{
  "title": "IMF Executive Board Concludes 2017 Article IV Consultation with Barbados",
  "publication": "IMF News, January 31, 2018",
  "sourceUrl": "https://www.imf.org/en/news/articles/2018/01/30/pr1833-imf-executive-board-concludes-2017-article-iv-consultation-with-barbados",
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  "summary": "Real GDP growth reached 1.6 percent in 2016, projected to slow to 0.9 percent in 2017 and 0.5 percent in 2018.",
  "publishDate": "2018-01-31",
  "sections": [
    {
      "heading": "Economic performance and outlook",
      "content": "- Real GDP growth reached 1.6 percent in 2016, projected to slow to 0.9 percent in 2017 and 0.5 percent in 2018.\n- CPI inflation (average) was 1.5 percent in 2016, projected at 4.5 percent in 2017 and 5.1 percent in 2018.\n- CPI inflation (end of period) was 3.8 percent in 2016, projected at 7.4 percent in 2017 and 3.0 percent in 2018.\n- Slower growth reflects increased pace of fiscal consolidation and policy uncertainty related to forthcoming elections.\n- Inflation is projected to rise by year end to 5.5 percent as a result of recent tax increases but return to its historical norm in the medium term."
    },
    {
      "heading": "External sector and international reserves",
      "content": "- Current account deficit declined to 4.4 percent of GDP in 2016, about half that in 2014.\n- Current account deficit projected at 3.7 percent in 2017 and 2.9 percent of GDP in 2018.\n- Net international reserves (NIR) declined to about US$275 million at end-September (1.6 months of imports).\n- Net international reserves (US$ millions) by year: 526.0 (2014), 463.0 (2015), 340.5 (2016), 275.3 (2017), 331.7 (2018).\n- Weakness in the financial account and delayed privatization expected to contribute to continued weak reserves.\n- Exports of goods and services: -3.6 (2014), 3.2 (2015), 6.5 (2016), -0.3 (2017), 2.5 (2018).\n- Imports of goods and services: -1.5 (2014), -3.9 (2015), 0.2 (2016), -1.7 (2017), 2.9 (2018)."
    },
    {
      "heading": "Fiscal consolidation, deficit, and debt",
      "content": "- Fiscal deficit (Central Government, percent of GDP, fiscal year): -7.5 (2014), -8.9 (2015), -5.5 (2016), -4.1 (2017), -3.0 (2018).\n- Revenue and grants (percent of GDP): 25.7 (2014), 26.1 (2015), 28.5 (2016), 29.1 (2017), 29.8 (2018).\n- Expenditure (percent of GDP): 33.3 (2014), 35.0 (2015), 34.0 (2016), 33.1 (2017), 32.8 (2018).\n- Interest Expenditure (percent of GDP): 7.0 (2014), 7.7 (2015), 7.3 (2016).\n- Primary Balance (percent of GDP): -0.5 (2014), -1.8 (2015), 2.2 (2016).\n- Central government gross debt (excludes NIS holdings, percent of GDP): 93.4 (2014), 101.0 (2015), 100.9 (2016), 97.2 (2017), 93.9 (2018).\n- Central government gross debt (includes NIS holdings, percent of GDP): 125.4 (2014), 134.7 (2015), 137.0 (2016), 132.8 (2017), 128.7 (2018).\n- Central government debt at end-FY2016/17 was 137 percent of GDP or 101 percent of GDP excluding securities held by the National Insurance Scheme (NIS).\n- Fiscal deficit estimated to have declined to 5.5 percent of GDP in FY2016/17 reflecting stronger revenue performance, including the introduction of the National Social Responsibility Levy (NSRL) and one-off factors.\n- Staff project fiscal deficit of 4.1 percent of GDP in FY2017/18 without divestment proceeds; shortfalls in NSRL revenues and higher transfers to SOEs reduced planned consolidation.\n- Larger than expected fiscal deficit is increasing funding challenges; commercial banks’ reserve requirements for holding government securities have been increased, increasing banks’ exposure to sovereign risk."
    },
    {
      "heading": "Financial sector and monetary policy",
      "content": "- Financial sector remains stable with banks well capitalized.\n- Financial soundness indicators show progress in reducing NPLs by commercial banks and credit unions.\n- Private sector credit growth remained subdued and banks’ profitability remains weak.\n- Central bank significantly reduced its funding of the government in the first half of FY2017/18.\n- Directors encouraged continued efforts to phase out direct financing of the government by the central bank and to reorient monetary policy towards supporting the fixed exchange rate regime.\n- Directors called for steps to ease the recent increase in statutory requirements for banks to hold government securities.\n- Directors encouraged enhancement of regulatory and supervisory frameworks, especially for non‑bank financial institutions, strengthening the AML/CFT regime, and legislative amendments to increase Central Bank independence."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Executive Directors noted the economy is slowing after improved performance in 2016; large fiscal deficits, high debt, and low reserves pose challenges.\n- Directors emphasized need for a stronger macroeconomic framework and bolder structural reforms to achieve fiscal and debt sustainability, meet financing needs, build adequate international reserves, and boost growth.\n- Recommended that adjustment measures focus on expenditure, primarily supported by reform of State‑Owned Enterprises (SOEs).\n- Priority reform actions and fiscal measures recommended:\n  - Comprehensive restructuring of SOE operations to reduce government transfers.\n  - Define clear objectives for SOE reform and implement the Public Financial Management and Audit Act.\n  - Contain the wage bill and reform government pensions.\n  - Improve revenue administration and broaden the tax base, including by reducing exemptions.\n  - Consider partial reversal of the increase in the National Social Responsibility Levy if progress is made on reforms.\n  - Make changes to the size and delivery of social programs to contain cost and ensure long‑term viability.\n  - Enhance timeliness and quality of economic data."
    },
    {
      "heading": "Key demographic and social indicators",
      "content": "- Population (2017 est. thousand): 280.4\n- Adult literacy rate: 99.7\n- Per capita GDP (2016 est., US$ thousand): 17.0\n- Poverty rate (individual, 2010): 19.3\n- Life expectancy at birth in years (2013): 75.3\n- Gini coefficient (2010): 47\n- Rank in UNDP Human Development Index (2014): 57\n- Unemployment rate (2016 est.): 9.9\n- Main Products: tourism, financial services, rum, and chemicals"
    },
    {
      "heading": "Selected macroeconomic aggregates (nominal and levels)",
      "content": "- Nominal GDP (BDS$ millions): 9,343 (2014), 9,390 (2015), 9,528 (2016), 10,045 (2017), 10,609 (2018).\n- Exchange rate (BDS$/US$) — memorandum item listed (value not provided in table).\n- Memorandum: Net international reserves in months of imports: 1.9 (year not specified in table but NIR levels provided above).\n\nPress Release No. 18/33 — IMF Communications Department, January 31, 2018\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Barbados and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/01/30/pr1833-imf-executive-board-concludes-2017-article-iv-consultation-with-barbados"
    }
  ],
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    "Published: January 31, 2018",
    "Real GDP growth reached 1.6 percent in 2016, projected to slow to 0.9 percent in 2017 and 0.5 percent in 2018.",
    "CPI inflation (average) was 1.5 percent in 2016, projected at 4.5 percent in 2017 and 5.1 percent in 2018.",
    "CPI inflation (end of period) was 3.8 percent in 2016, projected at 7.4 percent in 2017 and 3.0 percent in 2018.",
    "Slower growth reflects increased pace of fiscal consolidation and policy uncertainty related to forthcoming elections.",
    "Inflation is projected to rise by year end to 5.5 percent as a result of recent tax increases but return to its historical norm in the medium term.",
    "Current account deficit declined to 4.4 percent of GDP in 2016, about half that in 2014.",
    "Current account deficit projected at 3.7 percent in 2017 and 2.9 percent of GDP in 2018.",
    "Net international reserves (NIR) declined to about US$275 million at end-September (1.6 months of imports).",
    "Net international reserves (US$ millions) by year: 526.0 (2014), 463.0 (2015), 340.5 (2016), 275.3 (2017), 331.7 (2018).",
    "Weakness in the financial account and delayed privatization expected to contribute to continued weak reserves.",
    "Exports of goods and services: -3.6 (2014), 3.2 (2015), 6.5 (2016), -0.3 (2017), 2.5 (2018).",
    "Imports of goods and services: -1.5 (2014), -3.9 (2015), 0.2 (2016), -1.7 (2017), 2.9 (2018).",
    "Fiscal deficit (Central Government, percent of GDP, fiscal year): -7.5 (2014), -8.9 (2015), -5.5 (2016), -4.1 (2017), -3.0 (2018).",
    "Revenue and grants (percent of GDP): 25.7 (2014), 26.1 (2015), 28.5 (2016), 29.1 (2017), 29.8 (2018).",
    "Expenditure (percent of GDP): 33.3 (2014), 35.0 (2015), 34.0 (2016), 33.1 (2017), 32.8 (2018).",
    "Interest Expenditure (percent of GDP): 7.0 (2014), 7.7 (2015), 7.3 (2016).",
    "Primary Balance (percent of GDP): -0.5 (2014), -1.8 (2015), 2.2 (2016).",
    "Central government gross debt (excludes NIS holdings, percent of GDP): 93.4 (2014), 101.0 (2015), 100.9 (2016), 97.2 (2017), 93.9 (2018).",
    "Central government gross debt (includes NIS holdings, percent of GDP): 125.4 (2014), 134.7 (2015), 137.0 (2016), 132.8 (2017), 128.7 (2018).",
    "Central government debt at end-FY2016/17 was 137 percent of GDP or 101 percent of GDP excluding securities held by the National Insurance Scheme (NIS).",
    "Fiscal deficit estimated to have declined to 5.5 percent of GDP in FY2016/17 reflecting stronger revenue performance, including the introduction of the National Social Responsibility Levy (NSRL) and one-off factors.",
    "Staff project fiscal deficit of 4.1 percent of GDP in FY2017/18 without divestment proceeds; shortfalls in NSRL revenues and higher transfers to SOEs reduced planned consolidation.",
    "Larger than expected fiscal deficit is increasing funding challenges; commercial banks’ reserve requirements for holding government securities have been increased, increasing banks’ exposure to sovereign risk.",
    "Financial sector remains stable with banks well capitalized.",
    "Financial soundness indicators show progress in reducing NPLs by commercial banks and credit unions.",
    "Private sector credit growth remained subdued and banks’ profitability remains weak.",
    "Central bank significantly reduced its funding of the government in the first half of FY2017/18.",
    "Directors encouraged continued efforts to phase out direct financing of the government by the central bank and to reorient monetary policy towards supporting the fixed exchange rate regime.",
    "Directors called for steps to ease the recent increase in statutory requirements for banks to hold government securities.",
    "Directors encouraged enhancement of regulatory and supervisory frameworks, especially for non‑bank financial institutions, strengthening the AML/CFT regime, and legislative amendments to increase Central Bank independence.",
    "Executive Directors noted the economy is slowing after improved performance in 2016; large fiscal deficits, high debt, and low reserves pose challenges.",
    "Directors emphasized need for a stronger macroeconomic framework and bolder structural reforms to achieve fiscal and debt sustainability, meet financing needs, build adequate international reserves, and boost growth.",
    "Recommended that adjustment measures focus on expenditure, primarily supported by reform of State‑Owned Enterprises (SOEs).",
    "Priority reform actions and fiscal measures recommended:",
    "Population (2017 est. thousand): 280.4",
    "Adult literacy rate: 99.7",
    "Per capita GDP (2016 est., US$ thousand): 17.0",
    "Poverty rate (individual, 2010): 19.3",
    "Life expectancy at birth in years (2013): 75.3",
    "Gini coefficient (2010): 47",
    "Rank in UNDP Human Development Index (2014): 57",
    "Unemployment rate (2016 est.): 9.9",
    "Main Products: tourism, financial services, rum, and chemicals",
    "Nominal GDP (BDS$ millions): 9,343 (2014), 9,390 (2015), 9,528 (2016), 10,045 (2017), 10,609 (2018).",
    "Exchange rate (BDS$/US$) — memorandum item listed (value not provided in table).",
    "Memorandum: Net international reserves in months of imports: 1.9 (year not specified in table but NIR levels provided above).",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Barbados and the IMF](http://www.imf.org/external/country/BRB/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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