## 1brbea2022001 ## Source details **Canonical URL:** [1brbea2022001](https://www.imf.org/-/media/files/publications/cr/2022/english/1brbea2022001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2022/english/1brbea2022001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2022/english/1brbea2022001.pdf.json) --- ### Recent developments and macroeconomic outlook - International reserves: - Reached a low of US$220 million (5-6 weeks of import coverage) in May 2018. - Increased to US$1.5 billion at end-2021 and are reported at US$1.5 billion in May 2022. - Reserves at end-2021 covered around 9 months of imports. - Growth and tourism: - Economy contracted by 14 percent in 2020. - Economic growth was 0.7 percent in 2021. - Growth projected at 11 percent for 2022, premised on a robust recovery of tourism. - Tourist arrivals: about 60 percent of pre-pandemic levels expected in 2022; tourism expected to return to pre-pandemic levels by 2024. Stay-over arrivals were reported at roughly 55 percent of pre-pandemic norms to date in early 2022. - Labor market and unemployment: - Unemployment rate at 10.9 percent as of end-2021. - Inflation and external price shocks: - Annual average inflation projected at 7 percent for 2022. - Expected to revert to just over 2 percent in the medium term. - Inflationary pressures driven by higher global food and oil prices and exacerbated by the war in Ukraine. - Current account and financing: - Current account deficit increased to 11 percent of GDP in 2021. - Increase in reserves was supported by IFI loans and the SDR allocation. - IDB planning to approve US$100 million in budget support in the fourth quarter of 2022. - Shocks and disasters: - Twin natural disasters in 2021: volcanic ashfall from St. Vincent in April 2021 and category 1 hurricane Elsa in July 2021. - Ashfall clean-up and home building after Hurricane Elsa amounted to 0.5 percent of GDP. - COVID-related expenditures remained elevated at around 2 percent of GDP in FY2021/22. ### Program implementation and structural reforms - IMF program status: - Seventh and final review under the EFF; all quantitative program targets for end-December 2021 and end-March 2022 were met. - End-December 2021 structural benchmarks (including issuing regulations for a procedural fiscal rule) were met. - Three out of five end-March structural benchmarks were met; tabling of a revised public pension law and NIS’ submission of all outstanding financial statements for audit by the Auditor General are behind schedule. - Purchase of SDR 17 million will be made available in the form of budget support upon completion of the seventh review. - Key reforms implemented or advanced: - Introduction of a revised Central Bank of Barbados (CBB) law. - State-owned enterprise (SOE) reforms advanced. - Actuarial review of the civil service pension system completed. - Authorities remain committed to pension reform, SOE reform, and enhancing Public Finance Management (PFM) systems. - Constraints: - COVID-19 pandemic delayed parts of the structural reform agenda owing to limited opportunities for public consultation. ### Fiscal outlook and primary balance - Primary balance trajectory and targets: - For FY2022/23, the primary surplus is projected at 1 percent of GDP, up from minus 1 percent of GDP in both FY2020/21 and FY2021/22. - Primary surpluses need to reach 5-6 percent of GDP in three years to meet the 60 percent of GDP debt target by FY2035/36. - Primary surpluses are expected to gradually revert to 6 percent of GDP in FY2025/26. - Given increased uncertainty, the year targeted to reach a primary surplus of 6 percent of GDP has been pushed back by one year compared to the sixth review. - FY2022/23 Central Government Operations (in percent of FY GDP where indicated): - Total revenue: Program 29.1; Proj. 29.6; Difference 0.5 - Tax revenue: Program 27.2; Proj. 28.0; Difference 0.8 - Nontax revenue: Program 1.9; Proj. 1.6; Difference -0.3 - Total primary expenditure: Program 26.1; Proj. 28.6; Difference 2.5 - Current primary expenditure: Program 23.6; Proj. 24.8; Difference 1.3 - Capital expenditure and net lending: Program 2.5; Proj. 3.8; Difference 1.3 - CG Fiscal balance: Program -1.7; Proj. -3.2; Difference -1.5 - CG Primary balance: Program 3.0; Proj. 1.0; Difference -2.0 - Nominal GDP, FY (BDS$ millions): Program 10,606; Proj. 11,761 - Revenue and expenditure assumptions: - Revenue premised on a gradual recovery in tourism. - Expenditure envelope includes continued COVID-related health spending and funds for housing for low-income households after Hurricane Elsa. - Specific tax and fiscal measures: - Temporary VAT caps on oil products consistent with a WTI crude oil price of US$85 per barrel for an initial 6-month period starting in March 2022; forgone revenue projected at about 0.3 percent of GDP. Staff view: not well targeted to low-income households. - One-off pandemic levy of 15 percent applied to the past two-year income (2020 and 2021) of companies operating in the banking, insurance, and telecommunication sectors; expected to raise about 1 percent of GDP in FY2022/23. Staff view: retroactive solidarity levy poses risks to the investment climate. - A 1 percent levy on income charged on high-income individuals for 12 months starting in April 2022; expected to raise B$15 million, or about 0.2 percent of GDP in FY2022/23. Private sector concern: retroactive application of income taxes could create significant uncertainty. ### Debt sustainability, risks, and stress tests - Debt assessment: - Debt continues to be assessed as sustainable but subject to high risks. - DSA suggests the debt target of 60 percent of GDP can be achieved by FY2035/36 premised on consistently meeting the high primary surplus target. - Public debt projected to decline to about 135 percent of GDP in FY2021/22 from 147 percent in FY2020/21. - Key numeric debt and financing figures (selected): - Public debt (percent of FY GDP): 123.2 (2019), 147.0 (2020), 135.4 (2021), 119.9 (2022), 112.8 (2023 projection) - Public Debt (millions BDS$): 12,674 (2019/20), 13,287 (2020/21), 13,773 (2021/22 est.), 14,098 (2022/23 est.), 14,153 (2023/24 est.) - Total public debt (FY2021/22): 6,886.7 (US$ million) = 100.0 percent total debt = 135.4 percent of GDP. - External debt (FY2021/22): 2,474.7 (US$ million) = 35.9 percent total debt = 48.7 percent of GDP. - IMF (FY2021/22): 441.1 (US$ million) = 6.4 percent total debt = 8.7 percent of GDP. - Domestic debt (FY2021/22): 4,412.0 (US$ million) = 64.0 percent total debt = 86.7 percent of GDP. - Short-term debt (incl. T-Bills) (FY2021/22): 366.3 (US$ million) = 5.3 percent total debt = 7.2 percent of GDP. - Long-term debt (incl. Bonds) (FY2021/22): 4,045.7 (US$ million) = 58.7 percent total debt = 79.5 percent of GDP. - Stress-test findings and risks: - Debt would stay broadly on a steady downward trajectory even under stress tests; however, high level of debt remains a concern in the next 5 projection years. - Real GDP growth, combined macro-fiscal, and contingent liability shocks could result in the debt-to-GDP ratio being around 30 ppt higher than under the baseline at the end of the projection period. - Gross financing needs (GFNs) are susceptible to real GDP, contingent liability, and combined shocks that could temporarily push GFNs to GDP above the 15 percent threshold. - Policy recommendations to preserve sustainability: - Maintain high primary balances over an extended period through continued structural reforms. - Continue SOE reforms and strengthen contingency planning for natural disasters. - Maintain a prudent borrowing strategy and leverage IFI financing while rebuilding domestic market demand. ### Monetary, external, and financial sector policies - Central bank and financing: - Revised CBB law allows CBB financing up to 3 percent of GDP with a maximum 5-year maturity under a public emergency. - Authorities considering using the August 2021 SDR allocation, currently held at the CBB, for budget support; staff in principle supportive. - Exchange rate and competitiveness: - Barbados dollar pegged to the US dollar. - Further US dollar appreciation owing to tighter US monetary policy could dent Barbados’ tourism competitiveness. - Banking sector indicators (as of end 2021): - System-wide CAR: 16.8 percent. - Liquid assets to total assets: 28.4 percent. - Bank excess cash reserves: about 25.6 percent. - System’s NPL ratio: 7.4 percent with provision coverage of about 60 percent. - Credit and liquidity: - Commercial bank outstanding loans to the nonfinancial private sector trended down by 2.7 percent in 2021 (yoy). - Liquidity in FX market appears adequate; private sector credit contracting while liquidity at banks increased. - Pandemic-era measures and monetary policy: - CBB reduced overnight lending discount rate from 7 to 2 percent and minimum statutory holding requirement for government securities from 17½ to 5 percent of deposits. - Guidance allowing banks not to classify moratoria loans as nonperforming (currently 1 percent of the outstanding bank credit to the nonfinancial private sector) under conditions. - CBB has few instruments to tighten under the peg given weak transmission and excess liquidity; staff encouraged exploration of additional instruments and MCM TA. - AML/CFT and climate risk: - Progress on FATF-related measures, but significant work remains on DNFBPs, beneficial ownership, and money laundering case backlog. - Climate change poses risks to financial stability; CBB considering NGFS membership and stress-testing initiatives. ### Social protection, NIS finances, and pensions - Unemployment benefits and NIS: - Nearly five-fold increase in unemployment insurance claims in 2020 totaling about 2 percent of GDP in FY2020/21 have receded to pre-pandemic levels. - Unemployment Benefit Fund recapitalization envisages an infusion of B$143 million (1½ percent of GDP) over FY2021/22-FY2023/24; first disbursement of B$60 million transferred in FY2021/22 and additional B$60 million programmed for FY2022/23. - NIS engaged in cash management operations to meet National Insurance Fund (Pension Fund) obligations; an urgent need for authorities to articulate a NIF recapitalization plan. - Pension reform: - Actuarial review of the civil service pension system completed in November 2020; revised public pension law tabling delayed but expected in 2022 with outstanding NIS financial statements targeted for audit by end-2023. ### Structural reforms, growth, and climate resilience - Growth-enhancing reforms and priorities: - Digitization of government services and modernization of customs. - Reforms to streamline bureaucratic processes and enhance labour and product market flexibility. - Improve access to private credit and financial inclusion (Fair Credit Reporting Act; collateral registry intention). - Green transition and climate adaptation: - Recommendation: accelerate investment into renewable energy projects to reduce reliance on fuel imports. - Licensing system for IPP renewable energy projects and guidance note established (end-March 2022 structural benchmarks met). - Government target: 100 percent renewable energy by 2030. - Green Energy Park: 30 MW project slated for final approval in 2021. - Plan to develop a minimum of 30MW of wind energy; minimum 30 percent local participation in major projects and reserve 30 percent for SOEs. - Government achieved close to 10 percent of energy demand from installed or close-to-be-installed renewables; pipeline applications account for a further 10 percent. - Resilience investments: - Examples: drainage and water systems, physical flood defenses (seawalls), conservation/restoration of environmental barriers, breakwater retrofitting/climate proofing. - Continued engagement with regional initiatives (e.g., CCRIF) and use of state-contingent instruments recommended. ### Data, monitoring, program conditionality, and reporting - Data improvements: - Fund TA supported rebasing to constant 2016 price estimates of GDP and updated quarterly activity-based GDP. - STA to continue support for expenditure-based GDP estimates and a Tourism and Culture Satellite Account. - Barbados implemented IMF’s e-GDDS in March 2021 with a National Summary Data Page. - Program reporting and targets: - Final review under the 4-year EFF program; all quantitative targets relevant for the 7th review have been met. - Authorities requested full purchase of SDR 17 million for the seventh review as budget support; staff supports use of Fund resources for budget support. - Detailed reporting schedule required: daily NIR/GIR; monthly NDA, CG budgetary accounts, arrears, program loan disbursements; quarterly nominal and real GDP, financial position of public institutions, debt stock by maturity and creditor; annual audited financial statements and GDP. - Structural benchmarks status: - Met: regulations for a procedural fiscal rule; CBB quarterly core FSI indicators; licensing system and guidance for IPP renewable projects. - Behind schedule: tabling revised public pension law; submission of all outstanding NIS financial statements for audit. ### Program recommendation and follow-up - Staff recommendations: - Completion of the seventh review of the extended arrangement under the EFF. - Place Barbados on the standard 12-month cycle for Article IV Consultations (Decision No. 14747 – (10/96)). - Authorities have expressed interest in a follow-up program but no decision yet; absence of a successor within six months would trigger a Post Financing Assessment (PFA) as outstanding credit exceeds 200 percent of quota. - Program financing: - With proposed IMF disbursement and other IFI support, the program is fully financed. - EFF augmentations and SDR allocations noted: augmentations of SDR 66 million and SDR 48 million; requested SDR 17 million full purchase. ### Key macro and social indicators (preserved verbatim) - CY Real GDP: -1.3 (2019), -13.7 (2020), 0.7 (2021), 11.1 (2022), 5.0 (2023 projection) - CPI inflation (average): 4.1 (2019), 2.9 (2020), 3.0 (2021), 7.1 (2022), 5.0 (2023 projection) - Current account balance (US$ millions): -162 (2019), -323 (2020), -556 (2021), -593 (2022), -536 (2023 projection) - Gross International Reserves (GIR, US$ million): 739 (2019), 1,330 (2020), 1,529 (2021), 1,401 (2022), 1,273 (2023 projection) - GIR in months of imports of G&S: 4.2 (2019), 9.3 (2020), 9.4 (2021), 7.3 (2022), 6.3 (2023 projection) - Oil Price (WTI, US$ per barrel): 57.0 (2019), 39.4 (2020), 68.0 (2021), 103.9 (2022), 89.6 (2023 projection) - Population (2021 est., thousand): 288.6 - Per capita GDP (2021 est., US$ thousand): 16.8 - Poverty rate (individual, 2010): 19.3 - Life expectancy at birth in years (2019): 79.2 - Gini coefficient (2010): 47.0 - Unemployment rate (2020 est.): 21.3 _Italic: IMF staff analysis as presented in the source content._ ### introduction of a revised central bank law, state-owned enterprise (SOE) reform, and reforms ### introduction of a revised central bank law, state-owned enterprise (SOE) reform, and reforms ### Recent developments and macroeconomic outlook - International reserves: - Reached a low of US$220 million (5-6 weeks of import coverage) in May 2018. - Increased to US$1.5 billion at end-2021 and are reported at US$1.5 billion in May 2022. - Reserves at end-2021 covered around 9 months of imports. - Growth and tourism: - Economy contracted by 14 percent in 2020. - Economic growth was 0.7 percent in 2021. - Growth projected at 11 percent for 2022, premised on a robust recovery of tourism. - Tourist arrivals: about 60 percent of pre-pandemic levels expected in 2022; tourism expected to return to pre-pandemic levels by 2024. Stay-over arrivals were reported at roughly 55 percent of pre-pandemic norms to date in early 2022. - Labor market and unemployment: - Unemployment rate at 10.9 percent as of end-2021. - Inflation and external price shocks: - Annual average inflation projected at 7 percent for 2022. - Expected to revert to just over 2 percent in the medium term. - Inflationary pressures driven by higher global food and oil prices and exacerbated by the war in Ukraine. - Current account and financing: - Current account deficit increased to 11 percent of GDP in 2021. - Increase in reserves was supported by IFI loans and the SDR allocation. - IDB planning to approve US$100 million in budget support in the fourth quarter of 2022. - Public finances and fiscal targets: - Authorities committed to running primary surpluses from FY2022/23 onwards; primary surpluses need to reach 5-6 percent of GDP in three years to meet the 60 percent of GDP debt target by FY2035/36. - Primary balance target for FY2021/22 was reduced to a 1 percent of GDP deficit at the sixth EFF review. - The authorities met the primary balance target for FY2021/22. - Shocks and disasters: - Twin natural disasters in 2021: volcanic ashfall from St. Vincent in April 2021 and category 1 hurricane Elsa in July 2021. - Ashfall clean-up and home building after Hurricane Elsa amounted to 0.5 percent of GDP. - COVID-related expenditures remained elevated at around 2 percent of GDP in FY2021/22. ### Program implementation and structural reforms - IMF program status: - Seventh and final review under the EFF. - All quantitative program targets for end-December 2021 and end-March 2022 were met. - End-December 2021 structural benchmarks (including issuing regulations for a procedural fiscal rule) were met. - Three out of five end-March structural benchmarks were met; tabling of a revised public pension law and NIS’ submission of all outstanding financial statements for audit by the Auditor General are behind schedule. - Purchase of SDR 17 million will be made available in the form of budget support upon completion of the seventh review. - Key reforms implemented or advanced: - Introduction of a revised Central Bank of Barbados (CBB) law. - State-owned enterprise (SOE) reforms advanced. - Actuarial review of the civil service pension system completed. - Authorities remain committed to pension reform, SOE reform, and enhancing Public Finance Management (PFM) systems. - Constraints on reform progress: - COVID-19 pandemic delayed parts of the structural reform agenda owing to limited opportunities for public consultation. ### Fiscal policy stance and measures for FY2022/23 - Planned fiscal stance: - For FY2022/23, the primary surplus is projected at 1 percent of GDP, up from minus 1 percent of GDP in both FY2020/21 and FY2021/22. - This planned stance is more accommodative than the previously projected 3 percent of GDP primary surplus at the sixth review. - Staff view: the planned stance balances accelerating debt reduction and supporting the ongoing recovery. - Revenue and expenditure assumptions: - Revenue projections premised on a gradual recovery in tourism. - Expenditure envelope includes continued COVID-related health spending and funds for housing for low-income households after Hurricane Elsa. - Specific tax and fiscal measures: - Temporary VAT caps on oil products (gasoline and diesel) consistent with a WTI crude oil price of US$85 per barrel for an initial 6-month period starting in March 2022; forgone revenue projected at about 0.3 percent of GDP. - Staff view: not well targeted to low-income households; highlights need for well-functioning social safety nets. - One-off pandemic levy of 15 percent applied to the past two-year income (2020 and 2021) of companies operating in the banking, insurance, and telecommunication sectors; expected to raise about 1 percent of GDP in FY2022/23. - Staff view: retroactive solidarity levy targeting specific sectors poses risks to the investment climate. - A 1 percent levy on income charged on high-income individuals for 12 months starting in April 2022; expected to raise B$15 million, or about 0.2 percent of GDP in FY2022/23. - Private sector concern: retroactive application of income taxes could create significant uncertainty and be detrimental to investment plans. ### Monetary, external, and resilience policies - Central bank law and financing: - The revised CBB law allows for CBB financing up to 3 percent of GDP with a maximum 5-year maturity under a public emergency like the COVID-19 pandemic. - Authorities considering using the August 2021 SDR allocation, currently held at the CBB, for budget support in line with the revised CBB law; staff in principle supportive given SDRs are the cheapest form of financing and limited domestic market demand. - Exchange rate and competitiveness: - Barbados dollar pegged to the US dollar. - Further US dollar appreciation owing to tighter US monetary policy could dent Barbados’ tourism competitiveness. - Climate and disaster risk: - Strengthening resilience to natural disasters and climate change and accelerating transition to renewable energy are key to achieving sustainable growth and reducing vulnerability to international oil price volatility. - Recommendation: accelerate investment into renewable energy projects to reduce reliance on fuel imports. ### Risks and staff assessment - Main risks to the outlook (tilted to the downside): - Further lengthening of the pandemic affecting tourism recovery. - Intensification of the war in Ukraine increasing global commodity prices and inflationary pressures. - Repeated natural disasters aggravated by climate change could dampen economic activity. - Exchange rate peg exposure to US dollar appreciation. - Staff assessment and achievements: - Program objectives broadly achieved despite pandemic and natural disasters. - Macroeconomic stability restored through 2018-19 public debt restructuring, structural reforms, and IFI support. - Continued commitment by authorities to structural reforms and fiscal consolidation to meet medium-term debt targets. *Source: 1brbea2022001 - introduction of a revised central bank law, state-owned enterprise (SOE) reform, and reforms* ### 11. Primary surpluses are expected to gradually revert to 6 percent of GDP in FY2025/26. ### 11. Primary surpluses are expected to gradually revert to 6 percent of GDP in FY2025/26. ### Fiscal outlook and primary balance - As the pandemic wanes and the global economic outlook normalizes, the primary surplus is expected to revert to its FY2019/20 level, the first year under the program. - Given increased uncertainty over the Omicron variant and the war in Ukraine, and continued reconstruction investment needs following hurricane Elsa, the year targeted to reach a primary surplus of 6 percent of GDP has been pushed back by one year compared to the sixth review. - Projected medium-term improvement in the fiscal position is supported by: - cyclical recovery in revenues, - phasing out of COVID-related expenditures and VAT caps on oil products, - steady implementation of remaining structural reforms (including enhancing the financial viability of SOEs, legislation of pension reforms, and introduction of a numerical fiscal rule). - Measures to support fiscal and growth objectives and climate adaptation investment needs include: - (i) broadening the revenue base by enhancing the efficiency of land taxes, - (ii) reforming the VAT regime in the real estate and tourism sectors, - (iii) further rationalizing expenditures, and/or - (iv) curtailing inefficient current expenditure. - Contingency: Should revenue targets underperform, the authorities could accelerate some of these measures. - Fiscal year is from April to March. - Barbados: FY2022/23 Central Government Operations /1 - ProgramProj.Difference - Total revenue29.129.6 0.5 - Tax revenue27.228.0 0.8 - Nontax revenue 1.91.6 -0.3 - Total primary expenditure26.128.6 2.5 - Current primary expenditure23.624.8 1.3 - Capital expenditure and net lending2.53.8 1.3 - CG Fiscal balance-1.7-3.2 -1.5 - CG Primary balance3.01.0 -2.0 - Nominal GDP, FY (BDS$ millions) - 10,60611,761- - (In percent of FY GDP) - Sources: Ministry of Finance; and Fund staff estimates. - 1/ Fiscal year is from April to March. ### Debt sustainability and risks - Debt continues to be assessed as sustainable but subject to high risks. - The Debt Sustainability Analysis (DSA) suggests the debt target of 60 percent of GDP can be achieved by FY2035/36 as previously envisaged, premised on consistently meeting the high primary surplus target. - Main risks: - slower-than-expected economic recovery, - delay in economic and fiscal reforms to generate primary surpluses. - Mitigating factors: - Barbados’ strong track record under the EFF-supported program, - authorities’ strong commitment to long-term fiscal adjustment, - favorable debt service terms after the comprehensive debt restructuring. - Market perception of country risk has improved after ticking up in April 2020 with the spread of external debt to bondholders now well below 500 bps. ### Social protection and NIS finances - The surge in unemployment benefit outlays that strained NIS finances at the height of the pandemic have receded. - The nearly five-fold increase in unemployment insurance claims in 2020 totaling about 2 percent of GDP in FY2020/21 have receded back to pre-pandemic levels. - Unemployment Benefit Fund recapitalization program envisages an infusion of B$143 million (1½ percent of GDP) over the period FY2021/22-FY2023/24 and is underway. - Along with the anticipated recovery of contributions, financing pressures from unemployment and severance outlays are not anticipated in the near term. - The NIS is actively engaged in cash management operations to meet National Insurance Fund (Pension Fund) obligations, highlighting an urgent need for the authorities to articulate a NIF recapitalization plan. - Progress has lagged due to pandemic-related disruptions, which delayed the completion of the NIS’ 17th Actuarial Review and impeded broader consultations on Civil Service Pension reform. - Authorities indicated reforms to safeguard the sustainability of the NIF will be considered alongside the public service pension reform program now underway as part of a broad-based pension reform initiative. ### Monetary and financial sector policies - Credit to the private sector continues to contract, with liquidity in the banking sector increasing. - Commercial bank outstanding loans to the nonfinancial private sector trended down by 2.7 percent in 2021 (yoy). - Banks see limited bankable projects (except for renewable energy projects), buoying liquidity and pushing down the loan-to-deposit ratio. - Liquidity in the FX market appears adequate. - Commercial banks’ financial position (as of end 2021): - system-wide CAR was at 16.8 percent, - liquid assets to total assets at 28.4 percent, - bank excess cash reserves at about 25.6 percent, - system’s NPL ratio stood at 7.4 percent with provision coverage of about 60 percent. - Credit unions have seen an increase in their NPLs and resultant provisioning reduced profitability. - The CBB compiled and disseminated quarterly core Financial Soundness Indicators at the IMF’s website in March 2022 (end-March 2022 structural benchmark). - The CBB has maintained credit support measures introduced during the pandemic and extended temporary regulatory guidance on loan classification through October 2022. - Pandemic measures include reductions of both CBB’s overnight lending discount rate from 7 to 2 percent and of the minimum statutory holding requirement for government securities from 17½ to 5 percent of deposits; the securities reserve requirement was discontinued under the new Central Bank of Barbados Act adopted in December 2020. - Guidance allowed banks not to classify moratoria loans as nonperforming (currently 1 percent of the outstanding bank credit to the nonfinancial private sector), provided loans were previously in good standing and borrowers were impacted by the pandemic. - Staff view: Given uncertainty over the tourism recovery and the limited size of measures, the measures are appropriate; authorities intend to initiate unwinding after evaluation. - Monetary policy tightening under the fixed exchange regime: - CBB has few instruments to tighten under the peg given weak monetary transmission and structural excess liquidity. - If inflationary pressures continue, authorities should consider options to tighten monetary policy while reducing excess liquidity. - Staff encouraged consideration of MCM technical assistance to develop monetary policy instruments, strengthen transmission, and eventually revisit capital controls. - Climate risk to financial stability: - Banks are exposed to climate change sensitive sectors. - CBB is considering membership in the Network for Greening the Financial System and capacity to monitor climate risks. - Financial Services Commission is conducting a stress-testing exercise for insurance corporations for climate change effects. - FATF compliance: - Barbados has made good progress but significant work remains on risk-based supervision of DNFBPs, ensuring accurate beneficial ownership information with sanctions, improving access to such information, increasing use of financial intelligence by law enforcement, intensifying confiscation efforts, and reducing backlog of money laundering cases. ### Enhancing growth and resilience to climate change - Structural reforms and investments should be further accelerated to unlock growth potential. - Progress includes easing trading across borders; more reliable payment and digital identity system; enhancing financial access for small businesses. - To facilitate green energy: reduced import duties and excise taxes on electric vehicles and removal of application requirements for residential solar PV installation. - Continued reforms to facilitate digitalization, promote SME financial access, increase labour and product market flexibility, and green the economy are essential. - Investment in climate-resilient infrastructure should be stepped up: - Examples: enhancing drainage and water systems, physical flood defenses (seawalls), conservation and restoration of environmental barriers, breakwater retrofitting or climate proofing. - Continued engagement with regional initiatives (e.g., Caribbean Catastrophe Risk Insurance Facility) is key. - Renewable energy transition: - Licensing system for Independent Power Producers (IPP) renewable energy projects and guidance note on licensing/approval (end-March 2022 structural benchmark) have been established. - Important to implement the process and accelerate private sector investment to meet the goal of full transition to renewables by 2030. ### Data and program implementation issues - Data shortcomings are being addressed: - Recent Fund TA supported by Canada and CARTAC helped BSS compile constant 2016 price estimates of GDP (rebased from 2010) and update quarterly estimates of activity-based GDP. - STA to continue support for improved expenditure-based GDP estimates and a Tourism and Culture Satellite Account. - In March 2021, Barbados implemented IMF’s Enhanced General Data Dissemination Standard (e-GDDS) with a National Summary Data Page. - Program status: - This is the final review under the 4-year EFF program; all quantitative targets relevant for the 7th review have been met. - Authorities requested the full purchase of SDR 17 million for the seventh review be made available as budget support; staff supports use of Fund resources for budget support given limited alternative financing. - With proposed IMF disbursement and other IFI support, the program is fully financed. - Structural benchmarks: - End-December 2021 SBs to adopt regulations for a procedural fiscal rule and strengthen trade facilities and risk management by BCED were met. - Under the procedural fiscal rule, the government commits to: - (i) annually prepare a monitorable fiscal strategy/framework over the medium term; - (ii) regularly publish outcomes against this strategy; - (iii) take remedial action when required. - CBB prepared quarterly core FSI indicators; two SBs to improve the business environment for renewable energy projects implemented on schedule by March 2022. - Remaining end-March 2022 SBs (revised public pension law tabling and submission of all outstanding financial statements for audit by the Auditor General) are behind schedule due to public consultation difficulties and resource constraints. - Authorities initiated consensus-building on pension reform in the FY2022/23 budget presentation; aim to table revised pension law in 2022 and submit outstanding financial statements for audit by end-2023. - Authorities intend to deepen SOE reform by consolidating responsibilities of entities engaged in agricultural, housing and development, and transportation services respectively over a two-year window; these reforms and strengthened governance, reporting and risk monitoring are projected to further reduce transfers over the medium term. - Two PFM missions envisaged: (i) assessing comprehensive fiscal risks and (ii) restructuring the Ministry of Finance and Economic Affairs to improve internal audit, procurement, and accounting systems. ### Fund engagement, safeguards, and staff appraisal - Barbados’ capacity to repay the Fund is adequate: - Debt service to the IMF projected to remain low at around 2 percent of exports and 1 percent of GDP throughout the projection period. - Gross reserves projected to remain above 100 percent of ARA. - CBB safeguards: - CBB has implemented all but one recommendation of the 2018 safeguards assessment; outstanding measure for internal audit external quality assessment is at an advanced stage. - New CBB law adopted in December 2020 strengthened central bank autonomy, accountability and governance. - Transparency practices maintained with timely publication of annual audited financial statements. - Agreement with government for a two-stage gradual recapitalization to restore financial autonomy. - Staff appraisal highlights: - Authorities have made good progress implementing the BERT plan; all QPCs, continuous QPC on external arrears, ITs set for the seventh review were met; all structural benchmarks met with two exceptions. - Temporary fiscal relaxation during the pandemic was appropriate but needs to be compensated going forward. - A primary deficit of one percent of GDP for two consecutive years was critical to accommodate pandemic impact and twin natural disasters. - Starting in FY2022/23, steady improvement in the primary balance is needed to preserve debt sustainability. - With the debt anchor target of 60 percent of GDP pushed out by two years to FY2035/36, target achievement requires ambitious primary surpluses in the long term. - Staff assesses public debt remains sustainable but subject to high risks. - Continued implementation of structural reform agenda is essential for achieving and sustaining higher primary surpluses. - Priorities: tabling revised public pension law, operationalizing NIF recapitalization plan as a matter of priority. - Authorities should accelerate SOE reforms once the pandemic wanes: - To contain government expenditures and secure fiscal space for investment and greening the economy, transfers to SOEs need to resume declining by a combination of: - (i) phasing out of COVID-related additional transfers; - (ii) stronger oversight of SOEs, supported by improved reporting and analysis (including SOE dashboard); - (iii) adjustments to SOE cost structures and revenue frameworks, including an increase in user fees; - (iv) mergers and divestment. - Effort will require sustained and evolving reform implementation. *IMF staff summary based on the chapter "11. Primary surpluses are expected to gradually revert to 6 percent of GDP in FY2025/26."* ### 34. Structural reforms are needed to unlock Barbados’ growth potential. While meaningful ### Structural reforms are needed to unlock Barbados’ growth potential ### Structural reforms to boost potential growth and private investment - While meaningful structural measures to help improve the business climate have been implemented so far under the BERT, the process was disrupted due to the pandemic shock. - More remains to be done to further boost potential growth and attract private investment, including in the areas of digitalization, regulatory framework, and access to private credit. - Priorities include: - completing the digitization of government services and modernization of the customs framework, - reforms to streamline bureaucratic processes, - enhancing flexibility in labour and product markets. ### Resilient, green, and inclusive recovery - A resilient, green, and inclusive recovery will require accelerating structural reforms. - Barbados has become more vulnerable to climate change risks in recent years despite being less affected by natural disasters than other Caribbean countries in the past. - Improving resilience to natural disasters and climate change, and facilitating a transition to renewable energy, will be critically important, also in terms of reducing fossil fuel dependency. - Progress and remaining needs: - Barbados has taken steps to enhance the business environment for IPP renewable energy projects including by establishing and clarifying the licensing and approval process. - The transition to a greener economy should be accelerated. - Restoring fiscal space for climate investment through steady structural reforms would be key to catalyzing private sector resources and thereby meeting large financing needs for investment. ### Risks to the program - Risks remain elevated and uncertainty around economic projections is large despite economic activity starting to recover. - Identified risks include: - a more prolonged negative impact of the global coronavirus pandemic for example due to the emergence of more infectious variants; - slower than expected normalization from the pandemic in source countries for the tourism sector (UK, US, and Canada); - continued inflation pressures created by the disruptions in the global supply chain and the prolonged war in Ukraine; - more frequent and intensified natural disasters. - Implementation challenges: - Implementing the ambitious structural reform agenda to achieve and maintain large primary surpluses could be challenging. - Mitigating factors: - the authorities’ excellent track record under the program, - their strong commitment to the reform process, - strong support from IFIs, - broad public support for economic stabilization and the reform process. *Source: 1brbea2022001 - Structural reforms are needed to unlock Barbados’ growth potential. While meaningful* ### 37. With continued strong program implementation, staff recommends completion of the ### 1brbea2022001 - 37. With continued strong program implementation, staff recommends completion of the ### Program recommendation and conditionalities - Staff recommends completion of the seventh review of the extended arrangement under the Extended Fund Facility. - Staff recommends that Barbados be placed on the standard 12-month cycle for Article IV Consultations (Decision No. 14747 – (10/96)). - The authorities have expressed interest in a follow-up program but have not made a decision yet. - In the absence of a successor arrangement within six months, Barbados will be subject to a Post Financing Assessment (PFA) as its outstanding credit to the Fund exceeds the 200 percent of quota threshold. ### Real sector developments and recovery - Barbados was among the hardest hit in the region after the COVID-19 pandemic due to heavy reliance on tourism; tourism collapsed causing a sharp contraction in 2020. - A gradual recovery of tourist arrivals in 2021 and 2022 is leading to economic growth and improved labor market conditions. - Rising global commodity prices add to inflationary pressures and weigh on the nascent recovery. - Selected real-sector figures (calendar-year basis, exact values preserved): - CY Real GDP: -1.3 (2019), -13.7 (2020), 0.7 (2021), 11.1 (2022), 5.0 (2023 projection) - CPI inflation (average): 4.1 (2019), 2.9 (2020), 3.0 (2021), 7.1 (2022), 5.0 (2023 projection) - CPI inflation (end of period): 7.2 (2019), 1.3 (2020), 5.0 (2021), 5.2 (2022), 4.7 (2023 projection) ### Fiscal sector developments and projections - Expenditure ratios rose because of emergency spending associated with the Covid-19 pandemic and natural disasters, reversing prior improvements. - Tax ratio declined due to pandemic-induced reduction in economic activity and income tax policy changes announced in FY18/19. - Use of short-term debt instruments fell drastically after the debt restructuring and remains low. - Public debt ratio increased significantly due to plummeting revenues and GDP during the pandemic; debt service costs and gross financing needs rose. - Central government fiscal indicators (fiscal-year basis; exact values preserved): - Revenue and grants (percent of FY GDP): 30.7 (2019), 29.9 (2020), 28.9 (2021), 29.6 (2022), 29.6 (2023 projection) - Expenditure (percent of FY GDP): 26.9 (2019), 34.7 (2020), 34.1 (2021), 33.7 (2022), 30.7 (2023 projection) - Fiscal Balance (percent of FY GDP): 3.7 (2019), -4.8 (2020), -4.8 (2021), -3.2 (2022), -0.9 (2023 projection) - Interest Expenditure (percent of FY GDP): 2.4 (2019), 3.8 (2020), 3.9 (2021), 4.2 (2022), 4.4 (2023 projection) - Primary Balance (percent of FY GDP): 6.2 (2019), -1.0 (2020), -0.9 (2021), 1.0 (2022), 3.5 (2023 projection) - Central government gross debt (fiscal year, percent of FY GDP): 123.2 (2019), 147.0 (2020), 135.4 (2021), 119.9 (2022), 112.8 (2023 projection) ### External sector developments and projections - Current account deficit increased to 11.5 percent of GDP (2021) due to slow tourism recovery and rising imports driven by higher global oil price. - Capital and financial account recorded surpluses owing to large inflows from IFI loans, contributing to accumulation of international reserves. - Selected external figures (calendar-year, exact values preserved): - Current account balance (US$ millions): -162 (2019), -323 (2020), -556 (2021), -593 (2022), -536 (2023 projection) - Exports of goods and services (US$ millions): 2,265 (2019), 1,377 (2020), 1,467 (2021), 1,955 (2022), 2,182 (2023 projection) - Imports of goods and services (US$ millions): 2,098 (2019), 1,719 (2020), 1,960 (2021), 2,318 (2022), 2,435 (2023 projection) - Gross International Reserves (GIR, US$ million): 739 (2019), 1,330 (2020), 1,529 (2021), 1,401 (2022), 1,273 (2023 projection) - GIR in months of imports of G&S: 4.2 (2019), 9.3 (2020), 9.4 (2021), 7.3 (2022), 6.3 (2023 projection) - GIR (percent of ARA): 141.9 (2019), 260.0 (2020), 289.7 (2021), 235.8 (2022), 206.3 (2023 projection) - Oil Price (WTI, US$ per barrel, calendar-year): 57.0 (2019), 39.4 (2020), 68.0 (2021), 103.9 (2022), 89.6 (2023 projection) ### Monetary sector developments - Central Bank of Barbados (CBB) claims on Government declined after the domestic debt restructuring. - CBB international reserves increased sharply while commercial banks’ reserves at the CBB continue to increase. - Country risk premium peaked before debt restructuring but market perception has improved since. - T-bill rate declined after the debt restructuring; deposit rate remained very low with a recent uptick. - Private sector credit growth remained weak, with excess liquidity parked at the CBB. - Monetary and credit metrics (calendar-year; exact values preserved where shown): - Net domestic assets: 0.0 (2019), 5.0 (2020), 3.1 (2021), 2.3 (2022), 2.1 (2023 projection) - Private sector credit (percent change): 1.0 (2019), -1.2 (2020), -1.2 (2021), 2.0 (2022), 2.3 (2023 projection) - Broad money (annual change): 3.0 (2019), 7.3 (2020), 5.6 (2021), 5.6 (2022), 0.0 (2023 projection) ### Key statistics and social indicators (preserved verbatim) - Population (2021 est., thousand): 288.6 - Adult literacy rate (2014): 99.6 - Per capita GDP (2021 est., US$ thousand): 16.8 - Poverty rate (individual, 2010): 19.3 - Life expectancy at birth in years (2019): 79.2 - Gini coefficient (2010): 47.0 - Rank in UNDP Development Index (2019): 58 - Unemployment rate (2020 est.): 21.3 - Main products, services and exports: tourism, financial services, rum, sugar, and chemicals. ### Tables and program monitoring highlights (preserved figures) - Table 1 memorandum items: - Gross international reserves (US$ million): 738.9 (2019), 1,330.3 (2020), 1,529.4 (2021), 1,400.9 (2022), 1,273.4 (2023 est.) - In months of imports of G&S: 4.2 (2019), 9.3 (2020), 9.4 (2021), 7.3 (2022), 6.3 (2023 est.) - Nominal GDP, CY (BDS$ millions): 10,596 (2019), 9,354 (2020), 9,702 (2021), 11,395 (2022), 12,220 (2023 projection) - Table 2a (Central Government Operations, selected lines in millions of Barbados dollars): - Total revenue: 3,156 (2019/20), 2,702 (2020/21), 2,820 (2021/22 est.), 2,942 (2021/22 program), 3,121 (2022/23 est.), 3,485 (2022/23 program) - Total expenditure: 2,772 (2019/20), 3,132 (2020/21), 3,316 (2021/22 est.), 3,433 (2021/22 program), 3,298 (2022/23 est.), 3,865 (2022/23 program) - CG gross debt (memorandum): 12,674 (2019/20), 13,287 (2020/21), 13,831 (2021/22 est.), 13,773 (2021/22 program), 13,808 (2022/23 est.), 14,098 (2022/23 program) - Table 3 (Public Debt, selected lines in millions of BDS$ and percent of FY GDP): - Public Debt (millions BDS$): 12,674 (2019/20), 13,287 (2020/21), 13,773 (2021/22 est.), 14,098 (2022/23 est.), 14,153 (2023/24 est.) - Public Debt (percent of FY GDP): 123.2 (2019/20), 147.0 (2020/21), 135.4 (2021/22 est.), 119.9 (2022/23 est.), 112.8 (2023/24 est.) - Table 4a (Balance of Payments, US$ millions, selected lines): - Current account balance: -162 (2019), -323 (2020), -556 (2021), -593 (2022), -536 (2023 projection) - Capital and financial account: 394 (2019), 832 (2020), 591 (2021), 464 (2022), 409 (2023 projection) *Source: Excerpts from 1brbea2022001 (Barbados country document) contained in the supplied PDF content.* ### Annex I. Achievements Under the 2018–2022 EFF Program ### Annex I. Achievements Under the 2018–2022 EFF Program ### Key program objectives and context - Main goals: restore macroeconomic and fiscal sustainability, rebuild reserves, and initiate structural reforms to support growth. - Pre-program distress: - Public debt increased to almost 160 percent of GDP by mid-2018. - International reserves dwindled to just US$220 million by May 2018, equivalent to 5-6 weeks of import cover. - Exchange rate peg and government’s debt-servicing ability appeared in jeopardy after the 2008-09 global financial crisis and subsequent decade-long deterioration. - Political context: Following a decisive election victory in May 2018, a new government developed an ambitious reform program and requested IMF balance of payments support. ### Macroeconomic stabilization and fiscal adjustment - Immediate measures and outcomes: - A comprehensive debt restructuring was announced immediately after the new government took office. - A fiscal adjustment of 2½ percent of GDP was envisaged and implemented to reach a primary surplus of 6 percent of GDP in FY2019/20 (the first full year of program implementation). - Domestic debt restructuring completed in November 2018; external debt restructuring wrapped up in December 2019. - By March 2020, macroeconomic stability had been restored, enabling countercyclical macroeconomic policy during FY2020/21 and FY2021/22. - COVID-19 interruption: - Tourism collapsed and the economy contracted by 14 percent in 2020. - Primary deficits of 1 percent of GDP in FY2020/21 and FY2021/22 accommodated pandemic impacts. - Public debt path: After a sharp drop to 123 percent of GDP by March 2020, public debt increased to 147 percent of GDP in FY2020/21. - Long-term debt target of 60 percent of GDP was pushed back by two years to FY2035/36. ### Structural reforms advanced under constraints - Reforms enacted or advanced: - New central bank law adopted in December 2020 strengthening autonomy and limiting credit to the government. - Actuarial review of the civil service pension system completed in November 2020 to inform pension reform. - Modernization of the Customs and Excise Department and introduction of a revised Customs Act. - Modernization of the Revenue Authority improving tax administration. - Health dashboard for the Management and Accounting Unit (MAU) to monitor SOE financial performance and prioritize reforms. - New procurement law passed in December 2021 to strengthen fairness, integrity, and transparency. - Delays and capacity constraints: - Some elements of the structural agenda, including pension reform, were delayed due to limited administrative capacity and limited opportunity for public consultation during the pandemic. ### Confidence, reserves, and financing support - Reserves and financing: - International reserves grew steadily over the program period, supported by the comprehensive debt restructuring and significant support from IFIs (IDB, CDB, World Bank, CAF, IMF), including two EFF augmentations and the August 2021 SDR allocation. - Larger financing needs during the pandemic were met through strong IFI support and disbursements under the EFF-supported program with favorable borrowing terms. - Fiscal outlook and policy intentions: - After the temporary pandemic-related increase, public debt was put back onto a sustainable downward path in FY2021/22. - Primary balances are expected to gradually improve as the economy returns to normalcy. - Authorities intend to advance remaining reforms: revised public pension law, strengthening PFM (including eventual introduction of a fiscal rule), deeper SOE reforms, streamlining bureaucratic processes, digitization of government services, and enhancing product and labor market flexibility to boost growth potential. ### Debt developments, composition, and risk profile - Recent public debt developments: - Public debt was reduced from 158 percent of GDP in FY2017/18 to 123 percent of GDP by end-FY2019/20 before the pandemic interruption. - Public debt projected to decline to about 135 percent of GDP in FY2021/22 from 147 percent in FY2020/21. - The sharp FY2020/21 increase was driven largely by the fall in nominal GDP and pandemic fiscal responses. - The 2018-2019 restructuring provided debt reduction of about 30 percent of GDP and converted large shares of short-term central government debt into longer-term debt with improved debt-service profiles. - Debt profile features: - Restructured external debt: 5-year grace period; principal payments resume from 2025 onwards with a smoother debt service profile. - Around half of gross financing needs are represented by short-term debt with no rollover risk due to commercial banks’ agreement to rollover the full stock of these claims for the first 10-year period; remainder of short-term debt is held by the CBB. - The restructured securities have longer grace periods, longer maturities, and low interest rates. - Public debt coverage in the DSA: - Public debt defined as sum of: debt issued by the Central Government; debt and expenditure arrears by the Central Government; debt issued by SOEs and guaranteed by the Central Government; IMF BOP support lent to the CBB; and IMF budget support lent directly to the Treasury. ### Key numeric milestones and projections (as reported) - Pre-program and early program: - Almost 160 percent of GDP by mid-2018 (public debt). - US$220 million international reserves by May 2018 (5-6 weeks import cover). - Pandemic period: - Economy contracted by 14 percent in 2020. - Public debt: 123 percent of GDP by March 2020; 147 percent of GDP in FY2020/21. - Primary deficits of 1 percent of GDP in FY2020/21 and FY2021/22. - Post-pandemic/near-term: - Public debt projected at about 135 percent of GDP in FY2021/22. - Long-term debt anchor: 60 percent of GDP by end-FY2035/36 (pushed back by two years). - From debt decomposition (selected figures reported): - Total public debt (FY2021/22): 6,886.7 (US$ million) = 100.0 percent total debt = 135.4 percent of GDP. - External debt (FY2021/22): 2,474.7 (US$ million) = 35.9 percent total debt = 48.7 percent of GDP. - Multilateral creditors (FY2021/22): 1,657.3 (US$ million) = 24.1 percent total debt = 32.6 percent of GDP. - IMF (FY2021/22): 441.1 (US$ million) = 6.4 percent total debt = 8.7 percent of GDP. - Domestic debt (FY2021/22): 4,412.0 (US$ million) = 64.0 percent total debt = 86.7 percent of GDP. - Short-term debt (incl. T-Bills) (FY2021/22): 366.3 (US$ million) = 5.3 percent total debt = 7.2 percent of GDP. - Long-term debt (incl. Bonds) (FY2021/22): 4,045.7 (US$ million) = 58.7 percent total debt = 79.5 percent of GDP. - Contingent liabilities (FY2021/22): 225.5 (US$ million) = 3.3 percent of GDP. - Nominal GDP figures reported: 5,086.3 (FY2021/22), 5,086.3 (FY2022/23), 5,880.3 (FY2023/24), 6,275.0 (later period). - Debt sustainability assessment: - Under the baseline, the 60 percent-of-GDP debt anchor is projected to be reached by FY2035/36 with envisaged primary surpluses backed by recovery and reforms. - Over the medium term, debt remains above the 70 percent of GDP risk assessment threshold used in the MAC DSA, while gross financing needs are projected to stay below the 15 percent of GDP threshold. - Risks include slower-than-expected tourism recovery and the ability to sustain high primary surpluses; mitigants include program track record, favorable debt-service schedule, and improved market perceptions after the 2018-19 restructuring. ### DSA assumptions and macroeconomic projections - Growth and inflation assumptions: - Growth: 0.7 percent in 2021. - Growth projected to rebound strongly at about 11 percent for 2022 given tourism recovery. - Medium-term growth expected to return to pre-crisis levels around late 2024 and stabilize at long-term average of around 2 percent. - Average inflation projected to return to its long-run average of around 2½ percent from 2024 onwards. - Fiscal multiplier conservatively set at 0.3. - Primary balance assumptions: - FY2020/21 primary balance: minus 1 percent of GDP. - FY2021/22 primary balance: minus 1 percent of GDP. - FY2022/23 primary balance projected at 1 percent of GDP. - Primary balance projected to gradually increase to pre-crisis level of 6 percent of GDP in the medium term, with potential slight decrease later to accommodate development needs while respecting the FY2035/36 60 percent-of-GDP anchor. - Arrears: - Domestic expenditure arrears are gradually repaid and fully extinguished by end-FY2022/23. *Source: Annex I. Achievements Under the 2018–2022 EFF Program (IMF).* ### 3. Risks to debt sustainability remain elevated over the projection period. Public debt remains ### 3. Risks to debt sustainability remain elevated over the projection period. Public debt remains ### Baseline projections and long-term anchor - Public debt remains above the 70 percent of GDP risk assessment threshold over the 5-year projection period. - Under the current baseline projections, public debt is projected to meet its long-term anchor of 60 percent of GDP by end-FY2035/36. - Public debt was brought back onto a downward trajectory in FY2021/22 but remains around 30 percentage points of GDP above the pre-COVID debt trajectory envisaged under the original program. - The debt-to-GDP ratio is expected to come down to the pre-COVID level of around 120 percent of GDP in FY2022/23. - Projected primary balances are much larger than the debt-stabilizing primary balances, which are estimated to be around zero percent of GDP over the projection period. - Owing to recent debt restructurings and a prudent borrowing strategy, the effective real interest rate is roughly equal to long-run real growth rate, generating favorable declining debt dynamics consistent with cumulative primary surpluses. ### Debt management strategy and financing composition - Short-term debt accounts for around half of the financing needs and is automatically rolled over based on the debt restructuring agreement. - More than half of the remaining financing needs are expected to be financed by financial support from IFIs with favorable borrowing terms in the short run. - Authorities aim to meet the remaining near-term financing needs through domestic borrowing and gradually complement it with external commercial borrowing. - Support from IFIs remains important given still-limited domestic demand for government debt. - Long-term strategy: reach and maintain higher primary surpluses to build confidence, reduce short-term domestic debt, and replace it with longer-term domestic debt. - Regaining external market access is premised on improved market perceptions since the debt restructuring; Barbados is currently rated as B- by S&P. - Commercial external debt, including recently restructured external debt (coming due from 2025 onwards), will be partly rolled over depending on market conditions and IFI financing availability. - By end-FY2035/36, external and domestic debt are projected to be about 19 and 39 percent of GDP, respectively. ### Key risks and stress-test findings - Unfavorable outturns of debt-dynamics determinants (e.g., deviations from gradual recovery, repeated COVID variants, delays in tourism recovery, delays in structural reforms, public consultation difficulties) are important sources of risks to debt sustainability. - The authorities have started injecting capital to the NIS to restore long-term financial soundness impaired by the debt restructuring and a large temporary increase in unemployment benefits due to the COVID-19 pandemic. - Stress tests indicate: - Debt would stay broadly on a steady downward trajectory even under stress tests; however, the high level of debt remains a concern in the next 5 projection years. - The planned fiscal adjustment and cautious borrowing strategy help put public debt on a steady downward trajectory. - The trajectory is not meaningfully affected by both primary balance and interest rate shocks. - Real GDP growth, the combined macro-fiscal, and contingent liability shocks would result in a slower debt reduction path with the debt-to-GDP ratio projected to be around 30 ppt higher than under the baseline at the end of the projection period. - Gross financing needs (GFNs) are susceptible to three stress test scenarios: real GDP, contingent liability, and combined shocks would temporarily push the GFNs to GDP ratio above the 15 percent threshold. - With low debt service stemming from restructured debt and assumed primary surpluses, Barbados’ liquidity risks remain manageable. - Definition excerpt for the financial contingent liability shock: - Includes a 1 standard deviation of real GDP growth, - a 25 basis points decrease in inflation for every 1 percentage point decrease in real growth, - unchanged fiscal revenues, - an increase in expenditures of 5 percent of the size of the banking sector, - and interest rate increase by 25 basis points for every 1 percent of GDP deterioration in the primary balance. ### Debt profile vulnerabilities and indicators - The spread on external debt is currently around 500 bps, below the high-risk threshold of 600 basis points. - External debt held by non-residents, foreign currency-denominated debt, and external financing requirement suggest moderate risk. - All new external debt incurred in 2020 was provided by multilateral IFIs with favorable borrowing terms, posing limited risk to future debt service. - The share of external debt is expected to decrease over time as nominal public debt levels decline and domestic demand for government debt gradually increases with improved confidence. - Short-term debt points to low risk with a small annual decrease in the share of total debt. ### Confidence intervals and assessment - Fan charts produce narrow but slightly wider confidence intervals and bands compared with the previous DSAs prior to the pandemic due to unprecedented volatility of macroeconomic indicators observed in 2020. - On balance, Barbados’ debt is assessed as sustainable under the current baseline projections. - Public debt is projected to achieve the 60 percent-to-GDP debt target in FY2035/36 under baseline projections. - The debt target was pushed back by two years to FY2035/36 at the time of the fifth review; reasonably ambitious primary surpluses should allow the authorities to achieve the debt target in time. - Combined factors supporting sustainability: strong performance under the EFF program, commitment to long-term fiscal consolidation, and a cautious debt management strategy. ### Policy recommendations and resilience measures - Maintain high primary balances over an extended period through continued implementation of structural reforms to underpin debt sustainability. - Continue SOE reforms to entrench fiscal consolidation and strengthen the financial viability of state-owned enterprises. - Increase resiliency to natural disasters and strengthen SOEs’ financial viability in light of high vulnerability to contingent liability shock scenarios. - Encourage broader use and strengthening of state-contingent financial instruments to increase resilience against natural disasters. - Continue vigilance on the soundness of the financial sector. - Maintain prudent borrowing strategy and leverage IFI financing while gradually rebuilding domestic market demand to reduce reliance on expensive capital-market financing. _Italic: IMF staff analysis as presented in the source content._ ### 12. There is no significant concern over external debt sustainability ### 12. There is no significant concern over external debt sustainability ### Overview - In FY2021/22, external debt remained at an elevated level of 49 percent of GDP after a sharp rise in FY2020/21 due to strong support from IFIs and a sharp decline in nominal GDP. - It is projected to gradually decrease to about 30 percent of GDP by the end of the projection period. - Risks associated with external debt have been reduced by the 2018-19 debt restructuring with smoother and lower debt service and by the increased share of IFIs among non-resident creditors. - Private external debt is not included in the analysis due to the limited data availability. - A continued worsening in the current account deficit—for example due to a more prolonged pandemic and a further increase in commodity prices—would be a key risk as indicated by the stress test. ### Projections and debt indicators - External debt: 2017 = 28.5; 2018 = 33.4; 2019 = 33.5; 2020 = 48.8; 2021 = 48.7; 2022 = 44.5; 2023 = 42.9; 2024 = 40.9; 2025 = 37.6; 2026 = 33.8; 2027 = 30.6 (in percent of FY-GDP). - Debt-stabilizing non-interest current account: -4.6 (percent of FY-GDP). - Change in external debt (annual): -3.9; 4.9; 0.1; 15.3; -0.2; -4.2; -1.6; -1.9; -3.3; -3.8; -3.2 (2017–2027, in percent of FY-GDP). - Identified external debt-creating flows (4+8+9): -0.2; -1.1; -1.6; 3.4; 0.9; 0.3; 1.3; 0.0; -1.0; -0.9; -2.0 (2017–2027, in percent of FY-GDP). - Current account deficit, excluding interest payments: 2.1; 3.5; 2.5; 5.5; 9.6; 8.9; 7.3; 5.4; 4.1; 3.4; 2.6 (2017–2027, in percent of FY-GDP). - External debt-to-exports ratio (in percent): 67.9; 81.9; 76.1; 60.3; 168.7; 133.8; 123.2; 114.3; 103.7; 92.1; 82.4 (2017–2027). - Gross external financing need (in billions of US dollars): 0.3; 0.3; 0.2; 0.4; 0.6; 0.7; 0.6; 0.6; 0.6; 0.6; 0.5 (2017–2027). - Gross external financing need (in percent of FY GDP): 6.6; 5.6; 4.3; 9.2; 12.5; 11.7; 10.2; 8.4; 9.1; 8.3; 7.3 (2017–2027). ### Stress tests and scenario results - Under any of the stress tests considered, external debt is not projected to be higher than about 40 percent of GDP (Figure 7 reference). - Boundary and scenario tests presented include: - Interest rate shock (individual permanent one-half standard deviation shocks). - Current account (CA) shock. - Combined shock (permanent 1/4 standard deviation shocks to real interest rate, growth rate, and current account balance). - Real depreciation shock (one-time real depreciation of 30 percent occurs in 2019 for that scenario). - Growth shock and non-interest current account shock scenarios are documented with projected impacts. - Example scenario box averages (baseline vs historical): - Baseline: external-debt-to-GDP average projections around 31 (specific series shown in figures). - Historical: higher historical peaks (e.g., 41 in one panel). - Stress-test result highlighted: a continued worsening in the current account deficit would be a key risk as indicated by the stress test (may push debt dynamics upward in adverse scenarios). ### Policy measures, management strategy, and commitments - The downward trend in external debt will be supported by the public debt management strategy aiming to limit expensive financing from the external capital market and rely on multilaterals and/or domestic sources of financing. - The 2018-19 debt restructuring smoothed and lowered debt service and increased the share of IFIs among non-resident creditors, reducing associated risks. - Macroeconomic policy and program commitments from the authorities and the Extended Fund Facility (EFF): - The primary balance target for FY2021/22 of minus one percent of GDP established during the sixth review was met. - The FY2022/23 budget seeks to gradually return the primary balance into positive territory targeting a one percent of GDP surplus as a first step. - Government commitment to sustained primary surpluses over the medium-term in keeping with the target of bringing the debt-to-GDP ratio below 60 percent by FY2035/36. - IMF financing and program support: international reserves increased sharply to about US$1.5 billion by March 2022 supported by IFI loans; the Extended Arrangement under the EFF was augmented by SDR 66 million and SDR 48 million during the third and fourth reviews respectively, and the government requested the completion of the seventh and final review with the full purchase of SDR 17 million to be made available as budget support. - Contingent liabilities and state-owned enterprise reforms noted as part of broader debt and fiscal management efforts. ### Key statistics and assumptions (selected) - External debt: 49 percent of GDP in FY2021/22; projected about 30 percent of GDP by end of projection period. - Private external debt: not included in analysis. - International reserves: about US$1.5 billion by March 2022. - Primary balance targets: FY2021/22 = minus one percent of GDP (met); FY2022/23 target = one percent of GDP surplus. - Debt target: debt-to-GDP ratio below 60 percent by FY2035/36. - IMF program financing adjustments: EFF augmentations of SDR 66 million and SDR 48 million; requested SDR 17 million full purchase under seventh review. *Source: IMF staff and Barbados authorities (as presented in the supplied content).* ### 1. Barbados has embarked on a comprehensive Economic Recovery and Transformation ### 1. Barbados has embarked on a comprehensive Economic Recovery and Transformation ### Overview and program objectives - BERT (Economic Recovery and Transformation) aims to restore fiscal and debt sustainability, address falling reserves, and increase growth. - Revised debt target: from 60 percent by FY2033/34 to 60 percent by FY2035/36, reflecting the impact of the COVID-19 pandemic. - Strategy to achieve target: combination of fiscal consolidation, policies to boost growth, reform of public finances, and debt restructuring. - Vision statements: make Barbados "the best place to live, work, and enjoy life"—green, climate resilient, fossil-fuel free; smart, technological; culturally rich and diverse; cohesive nation with sustainable development built on social justice and economic opportunity. ### IMF engagement and program implementation - IMF Executive Board approved a four-year extended arrangement under the Extended Fund Facility (EFF) on October 1, 2018. - Reviews conducted at regular 6-month intervals; the sixth review completed in December 2021. - Outcomes by end-2021: - International reserves recovered to about US$1.5 billion. - Restructuring of public debt concluded, reducing uncertainty and placing public debt on a downward trajectory. - Lower government interest bill creating fiscal space for social spending and infrastructure investment. - EFF augmentations: - Augmented during third and fourth reviews by SDR 66 million and SDR 48 million respectively. - IMF general allocation: - IMF provided a general allocation of SDRs equivalent to US$650 billion (about SDR 456 billion). - Barbados’ allocation under that decision: about US$129 million (2¾ percent of GDP); government is exploring use consistent with institutional arrangements and transparency commitments. ### Program performance during COVID-19 - Despite pandemic challenges, most program targets met: - All structural benchmarks targeted for completion during the review were met apart from: tabling a revised public pension law and submission of all outstanding NIS financial statements (pandemic-related delays). - All quantitative program targets for end-December 2021 and end-March 2022 were achieved. - Social Partnership and monitoring: - Program developed, implemented, and monitored with full Social Partnership support. - BERT Monitoring Committee (BERT MC) established as a sub-Committee of the Social Partnership, tasked with monthly monitoring and publishing quarterly reports. ### Fiscal shock, recovery profile, and fiscal stance - Economic shock and recovery: - Tourist arrivals fell sharply; economic contraction of 14 percent in 2020. - Modest recovery in 2021: 0.7 percent; recovery complicated by domestic COVID surges (January and August) and natural disasters (volcanic ashfall in April; Hurricane Elsa in July). - Primary balance trajectory: - Original BERT Plan target: surplus of 6 percent of GDP (achieved in FY2019/20). - Revisions: primary balance targets for FY2020/21 and FY2021/22 revised down to a deficit of 1 percent of GDP respectively. - FY2022/23 budget targets a one percent of GDP primary surplus. - Government remains committed to sustained primary surpluses over the medium-term and to bringing debt-to-GDP below 60 percent by FY2035/36. - COVID-19 fiscal response and relief measures: - Phased, targeted response to protect lives and livelihoods. - Measures included: investments in health equipment and quarantine facilities; Household Survival Program; monitoring COVID compliance in schools/commercial enterprises/communities; liquidity support to NIS via repurchase of government bonds and a capital injection of B$143 million (approved June 2021); BEST plan for the tourism sector; HOPE affordable housing using renewable energy technology; temporary COVID relief jobs program; targeted cash transfers to small businesses/vendors during February 2021 pause. - Direct COVID-19 related expenditures: roughly 2.3 percent of GDP in FY2020/21 and 2.1 percent of GDP in FY2021/22. - Pandemic-related expenditures will continue in FY2022/23 to support vaccination strategy and households. ### Tax policy reforms and administration - Corporate Income Tax (CIT) reform: - Unified treatment of domestic and international companies; single converged scale of tax rates applies to all companies. - Brackets and rates: profits up to BRB$1 million taxed at 5.5 percent; profits above BRB$30 million taxed at 1 percent (with two intermediate brackets). - Several allowances, including a foreign currency earnings allowance, abolished. - Government joined the political agreement within the OECD Inclusive Framework; implementation date of 2023. - Pillar One would reallocate more than US$125 billion of profits from (initially) around 100 of the world’s largest MNEs to "market jurisdictions"—likely little impact on Barbados’s tax revenues due to allocation method. - Pillar Two establishes a global minimum tax regime; model rules by end-November 2021; detailed implementation framework expected by end of 2022. - The 15 percent minimum corporate tax rate may apply to some Barbados Constituent Entities (CEs) of foreign owned MNEs based outside Barbados. - Personal Income Tax (PIT): - Top PIT rate reduced to 28.5 percent as of January 1, 2020. - Compensatory measures: broadened VAT base; increased land taxes and tourism room rate levies; new gaming taxes and online taxes. - Tax administration modernization: - Online filing and payment for all taxpayers. - Barbados Revenue Authority (BRA) implemented TAMIS to retire legacy IT systems; new organizational structure and strategic plan. - BRA established a two-year dedicated task force to address pre-TAMIS taxpayer refunds and debt (structural benchmark for end-September 2021); completed vetting and tally of legacy arrears; phased clearance will prioritize VAT claims. - Commitment to repay outstanding tax refunds within six months after filing date. - Review of receivables balances is one-third complete; an aggressive recovery program will follow. - Large Taxpayer Unit (LTU) and compliance: - LTU operationalized a compliance improvement plan aiming to improve 'on-time' filing for large taxpayers to over 90 percent for core taxes (VAT, CIT, PAYE) (structural benchmark for end-March 2021). - Plan elements: key performance indicators; baseline performance; timely reporting (weekly/monthly/quarterly). - Use of third-party data to improve taxpayer base accuracy. - Audit activity: following initial 20 "issue-based" audits (structural benchmark end-June 2020), conducted 53 issue, 27 desk, and 6 other audits for a total of 86 audits of corporate taxpayers for FY2021/2022, with an estimated 80-90 audits per year (a third of the total population). ### Customs modernization and trade facilitation - Reform priorities identified in 2018: traceability, cargo targeting, clearance of goods, post clearance audit, risk assessment, special regimes controls. - IMF-supported customs administration capacity development project ongoing until July 2022. - Milestones achieved: - Trusted trader program established (structural benchmark for end-March 2020). - Transition to ASYCUDA World (structural benchmark for end-June 2020). - Measures to strengthen BCED verifications and audit processes (structural benchmark end-August 2020). - Institutional developments: - BCED strategic plan submitted to Ministry of Finance in November 2021. - Memorandum of Understanding between BRA and BCED for information sharing established March 2021. - Information and Technology Division within BCED established and staffed in March 2021 (structural benchmark for end-March 2021). - Training plan for ASYCUDA World prepared and submitted; proposal for HR Division staffing to be submitted by end-July 2022. - Operational improvements and benchmarks: - Improved BCED performance management (structural benchmark for end October 2021): harmonized KPIs with ASYCUDA, ASYPM implementation preparation, PRDS implementation, automated trade/commercial compliance dashboards populated weekly and summarized monthly. - Enhanced trade facilitation and risk management (structural benchmark for end December 2021): define benefits for Trusted Trader participants, streamline/standardize cargo import process in marine mode, improve traceability of shipments in customs system. - Modernized legislative framework: revised Customs Bill consulted in 2020–2021; draft tabled May 2021, slightly amended November 2021, passed by both houses in December 2021; will be enacted when republican swearing-in process is approved by Parliament and secondary legislation is developed. - Note on ASYCUDA traceability assessment: BCED will prepare a report to assess whether Guards and Officers complete ASYCUDA fields to follow cargo movement and whether Risk Management and Enforcement Units can leverage the data for risk assessments. ### Fiscal strategy forward-looking priorities - Fiscal policy must remain flexible given pandemic uncertainty and global shocks but maintain EFF core objectives. - Commitment: reduce debt-to-GDP ratio to 60 percent by FY2035/36 via sustained higher primary surpluses in the medium-term. - Revenue-side options under consideration: - Enhance efficiency of Land Taxes and VAT regimes in real estate and tourism sectors. - Further rationalize tax preferences. - Expenditure-side actions: - Improve performance of State Owned Enterprises (SOEs) to reduce central government transfers. - Adopt measures to curtail expenditure growth as needed. ### Fiscal rule and PFM reforms - Interim procedural fiscal rule: - Minister of Finance issued regulations for a procedural fiscal rule by end 2021 (structural benchmark for end December 2021). - Commitments under procedural rule: - Annually prepare a monitorable fiscal strategy/framework over the medium term. - Regularly publish outcomes against this strategy. - Take remedial action when required. - Fiscal framework tabled in Parliament on August 10, 2021 (structural benchmark for August 15, 2021), including projections for revenue, expenditure, and debt for FY2022-23 and two following fiscal years. - Mid-year review report presented in October 2021 detailing half-year outturn against FY2021/22 fiscal framework. - Planned numerical fiscal rule (post-pandemic uncertainty): - Design features to include: - A framework to limit the annual budgeted overall fiscal deficits of the public sector to achieve reduction in public debt to no more than 60 percent of GDP by FY2035/36. - Coverage to include all public sector fiscal activities, including SOEs and fiscal implications of PPPs (capturing all associated actual or contingent fiscal liabilities and risks). - An automatic correction mechanism triggered by substantial cumulative deviations from the annual overall balance target, requiring additional fiscal adjustment when deviations exceed a pre-specified threshold. - An escape clause limited to major adverse shocks and triggered only with Parliamentary approval or ratification; clause will pre-define events/shocks and specify measurable triggering conditions. - Institutional arrangements/legal options to strengthen sanction regime and transparency to enhance credibility: possible independent assessment of macro projections, disclosure of budget execution relative to the fiscal rule, Parliamentary hearings; Minister of Finance required to explain deviations in a mid-term budget review and outline corrective steps. - Public Financial Management (PFM) and budget process reforms will accompany fiscal rule adoption, drawing on IMF Fiscal Affairs Department TA recommendations. *Source: 1brbea2022001 - 1. Barbados has embarked on a comprehensive Economic Recovery and Transformation* ### 18. We have adopted an action plan for public financial management reform to ### We have adopted an action plan for public financial management reform to implement the new FMA act ### Strengthening the budget formulation process - Annual update of the government’s fiscal strategy based on backward-looking expenditure and revenue reviews and forward-looking targets on revenue, expenditure and debt in line with the Government’s current and medium-term priorities (structural benchmark for August 15, 2021). - Setting of multi-year expenditure ceilings in accordance with the updated fiscal strategy to guide allocation. - Provision of clear instructions by Cabinet for budget submissions based on comprehensive discussion of needs and priorities of each Ministry and program, including on spending ceilings. - Further actions: i) align the budget calendar to the requirements of the new FMA Act; and ii) issue the budget circular soon after the fiscal framework has been tabled in Parliament. The budget circular will be accompanied by expenditure ceilings approved by Cabinet for each financial year covered by the medium-term budget planning horizon. ### Reforming budget documentation and reporting - Annual Budget Documentation (Budget Estimates) will include: - A comprehensive narrative describing the public finances. - Starting with the FY2022/23 budget, an assessment of the alignment between the budget and the fiscal objective(s) established by the fiscal framework. - A comprehensive description of all revenue and expenditure measures taken. - A mid-year budget review report will be tabled in Parliament by October 15th of every year to: - Report outturns against the annual budget. - Signal likely deviations from fiscal objectives. - Identify remedial actions to ensure compliance with the fiscal framework. ### Enhancing fiscal risk management and SOE oversight - Ministries and Extra Budgetary Units (EBUs) expected to produce annual and quarterly reports in line with PFM Act requirements. - The MAU developed a monitoring dashboard to analyze financial performance of the government’s 19 priority oversight SOEs on metrics related to liquidity, solvency, profitability, financial performance, and financial dependency as input to quarterly progress updates to Cabinet (structural benchmark for end-March 2021). - The dashboard has been extended to cover all 53 SOEs monitored by the MAU. - Government exploring scope for the MAU to regularly review and report on the financial performance of the NIS. - NIS committed to clear its backlog of financial statements and submit all outstanding financial statements (2010 to 2020) for audit by the Auditor General (structural benchmark for end March 2022). - Government seeking to transition the NIS from a Government Department to an independent statutory corporation by end-2022. ### Public procurement, transparency, and governance - Strengthened effectiveness of the Public Accounts Committee to allow public real-time oversight. - Creation of separate sub-programmes to track COVID-19 related expenditures in the budget; Parliament laid all contracts awarded for BDS$1 million or more. - New procurement law approved by Parliament in December 2021 to promote integrity, fairness, transparency, and value for money; facilitates audit of crisis expenditures and publication of contracts and names of successful bidders; complements the corporate registrar’s searchable corporate registry database for beneficial ownership information. - Intend to submit a revised Integrity in Public Life Bill to Parliament to establish an Integrity Commission with powers to: i) make inquiries and carry out investigations to verify or determine accuracy of asset declarations; and ii) investigate complaints or reports of contraventions. - Two pieces of legislation laid in September 2021: (i) a revised Prevention of Corruption Bill (passed both Houses of Parliament in October 2021); and (ii) a Deferred Prosecutions Bill (passed both Houses in December 2021). Cabinet approved a Whistle-blower Protection bill in October 2021 (passed by Parliament in December 2021). ### Public-Private Partnerships (PPPs) framework review - Review legal and regulatory framework for PPPs to: - Establish a clear definition of PPPs. - Fully integrate PPPs into the overall investment strategy and the medium-term fiscal framework. - Safeguard public finance against fiscal costs and risks from PPPs. - Ensure transparent mechanisms for competitive processes and transparent reporting and auditing procedures in line with international standards. ### Debt restructuring, recapitalization, and targets - Comprehensive debt restructuring included external debt to private creditors and treasury bills held widely by domestic creditors; CBB’s balance sheet was impaired by a significant haircut. - Government announced agreement with an overwhelming majority of domestic creditors on October 15, 2018; agreement with the External Creditor Committee on US dollar-denominated commercial debt in November 2019. - Inclusion of a natural disaster clause in restructured debt. - Recapitalization plans: - CBB recapitalization will initially grow capital through profit retention (current status quo) with aim to transition (in approximately seven years) to a gradual predetermined payment plan until authorised capital is fully paid-up. - NIS recapitalization to proceed in two phases, initial focus on restoring the Unemployment Benefit Account through an infusion of B$143 million from the Consolidated Fund over a three to five-year period. A first disbursement of B$60 million was transferred in FY2021/22 and an additional B$60 million is programmed for FY2022/23. - Assessment of recapitalization needs of the National Insurance Fund (NIF) is ongoing; government intends to present a detailed recapitalization plan for the NIF by end-December 2022 (structural benchmark). - Debt-to-GDP target timing: - Target to bring debt-to-GDP ratio below 60 percent pushed back to FY2035/36 from FY2033/34 to accommodate fallout from the ongoing health pandemic. - Government committed to generate needed primary surpluses to achieve the 60 percent of GDP target once the COVID-19 crisis dissipates. ### Strengthening debt management - Established a Debt Management Committee. - Will develop and implement a medium-term debt management strategy (MTDS) with objective to meet financing needs at the lowest possible cost over the medium to long-term, consistent with a prudent degree of risk. - Commit to publish the medium-term debt strategy and borrowing plan with the budget on an annual basis. - Undertake a review of debt management practices, including assessment of the effectiveness of the auction mechanism for long-term debt. ### Expenditure arrears and SOE borrowing controls - Domestic expenditure arrears are gradually being reduced and resolved; commitment not to run new expenditure arrears. - System developed for monitoring arrears of SOEs on an ongoing basis. - Legislation introduced so all borrowing by SOEs receives approval of the Minister of Finance. - Loans by SOEs will be guaranteed by Central Government if: the SOE is not a commercial entity and is dependent on Central Government for financial operations; or if the purpose for which the borrowing is being made is not commercial. - Program target includes non-accumulation of new SOE arrears. ### Public sector reform and SOE transformation - Commitment to modernising and improving efficiency, quality, and cost effectiveness of the public sector; review of what is essential, highly desirable, optional, and better delivered elsewhere. - Adjustment and rationalisation of SOEs and some Government Departments; retooling, empowering, retraining and enfranchising public sector workers. - Public sector labour law reviews with two studies underway; introduced an interim, COVID-related flexible and remote work policy. - Implementation of the FMA Act (adopted January 2019) to confer greater autonomy to the Ministry of Finance to oversee SOEs, establish definitions and reporting requirements, and sanctions for noncompliance. - SOE reforms: - Comprehensive review of all SOEs to identify efficiency gains, cost recoveries, and enfranchisement through divestment. - Compact finalization in the transport sector with private operators to improve accountability and service quality while reducing costs to SOEs. - SOEs listed in the TMU have submitted standardized quarterly financial reports. - Measures taken: increased bus fares, adjusted water rates, introduced an interim health levy, airline & travel development fee, and a garbage and sewage contribution levy. - FY2022/23 budget reiterates intention to continue SOE transformation including merging and streamlining of Rural Development Corporation, Urban Development Corporation and the National Housing Corporation; further development of mass transportation; reform of the Caribbean Broadcasting Corporation; and efficiency measures across the board. ### Mitigating social impacts of SOE reforms and labour policies - Measures to mitigate adverse effects on the vulnerable from SOE restructuring: - Models of worker enfranchisement. - Preferential access to public procurement and agricultural lands owned by the State for displaced persons. - Enhanced severance packages. - Household Survival Programme managed by a Household Mitigation Unit to track and support affected workers; support and training opportunities for the self-employed and newly unemployed. - Minimum wage increase effective April 1, 2021 (previous minimum wage set in 2012). ### Civil service pension reform - Review of civil service pension scheme to ensure long-run sustainability. - A revised public pension law to be tabled in Parliament informed by the actuarial review completed in November 2020 and costed options for new entrants. - Pension reform white paper completed and to be discussed in Cabinet; public consultation delayed by COVID-19. - End-March 2022 structural benchmark to pass legislation was not met; process is underway. - FY2022/23 budget address outlined key pillars including lengthening of service for new public servants and required contributions for earnings above established NIS ceilings. - Discussions with key stakeholders proceeding with a view to enact public sector pension reform legislation this year. ### Improving economic and social statistics and data transparency - Two-year project to upgrade national accounts data with IMF technical assistance: - Update GDP benchmark estimates from a supply-use perspective to compile constant 2016 price estimates of GDP (rebased from 2010) and updated quarterly estimates of activity and expenditure-based GDP. - Four additional statisticians hired by the BSS for the project and to enhance resource capacity. - Commitment to implement the IMF’s Enhanced General Data Dissemination Standard (e-GDDS); National Summary Data Page (NSDP) and Advance Release Calendar (ARC) launched online in March 2021. - BSS commenced publication of a calendar of key economic statistical releases on its revamped website (structural benchmark for end-March 2021). ### Monetary and financial sector policies and central bank governance - Exchange rate peg to the US dollar maintained since 1975 as a key anchor for macroeconomic stability; commitment to maintain the peg and implement fiscal and structural policies to rebuild international reserves. - Amended Central Bank Law submitted to Parliament to enhance autonomy, mandate, and decision-making structures (structural benchmark for end-September 2020 and prior action for fourth review). - Amended law passed and effective since December 14, 2020 (structural benchmark for end-December 2020). - IMF Safeguards Assessment of the Central Bank of Barbados completed; government will continue to ensure implementation of outstanding recommendations from the Safeguards Assessment. *Source: 1brbea2022001 - chapter content provided* ### 31. We have started a gradual relaxation of exchange controls. Our approach is both ### 1brbea2022001 - 31–45 ### Exchange controls and foreign exchange policy - Gradual and targeted relaxation of exchange controls aimed at increasing investors’ confidence without jeopardizing reserve accumulation. - Effective August 1st, 2019: - All Barbadians allowed to open foreign currency denominated accounts. - Foreign currency proceeds from the sale of assets may be repatriated in foreign currency or kept locally in a foreign currency account. - Eliminated the surrender requirement of 70 percent of foreign exchange brought into Barbados. - Increased select foreign exchange limits, including the limit on personal travel facilities. - Increased delegated authority to foreign exchange dealers to approve foreign exchange transactions without reference to the Central Bank. ### Financial sector monitoring and regulatory framework - Amended Central Bank Law: - Establishes the promotion of financial stability as a secondary objective for the CBB. - Attributes formal macroprudential powers to the CBB to monitor financial stability and to manage and control risks to the financial system. - Oversight of the financial system is shared by: - CBB (Central Bank of Barbados), - Financial Services Commission (regulates and supervises nonbanks), - Barbados Deposit Insurance Corporation. - Financial Oversight Management Committee (FOMC) coordinates production of the annual Financial Stability Report and monitoring. - Effective banking regulatory framework: Basel II. - Banks follow standardized approaches in the calculation of risk-weighted assets and prepare financial statements according to IFRS 9. - CBB designs reporting forms and schedules for banks, Part III companies (trust and finance companies and merchant banks) and credit unions. - FSC monitors insurance corporations, pension funds and mutual funds; revising reporting forms and increasing reporting frequency to enhance surveillance. - Joint CBB–FSC outputs: - Annual Financial Stability Report and health check reports for sub-sectors. - CBB strengthened monitoring capacity: - Successful compilation and dissemination of a first set of quarterly core indicators for financial stability indicators (FSIs) for deposit takers (excluding credit unions), in line with IMF TA guidance in 2019 (structural benchmark for end-March 2022). ### COVID-19 measures and credit market support - March 2020 measures by the central bank and commercial banks to support credit market: - Reduction of the overnight lending discount rate from 7 to 2 percent. - Reduction of the minimum statutory holding requirement for government securities from 17.5 to 5 percent of deposits. - Commercial banks announced a six-month moratorium on loan repayment and revised loan terms on new loans for individuals and firms affected by the pandemic. - Post-moratorium: - Banks review customers’ circumstances on a case-by-case basis to determine need for further extension or debt restructuring while respecting regulatory standards on loan classification and provisioning. - Loans under deferred payments have declined sharply to about 5 percent of the peak value in May, representing about 1 percent of the outstanding credit to the nonfinancial private sector. ### Climate-related financial risks and AML/CFT - Climate change poses risks to financial stability; banks are exposed to climate change sensitive sectors. - Priority: integrate climate change risks into the CBB’s financial stability assessments, including stress testing based on potential scenarios. - Capacity building needed to monitor and assess climate-related risks in line with best practices. - CBB is exploring the feasibility of joining the Network for Greening the Financial System (NGFS). - Commitment to continue strengthening the AML/CFT framework in keeping with the action plan agreed with the FATF to promptly exit the FATF’s International Review Group process. ### Growth-enhancing reforms — strategy pillars - Barbados Economic Recovery and Transformation Plan rests on key pillars: - (i) Investing in a high-skilled, productive, and knowledge-based economy, particularly in skills training and education. - (ii) Better mobilizing private domestic savings for local investment, particularly in critical, climate-resilient infrastructure. - (iii) Making Government an enabler of growth by improving ease of doing business, accelerating government licensing, and increasing predictability of fiscal and regulatory environment. - (iv) Diversifying the economy into renewable energy, medicinal cannabis, high-value agricultural goods, high-tech and software development, and revitalized services sectors. - (v) Strengthening resilience to natural disasters and climate change. ### Education, training, and knowledge-economy initiatives - Large commitment to retooling and retraining Barbadians over the next 4 years across sectors and levels. - Barbados Youth Advance Corps: caters to 1,000 students per year for a 2-year programme. - National Transformation Initiative partnership with Coursera: free training through over thousands of courses; as of April 2021, roughly 5,700 courses have been completed by individuals. - Reintroduced return to free tertiary education at vocational, technical, and undergraduate levels. - Plans to integrate Barbados Community College, Samuel Jackson Polytechnic, and Erdiston Teacher Training College. - Reforms to secondary schooling and efficiency improvements in post-secondary and tertiary institutions, with savings redeployed into enhanced offerings. - Barbados Construction Gateway Training: - Upskill population, train artisans, and ensure a new core of male and female workers are available in a few months to fill construction jobs. - Provides training to Barbadians age 16 years and over in over 25 areas associated with construction. ### Judicial reforms and dispute resolution - Strengthen judiciary and reduce time for court hearings and redress. - Established a Commercial Court to speed up commercial adjudication; Commercial Judges already appointed. - New legislation compliant with UNCITRAL to address arbitration and alternate dispute resolution mechanisms. - Appointed five additional judges to criminal courts (three temporary) to address backlog; additional Criminal Courts intended to ensure all serious cases can be dealt with within six to nine months. - Plan to establish a specialized Family Court, decentralized with island-wide hearings and jurisdiction over family and maintenance matters. - Supreme Court Registry launched its e-Filing system on September 15, 2021 (structural benchmark for end-September) to enhance efficiency. ### Gender inclusion and labour force participation - Increase participation of women in the labour force as part of diversification strategy. - Facilitate opening of day care facilities in industrial parks and key Government office buildings over the next two years. - Developing paternity leave legislation. - Incorporate training programme for women in construction trades (electrical wiring, painting, tiling, related fields) as part of HOPE housing programme and Barbados Construction Gateway Training Initiative. ### Digital government, ID, and e-services - Government facilitating services online: drivers’ licenses, renewal of professional licenses, applying for passports and liquor licenses, Welcome Stamp fees, police certificates of character, planning and development applications, clearing goods through Customs, among others. - E-service of Government to be launched on one portal for access to all Government agencies. - New digital ID program beginning May 2021 to re-register the population with a single digital identity. - National Insurance Department phasing out printing of cheques for short-term benefits (unemployment, maternity, sickness). - Public Sector Modernization Programme: digitalization across seven priority departments (Immigration Department, Civil Registry and the Courts, Police Department, International Business division, BCED, Town and County Development Planning Office, Barbados Licensing Authority). - IDB-funded programme execution to be scaled up in current fiscal year with private sector partnerships. - Engagement of newly unemployed workers, particularly women, through digital expansion. - Refurbishment of a building to house roughly 200 personnel for digitization of records. - Over 400,000 government records digitized across Government agencies and ministries to date. - Need for critical investments in strengthening cybersecurity to protect progress and safety of personal and Government data and transactions. ### Business climate, payments, credit, and financial inclusion - World Bank Doing Business Reform Note outlines short-, medium- and long-term measures; Doing Business Sub-Committee of Cabinet and Private Sector Committee established to execute and monitor reforms by indicator. - Improvements already observed in time to receive planning decisions, FSC registrations, and other regulatory matters. - Legislation passed in Parliament (both February 2021): - National Payments Systems Act: provides a payment system that is safe, efficient, resilient, and competitive; manages risks, maintains financial stability and protects consumers. - National Identity Management System Act: facilitates the Digital Identity System and National ID Card Replacement Project; provides user authentication in online transactions, facilitates electronic signing, and secure electronic transfer of information for e-commerce, internet banking and e-communications. - Fair Credit Reporting Act passed in Parliament (structural benchmark for end-October 2021): - Complements the National Payments Bill. - Promotes accuracy, fairness, and privacy of personal information assembled by credit reporting agencies. - Expected to transform credit adjudication and unlock barriers to accessing credit for small businesses. - Intention to establish a web-based collateral registry of movable assets for entrepreneurs and small businesses to use as security when applying for loans. - Establishing a credit collateral registry and broadening eligible collateral would further facilitate access to credit. - Financial Literacy Bureau established: - Empowers residents with knowledge and skills for money management. - Serves as training hub for start-ups, MSMEs, large enterprises, households, and schools (primary to tertiary). - Three core objectives: improve money management skills; build a strong foundation for financial decisions; create intergenerational wealth. - First phase of six-week training conducted in November 2020. ### Natural disaster resilience and climate adaptation measures - Natural disaster risk management: - Insurance through Caribbean Catastrophe Risk Insurance Facility (CCRIF). - Introduced natural disaster clauses into new domestic and external bonds allowing capitalization of interest and deferral of scheduled amortization for two years following a major natural disaster. - Secured an IDB contingent credit facility allowing Barbados to borrow up to almost 2 percent of GDP in case of a natural disaster. - Structural and post-disaster resilience actions: - ‘Roofs to reefs’ program to improve disaster resilience of construction. - Strengthening the public procurement system. - Incentives for individuals and corporates to invest in renewable energy, water conservation, and building resilience. *International Monetary Fund staff report excerpt.* ### 46. The Government remains committed to reaching its 100 percent renewable energy ### 1brbea2022001 - 46. The Government remains committed to reaching its 100 percent renewable energy target by 2030 ### Renewable energy target and market liberalization - Government target: 100 percent renewable energy by 2030. - Market actions: - Further liberalised the market for power generation. - The independent Fair Trade Commission (FTC) has published Feed-in tariffs (FITs) for independent power producers for a range of renewable energy technologies. - The FTC regularly reviews its FITs and in 2021 issued its third review. - Government working with multilateral development banks (MDBs) to develop competitive tendering processes for more extensive projects to expand supply into technologies with greater economies of scale, such as wind power. ### Major projects, ownership, and co‑investment design - Green Energy Park: - A 30 MW Green Energy Park is slated for final approval in 2021. - Purpose: removes the need for costly new waste landfills and puts solar PV on top of rehabilitated landfill sites. - Wind project and local participation: - Plan to develop a minimum of 30MW of wind energy investment in collaboration with BL&P. - Barbadians to participate in and to own a minimum of 30 percent share in the benefits of the 30MW wind project through newly established financial instruments. - Government will provide an opportunity for Barbadians to participate in a 30 percent requirement for all major energy investment projects. - Government will reserve another 30 percent for the State-owned enterprises. ### Feed‑in tariffs, small projects, and approvals - FITs objectives: - Support shift to renewables. - Reduce energy costs. - Reduce foreign exchange demand. - Support smaller projects and technologies that bring substantial environmental benefits. - Response to FITs: - Demand for small primarily solar PV projects has been strong. - Regulatory facilitation (structural benchmarks; target end‑March 2022): - i) Establishing a streamlined approvals and licensing process for independent power producer (IPP) renewable energy projects. — Met (structural benchmark). - ii) Publishing a guidance note for IPP investors navigating this process. — Met (structural benchmark). - Table 1 entries: Item 38 — "Establish a licensing system for IPP renewable energy projects, including the process for co-investment in agriculture and renewable energy production on agricultural lands." End-March 2022 — Met. - Table 1 entries: Item 39 — "A guidance note outlining how the licensing and approval process for renewable energy projects works and steps for investors to follow will be prepared and published on the website of the Ministry of Energy, Small Business and Entrepreneurship." End-March 2022 — Met. ### Progress toward the 2030 target and pipeline - Government achieved close to 10 percent of energy demand from installed or close to be installed renewables. - Applications accounting for a further 10 percent of demand would be in the pipeline. - Implication: keeps the Government on track to hit or be close to the 2030 target. ### Policy implications and next steps highlighted in the text - Continue periodic reviews of FITs to adapt incentives (FTC practice). - Use competitive tendering (with MDB support) for larger projects to capture economies of scale and lower costs, particularly for wind power. - Maintain and operationalize streamlined IPP licensing and the published guidance note to facilitate private investment and local participation in renewable projects. - Implement financial instruments to enable at least 30 percent local participation in major projects and reserve 30 percent participation for State-owned enterprises. *Source: 1brbea2022001 - 46. The Government remains committed to reaching its 100 percent renewable energy target by 2030.* ### 4. The CG primary balance is defined as total revenues and grants minus primary ### 4. The CG primary balance is defined as total revenues and grants minus primary ### Definition and scope of the Central Government (CG) primary balance - The CG primary balance is defined as total revenues and grants minus primary expenditure and covers non-interest Government activities as specified in the budget. - The CG primary balance will be measured as cumulative over the fiscal year and it will be monitored from above the line. - Revenue recognition: - Revenues are recorded when the funds are transferred to a Government revenue account. - Tax revenues are recorded as net of tax refunds. - Tax refunds are recorded when the funds for repayment are transferred to the BRA from the Barbados Treasury Department. - Revenues will also include grants. - Capital revenues will not include any revenues from non-financial asset sales proceeding from divestment operations. - Primary expenditure recognition: - Central Government primary expenditure is recorded on a cash basis and includes recurrent expenditures and capital spending. - Primary expenditure also includes transfers to State-Owned Enterprises (SOEs). - All primary expenditures directly settled with bonds or any other form of non-cash liability will be treated as one-off adjustments and recorded as spending above-the-line, financed with debt issuance, and will therefore affect the primary balance. ### Adjustors to the primary balance target - The primary balance target will be adjusted upward (downward) by the surplus (shortfall) in disbursements of grants relative to the baseline projection. ### Reporting and frequency for primary balance monitoring - For the purpose of monitoring, data will be provided to the Fund on a monthly basis with a lag of no more than four weeks from the end-of-period (Section C, Table 2). --- ### Net Domestic Assets (NDA) of the Central Bank of Barbados (CBB) - NDA definition: difference between the monetary base and the sum of the NIR (as defined below) and commercial banks’ and Part III companies’ foreign currency deposits at the CBB. - Monetary base includes: - Currency in the hands of the non-bank public plus vault cash held in the banking system, - Statutory cash reserve requirements, - The current account of commercial banks and non-bank financial institutions (Part III companies) comprising credit balances held at the Central Bank. - Monitoring: - For the purpose of monitoring, the data will be reported on a monthly basis, with a lag of no more than two weeks from the end-of-period (Section B, Table 2). ### Net International Reserves (NIR) - NIR definition: difference between reserve assets and reserve liabilities with a maturity of less than one year. - Reserve assets include: - Readily available claims on nonresidents denominated in foreign convertible currencies. - CBB’s holdings of monetary gold, SDRs, foreign currency cash, foreign currency securities, deposits abroad, and the country's reserve position at the Fund. - Excluded from reserve assets: - Sinking funds’ assets, - Any assets that are pledged, collateralized, or otherwise encumbered, - Claims on residents, - Claims in foreign exchange arising from derivatives in foreign currencies vis-a-vis domestic currency (such as futures, forwards, swaps, options et cetera), - Precious metals other than gold, - Assets in nonconvertible currencies, - Illiquid assets. - Reserve liabilities: - (1) all foreign exchange liabilities to residents and nonresidents with maturity of less than one year, including commitments to sell foreign exchange arising from derivatives (such as futures, forwards, swaps, options, et cetera); - (2) all liabilities outstanding to the IMF. - Adjustors to the NIR target: - The NIR target will be adjusted upward (downward) by 75 percent of the amount of the surplus (shortfall) in program loan disbursements from multilateral institutions (i.e., Caribbean Development Bank (CDB), the Interamerican Development Bank (IDB), the Development Bank of Latin America (CAF), and the International Bank for Reconstruction and Development (IBRD)) relative to the baseline projection. - Program loan disbursements are defined as external loan disbursements from official creditors that are usable for the financing of the CG. - The NIR target will be adjusted upward (downward) by the surplus (shortfall) in disbursements of budget support grants relative to the baseline projection. - Monitoring: - For the purpose of monitoring, the data will be reported by the Central Bank on a daily basis, with a lag of no more than one week from the end-of-period (Section A, Table 2). ### Non-accumulation of CG external debt arrears (performance criterion) - The CG will not incur new arrears in the payments of its external debt obligations at any time during the program. - External arrears are defined as a delay in the payment of contractual obligations beyond the grace period set in the respective loan or debt contracts. - Exclusions: Arrears resulting from the nonpayment of debt service for which a clearance framework has been agreed or for which the Government or the institution with Government guaranteed debt is pursuing a debt restructuring are excluded from this definition. - The performance criterion will be applied on a continuous basis under the program. - For the purpose of monitoring, data on external arrears by creditors will be reported immediately. ### Ceiling on CG transfers and grants to public institutions - CG Transfers and Grants to Public Institutions will include cash transfers and grants to entities listed in paragraph 3 above. - For the purpose of monitoring, the data will be measured as cumulative over the fiscal year and it will be reported on a monthly basis, with a lag of no more than four weeks from the end-of-period (Section C, Table 2). ### Ceiling on the stock of public debt - Public debt is defined as domestic and external CG debt, SOEs debt guaranteed by the CG, and domestic CG expenditure arrears. - Interest and penalties arrears resulting from non-payment of debt service on external commercial debt subject to debt restructuring are excluded from the definition of public debt. - For program purposes, the stock of CG and CG guaranteed debt is measured under the disbursement basis excluding valuation effects. - Program FX rates defined in Table 1 will be used to value debt in FX. - Adjustors: - The ceiling on stock of public debt will be adjusted upwards by the full amount of the surplus in disbursements from multilateral institutions (i.e., CDB, IDB, CAF, and IBRD) relative to the baseline projection. - The ceiling on stock of public debt will be adjusted downward by the amount of nominal debt forgiveness in the case of debt restructuring. - Monitoring: - For the purpose of monitoring, the CG debt and CG guaranteed debt data by issuer, creditor, maturity, and currency will be reported to the Fund on a quarterly basis, with a lag of no more than four weeks from the end-of-period (Section D, Table 2). - Data on external and domestic arrears will be reported to the Fund as set forth elsewhere in this TMU. --- ### II. Indicative targets ### Ceiling on the stock of domestic CG expenditure arrears - Definition: sum of: - (a) any invoice received by a spending agency from a supplier of goods, services, and capital goods delivered and verified, and for which payment has not been made within the contractually agreed period (taking into account any applicable contractual grace period), or in the absence of a grace period, within 60 days after the due date; - (b) non-contributory pension transfers (by CG only), wages and pensions contributions to the NIS for which payment has been pending for longer than 60 days; - (c) rent and loan payments to the NIS pending for longer than 60 days; - (d) arrears on refunds of Personal Income Tax (PIT), Reverse Tax Credit (RTC), Corporate Income Tax (CIT), and Value Added Tax (VAT). - Tax refund arrears are defined as obligations on tax refunds in accordance with tax legislation that remain unpaid six months after the filing date. - Monitoring: - For the purpose of monitoring, the data on CG expenditure arrears and its components by creditors will be measured as cumulative over the fiscal year and it will be reported by the EPOC on a monthly basis, with a lag of no more than four weeks from the end-of-period (Section D, Table 2). ### Indicative floor on CG social spending - Applies only to expenditures incurred by the CG on specified plans and programs, excluding operating expenditure, intended to have a positive impact on education, health, social protection, housing and community services and recreational activities: - Welfare Department spending including cash transfers and assistance for house rents, utilities, food, and education to the poor and vulnerable; - Child Care Board spending on protection of vulnerable children; - Youth Entrepreneurship Scheme assisting jobless youth to start own businesses; - Strengthening Human and Social Development programme targeting the unemployed and vulnerable families and youth; - Alternative Care for the Elderly programme targeting the elderly transferred to private care; - Provision of medication to HIV patients. - Monitoring: - For the purpose of monitoring, the data will be measured as cumulative over the fiscal year and it will be reported on a quarterly basis, with a lag of no more than four weeks from the end-of-period (Section D, Table 2). ### Ceiling on the stock of public institutions expenditure arrears - Definition: sum of: - (a) any invoice received by a spending agency from a supplier of goods, services, and capital goods delivered and verified, and for which payment has not been made within the contractually agreed period (taking into account any applicable contractual grace period), or in the absence of a grace period, within 60 days after the due date; - (b) wages and pensions contributions to the NIS for which payment has been pending for longer than 60 days; - (c) arrears on Tax obligations defined as obligations on taxes in accordance with tax legislation. - Coverage: - The list of public institutions covered by this indicative target is listed in paragraph 3 excluding University of West Indies (UWI). - Monitoring: - For the purpose of monitoring, the data on SOE expenditure arrears and its components by creditors will be measured as cumulative over the fiscal year and it will be reported on a monthly basis, with a lag of no more than four weeks from the end-of-period (Section D, Table 2). --- ### III. Program reporting requirements (Table 2 summary of data to be reported) - Performance under the program will be monitored from data supplied to the IMF as outlined in Table 2. - The authorities will transmit promptly to IMF staff any data revisions as well as other information necessary to monitor the arrangement under the EFF. - Reporting responsibilities: - Financial Sector and External sector data to be provided by the CBB. - Real and Fiscal sector data by the MOF, in consultation with relevant agencies unless otherwise noted. - Reporting frequencies and key items: - Daily (lag no more than one week): - CBB NIR, as defined in section I. - CBB GIR. - Monthly (lag no more than two weeks): - CBB NDA, as defined in section I. - CBB survey showing the detailed composition of net foreign assets (NFA), net claims on the central Government (NCCG), claims on other depository corporations (CODC), claims on other sectors of the economy (COSE), other items net (OIN), and monetary base (MB). - CBB purchases and sales of foreign exchange. - Amounts offered, demanded and placed in Government auctions and primary issues; including minimum maximum and average bid rates. - Statement of use and outstanding balance of the CG deposit in the CBB. - Monthly (lag no more than four weeks) — Real and Fiscal Sector: - RPI index, its components, and weights. - CG budgetary accounts. - Net Domestic Financing and its components. - Net External Financing and its components. - Grants and transfers to public institutions listed in paragraph 3 as defined in Section I. - Stock of CG external arrears (interest, principal, and penalty amounts separately) by creditor and its components as defined in Section I. This will be reported immediately. - Program loan disbursements from multilateral institutions, including the CDB, the IDB, the CAF, and the IBRD as defined in section I. - Budget support grants as defined in section I. - Liabilities of public-private partnerships (PPPs) (if any). - Stock of CG expenditure arrears by creditor and its components as defined in Section II. - Stock of expenditure arrears of public institutions listed in paragraph 3 by creditor and its components as defined in Section II. - BOP trade balance data. - CBB’s Cashflow Table deriving GIR and NIR. - Monthly (lag no more than six weeks) — Financial Sector: - Other Depository Corporations (ODC) survey showing gross items for NFA, claims on the CBB, net claims on the CG (NCCG), COSE, OIN, deposits included in broad money (BM), deposits excluded from BM, and liabilities to the CBB. - Depository Corporations (DC) survey as consolidation of CBB and ODC surveys showing gross items for CBB NFA, ODC NFA, ODC NCCG, COSE, OIN, and BM. - Quarterly (lag no more than four weeks) — Real and Fiscal Sector: - Nominal and real GDP. - Tourism and other real sector high frequency indicators. - Social expenditure and its components as defined in Section II. - Financial position of public institutions listed in paragraph 3 including non-audited income statement, balance sheet and profit and loss accounts. - CG domestic debt stock data by creditor/holder and by maturity (ST <= 1 year, and LT > 1 year maturity). - CG external debt stock data by creditor/holder and by maturity (ST <= 1 year, and LT > 1 year maturity). - CG domestic guaranteed debt stock data by creditor/holder and by maturity (ST <= 1 year, and LT > 1 year maturity). - CG external guaranteed debt stock data by creditor/holder and by maturity (ST <= 1 year, and LT > 1 year maturity). - SOE domestic non CG guaranteed debt stock data by creditor/holder and by maturity (ST <= 1 year, and LT > 1 year maturity). - SOE external non CG guaranteed debt stock data by creditor/holder and by maturity (ST <= 1 year, and LT > 1 year maturity). - Quarterly LT and ST debt amortization and interest projections separate for CG domestic, CG external, CG guaranteed domestic and CG guaranteed external debt. - Copies of loan agreements for any new loan contracted, including financing involving the issue of Government paper, and of any renegotiated agreement on existing loans. - Stock of Tax Refunds and its components as defined in Section II. - CBB Balance sheet. - Balance of Payments accounts. - Quarterly (lag no more than six weeks) — Financial Sector indicators by bank and by sector: - Regulatory capital - Regulatory Tier 1 capital - Risk-weighted assets - Total assets - Total liabilities - Nonperforming loans in BRB$ millions - Non-performing loans net of provisions - Gross loans - Sectoral distribution of loans to total loans - Return on assets - Return on equity - Interest margin - Gross income - Noninterest expenses - Liquid assets - Short-term liabilities - Net open position in foreign exchange - Large exposures to capital - Gross asset position in financial derivatives - Gross liability position in financial derivatives - Total income - Personnel expenses - Noninterest expenses - Spread between reference lending and deposit rates (base points) - Highest interbank rate - Lowest interbank rate - Customer deposits - Total (non-interbank) loans - Foreign-currency-denominated loans - Foreign-currency-denominated liabilities - Net open position in equities - Net profits of the banking sector - Annual (within 6 weeks): - Nominal and real GDP and its components from the demand and supply side (provided by the MOF). - Audited financial statements of Public Institutions listed in Paragraph 2 within 12 weeks of the end-of-period. - Summary of legislative changes pertaining to economic matters. - Notification of establishment of new Public Institutions. - Notification of change in juridical status of existing Public Institutions. - Audited financial statements of Commercial Banks. *Source: 1brbea2022001 (IMF)* --- _Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1brbea2022001.pdf_