BROOKLYN, NY – The COVID-19 pandemic is causing a deep recession in Barbados. However, the implementation of the Barbados Economic Recovery and Transformation (BERT) programmed remains strong, and targets are still being met, an International Monetary Fund (IMF) staff mission reported on Friday.
The comments came at the end of an IMF staff visit, via videoconferencing, between February 2 and 5, to discuss the BERT plan’s implementation, supported by the IMF under the Extended Fund Facility (EFF).
“The prolonged COVID-19 pandemic continues to have a major impact on Barbados. The economy is estimated to have contracted by about 18 percent in 2020, with a gradual recovery projected to start in 2021,” said team leader Bert van Selm in a statement.
“Tourism arrivals remain at a fraction of normal levels, and recent increases in COVID-19 cases in key source markets, including the US and the UK, will likely delay the recovery. Also, a recent outbreak of COVID-19 in Barbados led to an ongoing lockdown that will reduce economic activity in the first quarter of this year.”
Despite the COVID-19 shock, van Selm added, Barbados was making some strides.
He said that in this very challenging environment, the country continues to progress in implementing its ambitious and comprehensive economic reform program while expanding critical investments in social protection.
“Key indicative targets for end-December under the EFF were met. International reserves, which reached a low of US$220 million (5-6 weeks of import coverage) at end-May 2018, increased to more than US$1.3 billion at the end of 2020,” van Selm said.
“Strong steps have been made in implementing structural reforms. A new Central Bank law, aimed at strengthening the bank’s autonomy while limiting the provision of credit to the government, was adopted by parliament in December 2020. An actuarial review of the civil service pension system was completed in November 2020, providing the basis for upcoming public pension reform. A new procurement law to strengthen the fairness, integrity, and transparency of the procurement process is expected to be submitted to parliament in February.”
Discussions for the fifth review under the EFF are scheduled for May.
In October 2018, the IMF agreed to a four-year deal that will see it provide US$290 million for the BERT program under the EFF.
The government must meet specific targets for payments to be disbursed.
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