IMF Executive Board Approves US$113 million under the Extended Fund Facility and US$189 million under the Resilience and Sustainability Facility for Barbados
IMF News, December 7, 2022
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- Published: December 7, 2022
Program approvals and financing
- Approved arrangements:
- Extended Fund Facility (EFF): 36-month arrangement in the amount equivalent to SDR 85.05 million (about US$113 million).
- Resilience and Sustainability Facility (RSF): arrangement in the amount equivalent to SDR 141.75 million (about US$189 million).
- Purpose: to maintain and strengthen macroeconomic stability, support the structural reform agenda, and increase resilience to climate change.
Economic context and recent performance
- Barbados has implemented a comprehensive Economic Recovery and Transformation (BERT) plan and completed a 2018-22 EFF.
- Despite global and regional economic shocks, Barbados has pursued fiscal consolidation, comprehensive debt restructuring, and structural reforms that restored macroeconomic stability in 2018 and 2019.
- The economy is starting to recover from the COVID-19 pandemic, but risks remain elevated due to:
- Higher global commodity prices pushing up inflation.
- Exposure to climate change and natural disasters for the tourism-dependent economy.
- Global coronavirus pandemic and Russia’s invasion of Ukraine affecting the external environment.
- Public debt trajectory:
- Public debt was put back on a clear downward trajectory starting FY2021/22.
Program objectives and key targets
- Maintain and strengthen hard-won macroeconomic stability.
- Support unfinished structural reform agenda and unlock growth potential.
- Fiscal target:
- Program targets a primary surplus of 2 percent of GDP in FY2022/23, up from minus 1 percent of GDP recorded in both FY 2020/21 and FY 2021/22.
- Structural reforms highlighted:
- Strengthening of tax and customs administration.
- Strengthening Public Financial Management (PFM).
- Adoption and implementation of pension reform.
- Rationalization and consolidation of State-Owned Enterprises (SOEs).
- Growth-enhancing measures, including additional steps to improve the business climate.
RSF-specific objectives and measures
- RSF financing to support climate change adaptation and mitigation and Barbados’ transition goals.
- Country ambition:
- Transition to a fully renewable-based economy by 2030.
- RSF reforms include:
- Mainstreaming of climate change in the budget.
- Introduction of "green Public Financial Management", including in procurement.
- Measures to incentivize private sector investments in climate resilient infrastructure and renewable energy projects.
- Coordination:
- RSF measures were identified in close coordination with the World Bank and other international partners.
Risks and outlook
- Inflation has been rising since the second half of 2021 owing to supply chain disruptions and increasing global food and oil prices.
- Economic recovery is expected to continue over the medium term, but downside risks to the outlook remain high.
Executive Board statement (Kenji Okamura, Deputy Managing Director and Acting Chair)
- Barbados continues to make good progress implementing its homegrown Economic Recovery and Transformation Plan despite a very challenging global economic environment.
- The combination of fiscal consolidation, comprehensive debt restructuring, and structural reforms created space for a countercyclical policy response to the COVID-19 pandemic in 2020 and 2021.
Press Release No. 22/417, December 7, 2022 — International Monetary Fund