Washington, DC:
At the request of the Government of Barbados, an International Monetary
Fund (IMF) team led by Bert van Selm conducted a virtual mission between
October 26-30, 2020 to discuss implementation of Barbados’ Economic
Recovery and Transformation (BERT) plan, supported by the IMF under the
Extended Fund Facility (EFF).
To summarize the mission’s findings, Mr. van Selm made the following
statement:
“Following productive discussions, the IMF team and the Barbadian
authorities reached staff-level agreement on the completion of the fourth
review under the EFF arrangement. The agreement is subject to approval by
the IMF Executive Board, which is expected to consider the review in
December. Upon completion of the review, SDR 65 million (69 percent of
quota, or about US$90 million) will be made available to Barbados.
“The COVID-19 pandemic has had a major impact on Barbados’ economy, with a
double-digit decline in economic activity projected for 2020. Tourism came
to a virtual standstill between March and June 2020: airlift declined
precipitously, most hotels closed, and occupancy plummeted at facilities
that remained open. In early July, the island cautiously started reopening
the economy for international tourists, after the authorities effectively
halted local transmission of the disease. However, tourism arrivals remain
at a fraction of normal levels.
“In this very challenging environment, Barbados continues to make good
progress in implementing its ambitious and comprehensive economic reform
program. International reserves, which reached a low of US$220 million (5-6
weeks of import coverage) at end-May 2018, are now in excess of US$1
billion. All quantitative targets for end-September under the EFF were met.
The program target for Net International Reserves was met by a wide margin,
as was the target for the Central Bank of Barbados’ Net Domestic Assets
(NDA).
“In response to the pandemic, the Government of Barbados is now targeting a
primary balance of minus 1 percent of GDP for FY2020/21 (compared to a
surplus of 6 percent of GDP envisaged prior to the pandemic, and a surplus
of 1 percent of GDP at the time of the third EFF review). The lowered
primary balance target accommodates the loss of government revenues
stemming from the pandemic and facilitates emergency outlays on health
facilities, medical supplies, and income support to the most vulnerable.
Staff supports this easing of the fiscal stance and, subject to approval by
the IMF Executive Board, proposes an augmentation of the Extended Fund
Facility in the amount of SDR 48 million (51 percent of quota, about US$66
million) to help finance the emerging fiscal deficit, bringing total access
under the program to SDR 322 million or 341 percent of quota.
“Tabling of a revised central bank law to parliament is expected shortly;
this is a critical safeguard for continued macroeconomic stability and will
be a prior action for the completion of this EFF review.
“The team would like to thank the authorities and the technical team for
their openness and candid discussions.”
