IMF Executive Board Concludes the Fourth Reviews Under the Extended Fund Facility and the Resilience and Sustainability Facility with Barbados
IMF News, December 18, 2024
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- Published: December 18, 2024
Review conclusion and IMF financing
- Executive Board concluded the Fourth Reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) with Barbados.
- The conclusion allows immediate disbursement of:
- SDR 14.175 million (about US$19 million) under the EFF.
- SDR 28.35 million (about US$37 million) under the RSF.
- Total disbursements to date:
- EFF: SDR 70.875 million (about US$93 million).
- RSF: SDR 113.4 million (about US$149 million).
- All quantitative performance criteria and indicative targets set for the fourth review of the EFF were met.
- All structural benchmarks for the fourth review were met and the two RSF reform measures were implemented.
Economic performance and external position (2024)
- Economic growth:
- The Barbadian economy expanded by 3.9 percent year-on-year between January and September 2024.
- Growth driven by tourism, business services, and construction.
- Labor market:
- Unemployment in the first half of the year fell to its lowest level since 2008.
- Inflation:
- Inflation continued moderating due to easing global commodity prices and lower domestic service prices.
- External sector:
- Current account deficit narrowed to 5 percent of GDP through September 2024.
- International reserves reached US$1.6 billion (equivalent to over 7 months of imports), supporting the exchange rate peg.
- Natural disasters:
- Hurricane Beryl caused significant damage to the fishing sector and some coastal infrastructure; macroeconomic impact expected to be relatively moderate due in part to its occurrence during the off-peak tourist season.
Fiscal outcomes, debt, and targets
- Fiscal performance:
- Authorities comfortably met the primary fiscal surplus target for the first half of FY2024/25.
- Authorities are on course to meet the end-year target of 3.8 percent of revised GDP.
- Public debt:
- Public debt declined to around 105 percent of GDP at end-September 2024.
- Authorities remain committed to meeting the debt target of 60 percent of GDP by 2035/36.
Structural reforms, institutional measures, and climate agenda
- BERT 2022:
- Government continues implementing the home-grown Barbados Economic Recovery and Transformation (BERT 2022) plan to achieve more inclusive and sustainable growth, maintain fiscal and debt sustainability, and build resilience to climate change.
- BERT 2022 places renewed focus on structural reforms to promote investment, accelerate the green transition, boost inclusive growth, and enhance competitiveness.
- Fiscal and public sector reforms:
- Important progress on fiscal reforms, including strengthening revenue administration, improving public financial management, and enhancing public investment and procurement.
- These measures are described as critical to preserve fiscal sustainability and create space for public investment.
- Monetary and financial resilience:
- Exchange rate peg remains a key anchor for macroeconomic stability, supported by ample international reserves.
- Authorities are working to enhance the monetary policy framework and strengthen financial resilience.
- Following Barbados’ removal from the FATF grey list, maintaining momentum to further strengthen the AML/CFT framework remains important.
- Climate policy and financing:
- Ambitious climate policy agenda continues to advance.
- A new Electricity Supply Bill has been tabled to enhance competition in the electricity market and encourage local participation in renewable energy investment.
- The Central Bank of Barbados has adopted a strategy for building its capacity to monitor and assess climate change risks to help safeguard financial stability and economic resilience.
- Authorities are successfully mobilizing climate financing, supported by international development partners.
- The recent debt-for-climate conversion is highlighted as an important innovation that will generate savings for upfront green investment to enhance Barbados’ water supply and resilience, support environmental sustainability, and boost food security.
Risks, outlook, and policy priorities
- Risks:
- Barbados remains vulnerable to global shocks, climate change, and natural disasters.
- Policy priorities emphasized:
- Continue implementing fiscal, structural, and public financial management reforms.
- Strengthen the business environment, mobilize domestic savings, and invest in skills and education to achieve more inclusive and sustainable growth.
- Maintain exchange rate peg supported by adequate reserves while enhancing monetary policy framework and financial sector resilience.
- Sustain momentum on AML/CFT reforms following removal from the FATF grey list.
- Continue mobilizing climate financing and implementing measures to enhance resilience to climate change and natural disasters.
IMF Press Release No. 24/488; December 18, 2024 — IMF Communications Department