change risks in the budget and enhancing public procurement, are welcome.
“The planned new policy reforms to develop guidelines to implement sustainable/green public procurement and introduce climate/green budget tagging will further support incorporating climate priorities in the budget process.
“The climate policy reforms are expected to help create an enabling environment that mobilizes private sector investment in climate-related projects,” Gopinath added.
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