Press Release No. 23/150

IMF Reaches Staff-Level Agreement with Barbados on the First Reviews of the Extended Fund Facility and the Resilience and Sustainability Facility Arrangement

May 12, 2023

• IMF team reaches a staff-level agreement with the Barbadian authorities on the completion of the first review of Barbados’ updated Economic Recovery and Transformation (BERT) plan supported by the Extended Fund Facility (EFF)
• The team also reached staff-level agreement on the first review to assess the implementation of reform measures under the Resilience and Sustainability Facility (RSF) Arrangement.
• Both reviews are expected to be considered by the IMF’s Executive Board in June.
• Barbados has successfully weathered a series of shocks in recent years. The economy has recovered with eight consecutive quarters of growth, and the Barbadian authorities are making good progress in implementing their ambitious economic reform program and climate policy agenda.

Bridgetown, Barbados: At the request of the Government of Barbados, an International Monetary Fund (IMF) team led by Pablo Morra visited Barbados during May 3-12, 2023 to discuss the implementation of Barbados’ updated Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Fund Facility (EFF) , and the implementation of reform measures under the Resilience and Sustainability Facility (RSF) arrangement. To summarize the mission’s findings, Mr. Pablo Morra made the following statement:

“Following productive discussions, the IMF team and the Barbadian authorities reached staff-level agreement on the completion of the first reviews under the EFF and RSF arrangements. The agreement is subject to approval by the IMF Executive Board, which is expected to consider the reviews in June. The completion of the reviews will make available SDR 14.175 million (about US$19 million) under the EFF arrangement and SDR 14.175 million (about US$19 million) under the RSF arrangement.

“The economy grew strongly in 2022 and continues to expand in 2023 driven by the rebound in tourism and related activities. Real GDP is projected to reach pre-pandemic levels in 2023, while nominal GDP has already exceeded 2019 levels. Inflation rose significantly over the 2021-2022 period due primarily to global supply chain disruptions and the rise in commodity prices but is expected to ease in 2023. International reserves rose to US$1.6 billion at end-March 2023, covering about 7.9 months of imports. Risks to the economic outlook could arise from an intensification of international conflicts leading to higher and volatile commodity prices, a slowdown in the main source countries for the tourism sector, and/or natural disasters.

“Barbados continues making good progress in implementing its updated Economic Recovery and Transformation (BERT) plan. All quantitative targets for end-December 2022 and end-March 2023 under the EFF were met. The primary fiscal balance recorded a surplus of 2.5 percent of GDP in FY2022/23, after a deficit of 1 percent of GDP in both FY2020/21 and FY2021/22. For FY2023/24, the authorities are targeting a primary surplus of 3.5 percent of GDP, in line with program targets.

“The authorities remain firmly committed to gradually increasing the primary fiscal surplus and reducing public debt to 60 percent of GDP by FY2035/36, supported by structural reforms. Important steps are being taken to enhance the tax and customs exemption regimes and the public procurement framework, improve tax administration, and advance pension reform. The authorities’ economic reform program contemplates further steps in state-owned enterprises reforms and improvements in public financial management.

“The Barbadian authorities are advancing their ambitious climate policy agenda, supported by the RSF arrangement. Efforts to green the economy are progressing, with renewables gradually increasing their share in the energy matrix. The authorities took steps towards strengthening the climate-resiliency of roads and operationalizing the Barbados Environmental Sustainability Fund (BESF) to support marine conservation, and the Parliament is expected to consider a revised water re-use policy. A fiscal risk statement discussing climate change risks was included in the FY2023/24 budget, and the authorities are working to incorporate climate change considerations in the budget process, including by supporting green procurement. Efforts, supported by the IMF and development partners, are ongoing to mobilize private climate financing.

“The team would like to thank the authorities and other counterparts for their constructive and candid policy dialogue.”