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### Background and structural features
- Barbados benefits from strong institutions and social and political stability, with one of the highest per capita incomes in the region and an investment grade rating.
- Economy: prime location for high-end tourism and offshore financial services; small, open economy with high trade openness and dependence on tourism and a few services; vulnerable to external shocks and cyclical swings.
- Political change: In January 2008 a new government was elected, with the Democratic Labour Party ending the Barbados Labour Party’s 14 years in office.
- Exchange rate: 33-year peg to the U.S. dollar enjoys strong support and credibility, but vulnerabilities arise from high public debt and a sizeable current account deficit.

### Exchange rate assessment (Box 1)
- Overall assessment: Barbados’ exchange rate is currently not far from its estimated equilibrium but domestic policy adjustments will be needed to contain external imbalances over the medium term.
- Quantitative results:
  - Real exchange rate deviation range: -1 to +6 percent around equilibrium.
  - Equilibrium approach point estimate: +2½ percent (overvaluation).
- External sustainability approach:
  - Authorities’ net foreign debt measure: 10 percent of GDP (subset of NIIP).
  - Stabilizing net debt implies the current account deficit, net of FDI inflows, would have to decline to about ½ percent of GDP.
  - Medium-term projection for non-FDI financed current account deficit under current policies: 2 percent of GDP.
  - Required additional current account adjustment: 1½ percentage points of GDP achievable by:
    - a real depreciation of about 4 percent (using standard trade elasticities scaled by openness), or
    - additional fiscal savings of about 3 percentage points of GDP—assuming about half of the current account impact is offset by lower private savings.
  - Without additional fiscal adjustment, net external debt projected to stabilize at around 40 percent of GDP.

### Recent developments and short-term outlook (Box 2 & Figure 1)
- Financial sector resilience: Global financial turbulence had little effect on Barbados’ banks thus far; banks remain liquid and do not appear exposed to risky mortgage-backed securities or highly leveraged operations.
- Growth and outlook:
  - Economy grew at a solid rate of 3¼ percent in 2007.
  - Tourism performed well in early 2008; as global slowdown affects trading partners, tourism receipts and FDI inflows expected to weaken.
- Inflation and fuel:
  - Annual inflation reduced from 7½ percent in 2006 to 4 percent in 2007 due to a freeze of retail fuel prices introduced in late 2006.
  - Freeze resulted in large losses at the state-owned National Oil Company in the range of 1–1¼ percent of GDP.
  - Government raised prices for individual oil products by some 25–75 percent in April; record high food prices and lifted energy price controls now pushing up inflation.
- Recent policy responses:
  - More sequenced approach to capital account liberalization (postponement of planned removal of controls on regional transactions).
  - Joint agreement with CARICOM partners to eliminate or reduce the common external tariff on selected food items on a temporary basis.
  - Large adjustment in controlled prices for fuel products, followed by limited tax rebates on diesel for sectors hardest hit (e.g., farmers and fishermen).
- Selected macro indicators (series shown as in source):
  - Real GDP growth 2004–2008: 4.8 4.3 3.3 3.3 2.3
  - CPI inflation (average) 2004–2008: 1.4 6.1 7.3 4.0 9.0
  - Current account (in percent of GDP) 2004–2008: -12.4 -12.8 -8.7 -7.2 -8.5
  - GIR (in months of imports) 2004–2008: 3.9 3.5 3.3 4.0 3.7

### Policy issues and agreed priorities
- Mission and government broadly agreed on outlook and priorities:
  - Fiscal policy: Identify areas for fiscal savings to create space for targeted support of the most vulnerable groups and reduce the high public debt ratio over the medium term.
  - Monetary policy: Contain inflation expectations by resisting interest-rate reductions at the current juncture and making further cuts contingent on a sharper-than-expected slowdown in aggregate demand.
  - Wage formation: Promote wage moderation within the tripartite framework to minimize second-round effects of oil and food price shocks.
  - Financial sector policy: Strengthen banking regulation, prudential oversight of the nonbank sector, and effective cross-country cooperation among regulators and supervisors.

### Fiscal policy—current stance, risks, and recommended adjustment
- Authorities’ stance: new government stressed commitment to fiscal prudence and balancing central government accounts over the medium term; a revised budget will be presented in early July.
- Central government deficit target for the fiscal year: 2¼ percent of GDP. Mission notes an implicit adjustment of about 1¾ percentage points of GDP in FY 2008/09.
- Public debt and risks:
  - Total public debt rose to 95 percent of GDP—or 87 percent if earmarked sinking funds are netted out.
  - Recent increase reflected off-budget projects and deficits in public enterprises.
  - Projected fiscal adjustment of 3½ percentage points of GDP under current policies—1¾ percentage points assumed for 2007/08 and another 1¾ percentage point projected over the medium term—is unlikely to reverse the rising trend in the debt ratio.
  - Stochastic debt analysis confirms a high probability for the debt ratio to rise and indicates need for persistent adjustment in the primary balance.
- Mission recommendation:
  - Adopt a more ambitious adjustment path consistent with restoring a public sector surplus in the medium term.
  - Recommend an additional tightening of 4 percentage points of GDP above the 3½ percentage points projected under current policies.
  - Phasing: additional adjustment not expected to begin before 2010 to avoid a pronounced fiscal withdrawal in 2009.
- Fiscal scenarios (as shown in source):
  - Current Policy Scenario public debt reaching 111 (percent of GDP); Adjustment scenario holding near 95 (percent of GDP) across 2003–2013.
  - Extracted NFPS and related rows (series as presented):
    - NFPS balance, -5.0 -4.0 -3.0 -2.7 -2.6 -2.6 -2.7 ...
    - Balance, excl. NIS -9.2 -7.8 -7.3 -7.2 -7.3 -7.3 -7.3
    - Primary balance, excl. NIS -3.2 -1.3 -0.7 -0.4 -0.2 0.0 0.3 ...
    - Adjustment (change in primary balance) ... 1.9 0.6 0.3 0.2 0.2 0.3 3.4
    - Alternative Adjustment scenario rows also shown with additional adjustment above Baseline ... 0.0 0.0 1.0 1.0 1.0 1.0 3.9

### Box 3 — Stochastic Analysis of Fiscal Policy and Public Debt
- Simulation framework:
  - VAR model using historical experience over 27 years (1980-2007).
  - Model variables: real growth of fiscal-balance components (tax revenue, primary and off-budget expenditures, and interest payments), real GDP growth, real exchange rate, and the T-bill rate.
  - Shocks generated with properties matching 1980-2007 experience; debt evolution computed recursively for 2008-13 using:
    - d_t = d_{t-1} + (r_t - g_t)/(1+g_t) * d_{t-1} + pb_t + oe_t
    - where d = debt-to-GDP ratio, r = real interest rate, g = real GDP growth, pb = simulated primary balance as a share of GDP, oe = off-budget expenditures as a share of GDP.
- Key simulation findings and scenarios:
  - 75 percent probability of raising the debt ratio above its 2007 level over the medium term (based on continuation of past patterns).
  - Assumes off-budget expenditures of 2.6 percent of GDP (average observed during 2000-07).
  - Under that assumption, model predicts an average debt ratio of 106 percent of GDP by 2013.
  - Eliminating off-budget expenditures alone would reduce probability of deterioration in the debt ratio to one-third.
- Fiscal policy implications and proposed measures (estimated savings, percent of GDP):
  - Expenditure-side:
    - Adjust prices of utilities and public services: potential medium-term savings of perhaps 1–1½ percent of GDP.
    - Contain public sector wage bill: reduction by ½ percentage point of GDP would bring wage bill back to recent historic minimum of 10½ percent of GDP.
  - Revenue-side:
    - Raising offshore tax rates by 1 percentage point could generate additional revenues of up to 2 percent of GDP.
    - Lifting the cap on the property tax: initial impact perhaps on the order of ¼ percent of GDP.
    - Reducing tax incentives for foreign investments: actions could deliver additional revenue of perhaps 1–2 percent of GDP in the medium term.
    - Improving tax administration via a Central Revenue Authority: potential savings perhaps ½–1 percent of GDP.
    - Adjusting the VAT (removing exemptions and extensive zero-ratings): estimated revenue gains of ¾–1¾ percentage points of GDP.
  - Total potential fiscal savings from listed measures: 5-9 percentage points of GDP over the medium term.
  - Mission’s proposed additional adjustment: 4 percentage points of GDP.
  - Authorities indicated willingness on subsidies and controlled price adjustments and potential lifting of the property tax cap; expressed concern about raising international business taxes or the VAT in the current environment and favored raising non-tax revenues through fees and charges.

### Monetary policy and inflation expectations (from Box 3)
- CBB policy actions:
  - CBB lowered interest rates twice in the past year: by 50 basis points in November 2007 and 25 basis points in March.
  - As of April, interest differential rose to 250 basis points relative to the U.S. federal funds rate, or 130 basis points relative to six-months LIBOR.
  - Lending rates lowered by 35 basis points while private credit growth continued to moderate.
- Policy view:
  - Cautious stance endorsed to contain inflation expectations; further cuts contingent on a sharper slowdown.
  - Preparations encouraged for indirect policy instruments: activate discount facility using repos and reverse repos, forecast liquidity, consider building a stock of securities for open-market operations.
  - Delay capital account liberalization until global markets calm, but proceed with preparations for market-based instruments.

### Wage formation: minimizing second-round inflation effects
- Wage negotiations outcome is decisive for policy effectiveness in addressing inflation pressures from higher food and oil prices.
- Coordinated response recommended: stability-oriented fiscal and monetary policies complemented by wage agreements to contain second-round price pressures.
- Government to hold national consultations in mid-June aiming for consensus on wage moderation.

### Financial sector policies: strengthening regulation and supervision
- FSAP update: financial system resilient but regulatory and supervisory weaknesses identified.
  - Nonbank financial sector assets about 65 percent of GDP (nearly half the size of the banking sector); insurance companies rely largely on self-regulation; credit unions require stepped-up joint inspections with the CBB.
- Key FSAP recommendations (summary):
  1. Banking: update capital adequacy, classification of assets, and loss provision regulations; set aggregate-limit regulations for large exposures and related-party transactions; strengthen cross-border consolidated supervision; improve public awareness of deposit insurance.
  2. Insurance: formalize regulation; improve timeliness of supervisory returns; redesign onsite inspection and offsite analytical support; strengthen cross-border collaboration.
  3. Credit Unions: resume joint on-sight examinations by the CBB and Registrar of the Cooperatives; consider issuing a specialized Credit Union Law.
  4. Securities Markets: give Securities Commission statutory power to make legally binding rules, inspect and access information, cooperate with supervisors; implement regular inspection program and require adequate internal control and risk-management policies.
  5. Financial Services Commission: new government should promptly clarify plans regarding mandate and structure of the yet-to-be-established Financial Services Commission.

### Macroeconomic challenges, risks, and recommended coordination
- Key simultaneous pressures:
  - Respond to rising food and fuel prices.
  - Manage high public debt that constrains fiscal space.
  - Contain external imbalances under the fixed exchange rate system.
- Coordinated response required across fiscal, monetary, incomes, and financial sector policies.
- Data and surveillance: macroeconomic data broadly adequate for surveillance; improve coverage and timeliness of national accounts, monetary data, and balance of payments including NIIP.
- Recommendation: hold next consultation on standard "12-month cycle."

### Key projections, vulnerabilities, and fiscal sustainability indicators (selected exact figures)
- Real GDP (annual percent change, Table 1): 4.8 4.3 3.3 3.3 2.3 2.0
- CPI inflation (end of period, Table 1): 4.3 7.3 5.7 4.8 8.6 3.2
- Exports of goods and services (annual percent change, Table 1): 5.5 21.8 8.6 7.8 8.3 5.4
- Imports of goods and services (annual percent change, Table 1): 14.8 17.9 2.0 5.6 11.5 6.0
- Current account (in percent of GDP, Table 1): -12.4 -12.8 -8.7 -7.2 -8.5 -8.3
- Gross international reserves (US$ million, Table 4): 598 775 800 781 795 810 829 855
- Public sector debt (percent of GDP, Table 3 projections): 92.8 94.6 95.7 96.7 99.0 101.0 103.1 105.0
- Public sector debt-to-revenue ratio (Debt-stabilizing Projections): 180.4 185.0 188.4 183.6 186.2 185.3 187.1 190.9 194.8 198.8 202.6
- Gross financing need (percent of GDP, Debt-stabilizing Projections): 18.6 14.3 20.1 19.4 19.9 20.2 17.4 19.4 17.2 17.2 17.1
- External debt (percent of GDP, Table 7 baseline): 43.9 39.5 41.3 43.4 39.6 41.2 42.6 44.3 45.3 46.0 46.1

### IMF Executive Board conclusions and authorities’ measures (summary)
- Growth and inflation:
  - Authorities expect 2008 growth of 2–2½ percent; staff projection 2.3 percent.
  - Authorities expect acceleration in inflation to about 8 percent (staff projected 9 percent).
  - Staff projection: inflation projected to rise to 9 percent in 2008 from 4 percent in 2007.
  - Current account deficit projected to widen to 8½ percent of GDP in 2008 from 7 percent in 2007.
- Fiscal measures and revised budget:
  - Proposed increases in taxes on alcohol, tobacco, and gambling, and a wide range of non-tax revenues (fees on vehicles, professional services, and mobile telephones).
  - Authorities estimate additional revenue of about 1.3 percent of GDP annually; proposed targeted expenditures and rebates estimated to cost 1.1 percent of GDP.
  - Incorporating measures implies central government deficit of 2 percent of GDP in FY 2008/09 (staff projected 2.2 percent).
- Fuel pricing:
  - Government adopted automatic adjustments for fuel prices effective August 2008; prices on petroleum products and natural gas to be regularly adjusted on the basis of a predetermined formula.
- Monetary policy and exchange rate:
  - Directors endorsed tight monetary stance to contain inflation expectations; cautious easing conditional on slowdown and easing inflation.
  - 33-year peg to U.S. dollar enjoys strong support and credibility.
  - Real effective exchange rate currently not far from estimated equilibrium.
- Labor market and wages:
  - Wage moderation recommended to minimize second-round effects and avoid wage indexation to high headline inflation.
- Financial sector:
  - Directors welcomed FSAP update finding of resilience and encouraged swift implementation of recommendations, prioritizing supervision gaps in the nonbank sector.

### Appendix I — Background and Fund and multilateral relations (selected exact facts)
- 2008 Article IV consultation discussions held in Barbados during June 4-6, 2008; staff team: C. Daseking (head), G. El-Masry, A. Guerson, and M. Kandil (all WHD).
- Exchange rate arrangements:
  - Barbados accepted the obligations of Article VIII, Sections 2, 3, and 4 on November 3, 1993.
  - Barbados dollar pegged to the U.S. dollar since mid-1975 at BDS$2.00 = US$1.00.
  - On May 31, 2008, official buying and selling rates for the U.S. dollar were BDS$1.98 and BDS$2.04, respectively, per US$1.
- Fund relations — summary:
  - No outstanding purchases and loans with the Fund.
  - Last financial arrangement: Stand-by Arrangement 02/07/1992 to 05/31/1993 totaling SDR 23.9 million, of which SDR 14.7 million was drawn.
- Relations with multilateral partners (selected figures):
  - World Bank successor project expected totalling US$35 million to support 2008–2013 Barbados National HIV/AIDS Strategic Plan.
  - IDB current portfolio totals US$129 million: US$3.3 million in technical assistance grants and US$125.9 million in investment loans.
  - CDB approved US$276.0 million in loans, contingent loans, equity, and grants to Barbados between 1970 and May 2008 (9.3 percent of total approvals to CDB’s borrowing member countries).

*Source: IMF staff report excerpt (Selected Economic, Financial, and Social Indicators) and Box 3 (Stochastic Analysis) from the cited IMF staff report.*

### 1.  Selected Economic, Financial, and Social Indicators .........................................................18

### 1.  Selected Economic, Financial, and Social Indicators .........................................................18

### Background and structural features
- Barbados benefits from strong institutions and social and political stability, with one of the highest per capita incomes in the region and an investment grade rating.  
- The country is a prime location for high-end tourism and offshore financial services.  
- Political change: In January 2008 a new government was elected, with the Democratic Labour Party ending the Barbados Labour Party’s 14 years in office.  
- Small, open economy with high trade openness and dependence on tourism and a few services; vulnerable to external shocks and cyclical swings.  
- The 33-year peg to the U.S. dollar enjoys strong support and credibility, but vulnerabilities arise from high public debt and a sizeable current account deficit.

### Selected indicators (as presented in source)
- Table excerpt (as shown in source):  
  - Trinidad & BarbadosJamaicaTobago Economic indicators GDP per capita (USD 2007)13,6054,17215,905  
  - S&P sovereign rating (forex long-term debt)BBB+BA-  
  - Moody's sovereign (forex long-term debt)Baa2B1Baa1  
  - Human Development Index (UNDP, rank)3110159  
  - Health and Primary Education Index (WEF, rank)97262  
  - Global Competitiveness Index (WEF, rank)507884  
  - Business Competitive Index (WEF, rank)416174  
  - Regulatory Quality (WB, percentile)76.658.571.2  
  - Corruption Perception Index (TI, rank)238479  
  - Political Stability (WB, percentile)84.136.141.3  
  - Rule of Law (WB, percentile)83.333.348.1

### Exchange rate assessment (Box 1)
- Overall assessment: Barbados’ exchange rate is currently not far from its estimated equilibrium but domestic policy adjustments will be needed to contain external imbalances over the medium term.  
- Quantitative results reported: the real exchange rate is within a range of -1 to +6 percent around its equilibrium value.  
- Equilibrium real exchange rate approach: estimated deviations in the range of -1 to +6 percent and a point estimate of +2½ percent (overvaluation).  
- External sustainability approach findings:  
  - Complete NIIP data are not available; authorities collect a subset capturing most net foreign debt currently standing at 10 percent of GDP.  
  - Stabilizing this net debt measure implies the current account deficit, net of FDI inflows, would have to decline to about ½ percent of GDP.  
  - Medium-term projection for the non-FDI financed current account deficit is 2 percent of GDP under current policies.  
  - The additional current account adjustment of 1½ percentage points of GDP could be achieved by:  
    - a real depreciation of about 4 percent (using standard trade elasticities scaled by openness), or  
    - additional fiscal savings of about 3 percentage points of GDP—assuming about half of the current account impact is offset by lower private savings.  
  - Without this additional fiscal adjustment, net external debt would be projected to stabilize at around 40 percent of GDP.

### Recent developments and short-term outlook (Box 2 & Figure 1)
- Short-run resilience: Global financial turbulence had little effect on Barbados’ banks thus far; banks remain liquid and do not appear exposed to risky mortgage-backed securities or highly leveraged operations.  
- Growth and outlook:  
  - Economy grew at a solid rate of 3¼ percent in 2007, with tourism performing well in early 2008.  
  - As the global slowdown affects trading partners, tourism receipts and FDI inflows (including luxury housing) are expected to weaken.  
- Inflation and fuel:  
  - Annual inflation was reduced from 7½ percent in 2006 to 4 percent in 2007 due to a freeze of retail fuel prices introduced in late 2006.  
  - The freeze resulted in large losses at the state-owned National Oil Company in the range of 1–1¼ percent of GDP.  
  - The government raised prices for individual oil products by some 25–75 percent in April to prevent further fiscal losses; record high food prices and lifted energy price controls are now pushing up inflation.  
- Key recent policy responses:  
  - A more sequenced approach to capital account liberalization (postponement of planned removal of controls on regional transactions).  
  - A joint agreement with CARICOM partners to eliminate or reduce the common external tariff on selected food items on a temporary basis.  
  - Large adjustment in controlled prices for fuel products, followed by limited tax rebates on diesel for sectors hardest hit (e.g., farmers and fishermen).  
- Selected macro indicators (table as presented):  
  - Real GDP growth 2004–2008: 4.84.33.33.32.3  
  - CPI inflation (average) 2004–2008: 1.46.17.34.09.0  
  - Current account (in percent of GDP) 2004–2008: -12.4-12.8-8.7-7.2-8.5  
  - GIR (in months of imports) 2004–2008: 3.93.53.34.03.7

### Policy issues and agreed priorities
- Mission and government broadly agreed on outlook and priorities:  
  - Fiscal policy: Identify areas for fiscal savings to create space for targeted support of the most vulnerable groups and reduce the high public debt ratio over the medium term.  
  - Monetary policy: Contain inflation expectations by resisting interest-rate reductions at the current juncture and making further cuts contingent on a sharper-than-expected slowdown in aggregate demand.  
  - Wage formation: Promote wage moderation within the tripartite framework to minimize second-round effects of oil and food price shocks.  
  - Financial sector policy: Strengthen banking regulation, prudential oversight of the nonbank sector, and effective cross-country cooperation among regulators and supervisors.

### Fiscal policy—current stance, risks, and recommended adjustment
- Authorities’ stated commitment: new government stressed commitment to fiscal prudence and balancing central government accounts over the medium term; a revised budget will be presented in early July.  
- Central government deficit target for the fiscal year: 2¼ percent of GDP. The mission notes an implicit adjustment of about 1¾ percentage points of GDP in FY 2008/09.  
- Current public debt dynamics and risks:  
  - Total public debt rose to 95 percent of GDP—or 87 percent if earmarked sinking funds are netted out.  
  - Much recent increase reflected off-budget projects and deficits in public enterprises; the mission welcomed reassessment of earlier-planned projects (e.g., the multi-purpose sugar factory).  
  - Projected fiscal adjustment of 3½ percentage points of GDP under current policies—1¾ percentage points assumed for 2007/08 and another 1¾ percentage point projected over the medium term (from lower capital spending and transfers to public enterprises)—is unlikely to reverse the rising trend in the debt ratio.  
  - Stochastic debt analysis (Box 3) confirms a high probability for the debt ratio to rise and indicates the need for a persistent adjustment in the primary balance.  
- Mission recommendation: adopt a more ambitious adjustment path consistent with restoring a public sector surplus in the medium term. Specifically:  
  - Recommend an additional tightening of 4 percentage points of GDP above the 3½ percentage points projected under current policies.  
  - Rationale: This would generate a modest surplus in the public sector balance, bring the debt ratio back to its current level, and imply favorable debt dynamics beyond the medium term.  
  - Phasing: Given ongoing capital projects and implementation lags, the additional adjustment would not be expected to begin before 2010 to avoid a pronounced fiscal withdrawal in 2009 when the global slowdown impact is expected to be largest.  
- Selected fiscal simulations and figures (as shown in source):  
  - Public Debt Under Alternative Scenarios figure shows Current Policy Scenario reaching 111 (percent of GDP) and Adjustment scenario holding near 95 (percent of GDP) across 2003–2013.  
  - Extracted NFPS and related rows (as presented):  
    - NFPS balance,-5.0-4.0-3.0-2.7-2.6-2.6-2.7...  
    - Balance, excl. NIS-9.2-7.8-7.3-7.2-7.3-7.3-7.3  
    - Primary balance, excl. NIS-3.2-1.3-0.7-0.4-0.20.00.3...  
    - Adjustment (change in primary balance)...1.90.60.30.20.20.33.4  
    - Alternative Adjustment scenario rows also shown in source with additional adjustment above Baseline...0.00.01.01.01.01.03.9

*Source: IMF staff report excerpt (Selected Economic, Financial, and Social Indicators).*

### Box 3.  Barbados: Stochastic Analysis of Fiscal Policy and Public Debt

### Box 3. Barbados: Stochastic Analysis of Fiscal Policy and Public Debt

### Stochastic simulation framework
- Simulation based on a VAR model of the Barbadian economy and fiscal dynamics using historical experience over the past 27 years (1980-2007).
- Model variables: real growth of fiscal-balance components (tax revenue, primary and off-budget expenditures, and interest payments), real GDP growth, real exchange rate, and the T-bill rate.
- Shocks generated with the same properties (volatility, persistence and co-movement) as actual shocks during 1980-2007 to produce a large number of simulated primary-balance series.
- Debt evolution computed recursively for 2008-13 using the identity:
  - d_t = d_{t-1} + (r_t - g_t)/(1+g_t) * d_{t-1} + pb_t + oe_t
  - where d = debt-to-GDP ratio, r = real interest rate, g = real GDP growth, pb = simulated primary balance as a share of GDP, oe = off-budget expenditures as a share of GDP.

### Key simulation findings and scenarios
- Based on continuation of past revenue and expenditure patterns, there is a 75 percent probability of raising the debt ratio above its 2007 level over the medium term.
- Assumes off-budget expenditures of 2.6 percent of GDP (average observed during 2000-07).
- Under that assumption, the model predicts an average debt ratio of 106 percent of GDP by 2013.
- Even in the most benign scenarios with positive shocks, the debt ratio is likely to increase.
- Eliminating off-budget expenditures alone would reduce the probability of a deterioration in the debt ratio to one-third.
- Probability distributions of debt dynamics were produced for each simulated year (2008-13) to tabulate outcomes under different thresholds.

### Fiscal policy implications and recommended adjustment measures
- Authorities and mission agreed on the need to reverse the rising trend in the public debt ratio over the medium term.
- Gross financing needs are about 20 percent of GDP; rollover risks mitigated by the high share of domestic liabilities and that one-third of domestic liabilities are held by the National Insurance Scheme.
- The mission urged prompt measures to generate fiscal savings; proposed options and estimated savings (percent of GDP) include:

  Expenditure-side measures
  - Better prioritizing new government projects (consolidated presentation of quasi-fiscal activities).
  - Adjusting prices of utilities and public services: potential medium-term savings of perhaps 1–1½ percent of GDP (automatic pass-through for fuel and adjustments in regulated prices such as natural gas, water, transportation).
  - Containing the public sector wage bill: a reduction by ½ percentage point of GDP would bring the wage bill back to its recent historic minimum of 10½ percent of GDP.

  Revenue-side measures
  - Raising tax rates on offshore activities: raising offshore tax rates by just 1 percentage point could generate additional revenues of up to 2 percent of GDP.
  - Lifting the cap on the property tax: initial revenue impact perhaps on the order of ¼ percent of GDP, with growth as property appreciation continues.
  - Reducing tax incentives for foreign investments: past estimates put costs of incentive schemes at about 6 percent of GDP; actions could deliver additional revenue of perhaps 1–2 percent of GDP in the medium term (most effective if coordinated regionally).
  - Improving tax administration via a Central Revenue Authority: potential savings perhaps ½–1 percent of GDP from synergies and improved compliance.
  - Adjusting the VAT (removing exemptions and extensive zero-ratings): estimated revenue gains of ¾–1¾ percentage points of GDP.

- Total potential fiscal savings from the listed measures: 5-9 percentage points of GDP over the medium term.
- The mission’s proposed additional adjustment: 4 percentage points of GDP.
- Authorities indicated willingness on subsidies and controlled price adjustments and potential lifting of the property tax cap, but expressed concern about raising international business taxes or the VAT in the current environment. They favored raising non-tax revenues through fees and charges in the revised budget.

### Monetary policy and inflation expectations
- The mission endorsed the Central Bank of Barbados’ cautious approach to lowering its policy rate relative to easing in the United States.
  - CBB lowered interest rates twice in the past year: by 50 basis points in November 2007 and 25 basis points this March.
  - As of April, the interest differential rose to 250 basis points relative to the U.S. federal funds rate, or 130 basis points relative to six-months LIBOR.
  - Lending rates have been lowered by 35 basis points while private credit growth has continued to moderate.
- Policy view: absent a surge in short-term capital inflows or a sharper slowdown, the cautious stance is appropriate to contain inflation expectations.
- The mission encouraged preparations for introducing indirect policy instruments:
  - Plans to activate the discount facility using repos and reverse repos and to forecast liquidity.
  - Consideration of building a stock of securities for prospective open-market operations.
  - Delaying capital account liberalization until global markets calm, but proceeding with preparations for market-based instruments.

### Wage formation: minimizing second-round inflation effects
- Outcome of wage negotiations is decisive for policy effectiveness in addressing inflation pressures from higher food and oil prices.
- Coordinated response recommended: stability-oriented fiscal and monetary policies complemented by wage agreements to contain second-round price pressures.
- Government highlighted the tripartite consultation framework (government, business, trade unions) and historical precedents of wage moderation (nominal cut in public sector and freeze in private sector wages in early 1990s; real wages adjusted after the 2001 shock).
- Government hopeful that national consultations in mid-June would yield consensus on wage moderation to prevent second-round price pressures and future job losses.

### Financial sector policies: strengthening regulation and supervision
- FSAP update found a resilient financial system but identified regulatory and supervisory weaknesses.
  - Domestic banking system currently sound and profitable; well insulated from the offshore sector; new deposit insurance scheme added to safety net.
  - Nonbank financial sector assets about 65 percent of GDP (nearly half the size of the banking sector); insurance companies rely largely on self-regulation; credit unions under Registrar of the Cooperatives require stepped-up joint inspections with the CBB.
- Key FSAP recommendations (summary):
  1. Banking
     - Update capital adequacy, classification of assets, and loss provision regulations.
     - Issue aggregate-limit regulations for large exposures and related-party transactions on a consolidated basis; set licensing criteria for holding companies.
     - Strengthen cross-border consolidated supervision and home/host collaboration; conduct simulated “fire drills.”
     - Improve public awareness of the new deposit insurance scheme.
  2. Insurance
     - Formalize regulation of the insurance sector; improve timeliness of supervisory returns (including fines for late-filing); redesign onsite inspection and offsite analytical support; strengthen cross-border supervisory collaboration.
  3. Credit Unions
     - Resume joint on-sight examinations by the Central Bank of Barbados and the Registrar of the Cooperatives; consider issuing a specialized Credit Union Law.
  4. Securities Markets
     - Provide the Securities Commission with statutory power to make legally binding rules, inspect and access all information of regulated firms, and cooperate with domestic and foreign supervisors; implement regular inspection program and require adequate internal control and risk-management policies.
  5. Financial Services Commission
     - New government should promptly clarify plans regarding the mandate and structure of the yet-to-be-established Financial Services Commission given the need to bolster supervision of nonbank sectors.

*Source: IMF staff calculations and country authorities (Central Bank of Barbados); based on data and analysis in Box 3 of the cited IMF staff report.*

### 17.      The government is faced with the challenge of balancing conflicting risks to

### _cr08295 - 17.      The government is faced with the challenge of balancing conflicting risks to

### Macroeconomic challenges: inflation, growth, and medium-term sustainability
- Direct spillovers from the financial turmoil have been contained, but Barbados is likely to feel a delayed impact of weaker global demand on tourism, with repercussions on the rest of the economy.
- Government faces simultaneous pressures:
  - respond to rising food and fuel prices;
  - manage high public debt that severely constrains fiscal space;
  - contain external imbalances under the fixed exchange rate system, although the real exchange rate is currently "not far from its estimated equilibrium".
- Coordinated response required across fiscal, monetary, incomes, and financial sector policies.

### Fiscal policy: objectives and required adjustments
- Authorities plan to gradually eliminate the central government deficit, starting with a tightening of "1¾ percentage points of GDP this year."
- To reverse deteriorating public debt dynamics and reduce external imbalances, additional measures are needed to:
  - shift a sizeable overall public sector deficit to a modest surplus by 2013.
- As savings will take time to build, it is important to identify and commit to specific revenue and expenditure measures early on.
- Related numerical context from tables:
  - Nonfinancial public sector overall balance: "1.4 -3.6 -3.7 -5.0 -4.0 -3.0" (years shown in Table 1 header sequence).
  - Central Government revenue and grants: "33.1 35.1 34.2 34.9 35.3 35.1".
  - Central Government expenditure: "35.7 36.4 36.3 38.9 37.5 37.3".
  - Public sector debt (fiscal year): "87.1 91.6 92.8 94.6 95.7 96.7" (percent of GDP across years listed in Table 1).
  - Baseline public sector debt trajectory: "85.0 87.1 91.6 92.8 94.6 95.7 96.7 99.0 101.0 103.1 105.0" (Table: Debt-stabilizing Projections).

### Monetary policy: current stance and preparations
- Monetary policy should continue to prioritize containing the risk of entrenching inflation expectations.
- The CBB has lowered interest rates by only "75 basis points since last fall", creating a sizeable differential with U.S. rates; this comparatively tight stance is judged appropriate (absent a surge in short-term capital inflows).
- Further easing may be warranted if there are signs of a more severe slowdown in economic activity.
- Authorities should advance preparation for introducing indirect monetary policy instruments to be ready for the shift once global financial markets have calmed.
- Relevant numeric indicators:
  - CPI inflation (average): "1.4 6.1 7.3 4.0 9.0 5.9" (Table 1 annual sequence).
  - Interest rate on deposits (average in percent per annum): "2.5 4.1 4.7 5.1 4.5 4.5".
  - Interest rate on loans (average in percent per annum): "9.8 10.6 10.7 10.7 10.4 10.4".

### Incomes policy: wage negotiations and inflation pass-through
- Outcome of wage negotiations will be important to overall policy effectiveness.
- If price increases are persistent, wage moderation is crucial to minimize second-round effects of oil and food price shocks and help the economy adjust in the least harmful way.
- It is important to avoid wage indexation to currently high headline inflation rates.

### Financial sector prudential oversight
- Risks to external and domestic stability can be reduced by addressing identified weaknesses in prudential oversight.
- Authorities should "swiftly implement the main recommendations of the FSAP update mission."
- Priority actions include:
  - strengthen banking regulation and cross-border cooperation;
  - improve prudential oversight of the non-bank sector, which is described as "much weaker".

### Data, surveillance, and consultations
- Provision of macroeconomic data is described as "broadly adequate for surveillance."
- Efforts should be made to improve coverage and timeliness of:
  - national accounts;
  - monetary data;
  - balance of payments data, including the net international investment position.
- Recommendation: hold the next consultation on the standard "12-month cycle."

### Key projections, vulnerabilities, and fiscal sustainability indicators (selected exact figures)
- Real GDP (annual percent change, Table 1): "4.8 4.3 3.3 3.3 2.3 2.0" (series across years shown).
- CPI inflation (end of period, Table 1): "4.3 7.3 5.7 4.8 8.6 3.2".
- Exports of goods and services (annual percent change, Table 1): "5.5 21.8 8.6 7.8 8.3 5.4".
- Imports of goods and services (annual percent change, Table 1): "14.8 17.9 2.0 5.6 11.5 6.0".
- Current account (in percent of GDP, Table 1): "-12.4 -12.8 -8.7 -7.2 -8.5 -8.3".
- Gross international reserves (US$ million, Table 4): "598 775 800 781 795 810 829 855".
- Public sector debt (percent of GDP, Table 3): "92.8 94.6 95.7 96.7 99.0 101.0 103.1 105.0" (serial projection).
- Public sector debt-to-revenue ratio (Table: Debt-stabilizing Projections): "180.4 185.0 188.4 183.6 186.2 185.3 187.1 190.9 194.8 198.8 202.6".
- Gross financing need (in percent of GDP, Table: Debt-stabilizing Projections): "18.6 14.3 20.1 19.4 19.9 20.2 17.4 19.4 17.2 17.2 17.1".
- External debt (percent of GDP, Table 7 baseline): "43.9 39.5 41.3 43.4 39.6 41.2 42.6 44.3 45.3 46.0 46.1".

*Source: IMF staff assessment and supporting tables in the provided chapter.*

### APPENDIX I. BACKGROUND AND SUMMARY OF APPENDICES

### APPENDIX I. BACKGROUND AND SUMMARY OF APPENDICES

### Discussion
- 2008 Article IV consultation discussions: held in Barbados during June 4-6, 2008.
- Staff team: C. Daseking (head), G. El-Masry, A. Guerson, and M. Kandil (all WHD).
- Participants in wrap-up meeting: Jonathan Fried (Executive Director for Barbados) and Marco Espinosa (mission chief for the FSAP Update mission, MCM).
- Authorities and stakeholders met: Senator Hon. Darcy Boyce, Minister of State for Finance and Energy; Dr. Marion Williams, Governor of the Central Bank of Barbados; government officials; representatives of the private sector, labor unions, and the opposition.

### Exchange Rate Arrangements
- Barbados accepted the obligations of Article VIII, Sections 2, 3, and 4 on November 3, 1993; there are no restrictions on the making of payments and transfers for current international transactions.
- The Barbados dollar has been pegged to the U.S. dollar since mid-1975 at BDS$2.00 = US$1.00.
- On May 31, 2008, the official buying and selling rates for the U.S. dollar were BDS$1.98 and BDS$2.04, respectively, per US$1.
- There are exchange controls on some invisibles; bona fide transactions are approved. All capital outflows and certain capital inflows require approval.

### Fund Relations — Summary
- Financial assistance:
  - Barbados has no outstanding purchases and loans with the Fund.
  - Last financial arrangement: Stand-by Arrangement for the period 02/07/1992 to 05/31/1993 totaling SDR 23.9 million, of which SDR 14.7 million was drawn.
- Recent technical assistance:
  - January 2008: Statistics Department mission on monetary and financial statistics.
  - March 2008: Fiscal Affairs Department mission on administration of indirect taxes and customs.
  - CARTAC is assisting the Barbados Statistics Services on rebasing, and improving the coverage of, national accounts.

### Relations with the World Bank Group
- A recently concluded HIV/AIDS awareness and prevention project.
- A successor project, totaling US$35 million, expected to be approved in the second half of 2008 to support implementation of the 2008–2013 Barbados National HIV/AIDS Strategic Plan.
- Summary of World Bank Loans, Credits, and Grants (In millions of U.S. dollars):
  - IBRD Original principal: 118.4
  - IDA/IDA Grants Original principal: 0.0
  - Total Original principal: 118.4
  - Cancellations: 16.8
  - Disbursed: 101.5
  - Undisbursed: 0.0
  - Repaid: 85,9
  - Due: 14.3
  - Exchange adjustment: 0.0
  - Borrower obligation: 14.3

### Relations with the Inter-American Development Bank (IDB)
- IDB Country Strategy for 2005–08: focused on public sector reforms and improving competitiveness.
- Current Barbados portfolio totals US$129 million: US$3.3 million in technical assistance grants and US$125.9 million in investment loans.
- Historical flows and balances (US$ million):
  - Loan approvals (2000–2007): 0.0; 8.7; 17.0; 0.0; 0.0; 4.4; 0; 5
  - Loan disbursements (2000–2007): 10.4; 24.2; 15.8; 16.0; 7.9; 4.4; 2.2; 2.8
  - Net cash flow (2000–2007): -6.9; 8.2; 0.5; -3.2; -13.3; -14.8; -19.4; -19.4
  - Debt outstanding (2000–2007): 127.0; 143.9; 151.6; 156.6; 150.7; 150.1; 140.6; 133.0
- IDB projects and amounts (Approved / Disbursed):
  - Education Sector Enhancement Program (1998): 60,034,063 / 34,871,896
  - Administration of Justice (2001): 8,750,000 / 823,096
  - Coastal Infrastructure Program (2002): 17,000,000 / 3,548,731
  - Modernization of Customs, Excise and VAT (2005): 4,400,000 / 236,516
  - Housing and Neighbourhood Upgrading Programme (Project Prep. Facility) (2006): 688,000 / 68,000
  - Modernization of the Barbados National Standards System (December 2007): 5,000,000 / 0
  - Housing and Neighbourhood Upgrading Program - Phase I (January 2008): 30,000,000 / 0
  - Total: 125,872,063 Approved / 39,548,239 Disbursed
- Three new investment loan projects scheduled for approval before end-2008: total US$28.1 million.
  - Lending Program 2008 (Public Sector) — Amount (in US$ millions):
    - Modernization of National Procurement System: 4.1
    - Agricultural Health and Food Safety Competitiveness Program: 9.0
    - (Another entry listed as) 10.0
    - Modernization of the Statistical Service: 5.0
    - Total 2008: 28.1

### Relations with the Caribbean Development Bank (CDB)
- CDB approved US$276.0 million in loans, contingent loans, equity, and grants to Barbados between 1970 and May 2008 (9.3 percent of total approvals to CDB’s borrowing member countries).
- Allocation by sector (US$ million and percent):
  - Productive sector: 78.7 (28.5 percent)
    - Agriculture: 4.2 (1.5 percent)
    - Manufacturing: 45.5 (16.5 percent)
    - Tourism: 12.0 (10.5 percent)
    - Mining: 0.1 (0.0 percent)
  - Economic infrastructure: 143.8 (52.1 percent)
    - Power and energy: 0.1 (0.0 percent)
    - Water: 0.8 (0.3 percent)
    - Transportation: 88.1 (31.9 percent)
    - Housing: 1.4 (0.5 percent)
    - Education: 50.2 (18.2 percent)
    - Health: 3.2 (1.2 percent)
  - Multisector: 53.5 (19.4 percent)
  - Total: 276.0 (100.0 percent)
- Recent approvals:
  - Approximately US$13.5 million in new loans (multisector) approved in 2003.
  - No new loans approved in 2004 and 2005.
  - In 2006, a technical assistance loan of US$3.5 million was approved.
  - No new loan approved from January 2007 to May 2008.

### Appendix I — Barbados: Fund Relations (As of May 31, 2008)
- I. Membership Status:
  - Joined 12/29/1970; Article VIII
- II. General Resources Account (SDR million):
  - Quota: 67.50 (Percent 100.00)
  - Fund holdings of currency: 61.92 (Percent 91.73)
  - Reserve position in Fund: 5.58 (Percent 8.27)
- III. SDR Department (SDR million; Percent of Allocation):
  - Net cumulative allocation: 8.04 (100.00)
  - Holdings: 0.12 (1.52)
- IV. Outstanding Purchases and Loans:
  - None
- V. Financial Arrangements:
  - Stand-by: Approval date 02/07/1992; Expiration date 05/31/1993; Amount approved (SDR million) 23.89; Amount drawn (SDR million) 14.67
  - Stand-by: Approval date 10/01/1982; Expiration date 05/31/1984; Amount approved (SDR million) 31.88; Amount drawn (SDR million) 31.88
- VI. Projected Obligations to Fund (SDR million; based on existing use of resources and present holdings of SDRs) — Forthcoming:
  - Charges/Interest: 2008: 0.16; 2009: 0.24; 2010: 0.24; 2011: 0.24; 2012: 0.24
  - Total: 2008: 0.16; 2009: 0.24; 2010: 0.24; 2011: 0.24; 2012: 0.24
- VII. Exchange Rate Arrangements:
  - The Barbados dollar has been pegged to the U.S. dollar since mid-1975 at BDS$2.00 = US$1.00.
  - On May 31, 2008, official buying and selling rates for the U.S. dollar were BDS$1.98 and BDS$2.04, respectively, per US$1.
  - Authorities accepted the obligations of Article VIII, Sections 2, 3, and 4 on November 3, 1993.
- VIII. Last Article IV Consultation:
  - Streamlined 2007 Article IV consultation concluded by the Executive Board on September 10, 2007; Staff Report issued as IMF Country Report No. 07/315.
  - Barbados is on the standard 12-month consultation cycle.
- IX. Technical Assistance (2004-08) — Department / Dates / Purpose:
  - CARTAC / Ongoing / Rebasing national accounts
  - FAD / March 2008 / Administration of indirect taxes and customs
  - CARTAC / January 2008 / Revenue collection enforcement
  - STA / January 2008 / Monetary and financial statistics
  - STA / January 2008 / Monetary and financial statistics
  - STA / December 2006 / Multi-sector statistics advisor.
  - CARTAC / September 2005 / Regional BOP methodology course.
  - FAD / March 2004 / Tax policy.
  - CARTAC / September 2004 / Development of supply and use tables.
  - CARTAC / January 2004 / (Purpose not specified beyond listing)
- X. Resident Representative:
  - The resident representatives post was closed in January 1995.

*Source: APPENDIX I. BACKGROUND AND SUMMARY OF APPENDICES (Staff Report for the 2008 Article IV Consultation—Informational Annex, Prepared by the Western Hemisphere Department, July 8, 2008).*

### 1.      This statement updates the Board on developments in Barbados since the issuance of

### IMF Executive Board Concludes 2008 Article IV Consultation with Barbados

### Recent economic developments and outlook
- Recent data are consistent with the staff’s projections for 2008; latest national accounts confirm a significant slowdown in economic activity in 2008.
- Following a buoyant first quarter, preliminary data for the second quarter suggest a marked weakening in growth, led by the construction and tourism sectors.
- Authorities expect the economy as a whole to grow by 2–2½ percent during 2008, consistent with staff projections of 2.3 percent.
- Authorities expect an acceleration in inflation to about 8 percent (compared with 9 percent projected by staff).
- Barbados has weathered the global financial turmoil well so far, but a deteriorating external environment poses significant challenges; growth is expected to decline by 1 percentage point to 2¼ percent in 2008 (staff projection stated elsewhere).
- Inflation is projected to rise to 9 percent in 2008 from 4 percent in 2007 due to record high import prices, particularly for oil and food, and recent adjustment in controlled fuel prices.
- The current account deficit is projected to widen to 8½ percent of GDP in 2008 from 7 percent in 2007.

### Fiscal policy, revised budget, and measures
- Revised budget proposals are broadly consistent with the fiscal stance for FY 2008/09 as presented in the staff report.
- New proposals include increases in taxes on alcohol, tobacco, and gambling, and a wide range of nontax revenues (fees on vehicles, professional services, and mobile telephones).
- Authorities estimate these measures will provide additional revenue of about 1.3 percent of GDP on an annual basis.
- The government proposes to use this fiscal space to finance additional expenditures and tax rebates to targeted groups, estimated to cost 1.1 percent of GDP.
- Targeted expenditures include:
  - raising old-age pensions and welfare payments to low-income recipients;
  - providing free bus transportation for school children;
  - zero-rating of VAT for building materials for low-income housing;
  - supporting agriculture, energy conservation, and alternative energy production.
- Incorporating these measures implies a central government deficit of 2 percent of GDP in FY 2008/09, slightly lower than the deficit projected in the staff report of 2.2 percent of GDP.
- Directors encouraged efforts to generate a modest overall public sector surplus over the medium term to reverse unfavorable debt dynamics and put public debt on a firmly declining trajectory.
- Directors recommended identifying specific revenue and expenditure measures early on, noting fiscal savings could take time to materialize.

### Fuel pricing and public sector balance
- The government decided to adopt automatic adjustments for fuel prices.
- Effective August 2008, prices on petroleum products and natural gas will be regularly adjusted on the basis of a predetermined formula, and without political involvement.
- Fuel prices were expected to be increased in August; regular adjustments are likely to prevent deterioration in the overall public sector balance that would otherwise occur from losses by the National Oil Company.
- Directors welcomed the adoption of an automatic fuel price adjustment mechanism as an important step.

### Monetary policy and exchange rate
- Directors saw the main role for monetary policy in containing the risk of entrenching inflation expectations and deemed the current policy stance appropriately tight.
- A reduction in interest rates may become necessary should a more severe slowdown be accompanied by easing of inflationary pressures.
- Directors encouraged authorities to advance preparations for introducing indirect monetary policy instruments, to be ready for implementation once global financial markets have calmed.
- Directors agreed the 33-year peg of the exchange rate to the U.S. dollar enjoys strong support and credibility and has served the economy well.
- The real effective exchange rate is currently not far from its estimated equilibrium; no apparent signs of competitiveness problems in the dominant tourism sector.
- Directors stressed adjustments in domestic policies will be important in the medium term to contain external imbalances.

### Labor market and wage policy
- Directors viewed the outcome of wage negotiations as critical to the effectiveness of the overall policy response.
- Wage moderation is needed to minimize second-round effects of the oil and food price shocks and to help the economy adjust in the least harmful way.
- Directors warned about the risks of wage indexation to currently high headline inflation rates.

### Financial sector and supervision
- Directors welcomed the FSAP update finding that the financial system remains resilient in the face of the global turmoil.
- To ensure continued financial-sector resilience, Directors encouraged the authorities to address identified weaknesses in prudential oversight and to implement key FSAP update recommendations.
- Priority should be given to removing gaps in supervision of the nonbank sector, alongside important provisions to strengthen banking regulation and cross-border cooperation.

### Selected economic indicators (Prel./Proj.)
- Real GDP (annual percentage change): 2004 4.8; 2005 4.3; 2006 3.3; 2007 3.3; 2008 2.3; 2009 2.0
- Nominal GDP (annual percentage change): 2004 4.5; 2005 6.7; 2006 6.2; 2007 6.8; 2008 11.2; 2009 7.8
- Consumer prices (annual percentage change): 2004 1.4; 2005 6.1; 2006 7.3; 2007 4.0; 2008 9.0; 2009 5.9
- Net domestic assets (annual percentage change): 2004 43.5; 2005 14.1; 2006 14.2; 2007 9.3; 2008 0.2; 2009 15.8
- Private sector credit (annual percentage change): 2004 16.7; 2005 21.7; 2006 13.2; 2007 6.4; 2008 2.5; 2009 7.8
- Broad money (annual percentage change): 2004 17.4; 2005 6.9; 2006 11.3; 2007 13.2; 2008 2.8; 2009 13.7
- Overall public sector balance (percent of GDP): 2004 1.4; 2005 -3.6; 2006 -3.7; 2007 -5.0; 2008 -4.0; 2009 -3.0
- Central government balance (percent of GDP): 2004 -2.5; 2005 -1.3; 2006 -2.0; 2007 -4.0; 2008 -2.2; 2009 -2.2
- Off-budget activities (percent of GDP): 2004 1.3; 2005 -1.9; 2006 -3.9; 2007 -2.0; 2008 -2.0; 2009 -1.8
- National Insurance Scheme balance (percent of GDP): 2004 3.6; 2005 3.7; 2006 4.2; 2007 4.2; 2008 3.8; 2009 4.3
- Public enterprises balance (percent of GDP): 2004 -1.0; 2005 -4.2; 2006 -2.0; 2007 -3.3; 2008 -3.6; 2009 -3.3
- Primary balance (percent of GDP): 2004 4.5; 2005 -0.1; 2006 0.0; 2007 -1.4; 2008 -0.1; 2009 0.7
- Public sector debt (percent of GDP): 2004 87.1; 2005 91.6; 2006 92.8; 2007 94.6; 2008 95.7; 2009 96.7
- External current account balance (percent of GDP): 2004 -12.4; 2005 -12.8; 2006 -8.7; 2007 -7.2; 2008 -8.5; 2009 -8.3
- External debt (percent of GDP): 2004 27.3; 2005 28.9; 2006 27.6; 2007 24.2; 2008 26.0; 2009 25.6
- Gross international reserves (in millions of U.S. dollars): 2004 595; 2005 619; 2006 598; 2007 775; 2008 800; 2009 781
- Memorandum item — Nominal GDP (in millions of Barbados dollars): 2004 5,634; 2005 6,010; 2006 6,382; 2007 6,818; 2008 7,582; 2009 8,173

*Source: IMF staff report and Public Information Notice on the 2008 Article IV Consultation with Barbados.*

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