{
  "title": "IMF Executive Board Approves US$290 million Extended Arrangement Under the Extended Fund Facility for Barbados",
  "publication": "IMF News, October 1, 2018",
  "sourceUrl": "https://www.imf.org/en/news/articles/2018/10/01/pr181370-imf-exec-board-approves-us-290-million-ext-arr-under-ext-fund-facility-barbados",
  "canonical": "https://www.imf.org/en/news/articles/2018/10/01/pr181370-imf-exec-board-approves-us-290-million-ext-arr-under-ext-fund-facility-barbados",
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  "summary": "Executive Board approved a four-year Extended Arrangement under the Extended Fund Facility (EFF) for Barbados equivalent to SDR 208 million (about US$290 million, or 220 percent of Barbados’s quota in the IMF).",
  "publishDate": "2018-10-01",
  "sections": [
    {
      "heading": "Approval, financing, and disbursement",
      "content": "- Executive Board approved a four-year Extended Arrangement under the Extended Fund Facility (EFF) for Barbados equivalent to SDR 208 million (about US$290 million, or 220 percent of Barbados’s quota in the IMF).\n- The Board’s decision enables the authorities to purchase the equivalent of SDR 35 million (or about US$49 million) immediately.\n- The remainder will be available upon successful completion of seven semiannual reviews."
    },
    {
      "heading": "Program objectives",
      "content": "- Restore debt sustainability.\n- Strengthen the external position.\n- Improve growth prospects.\n- Protect vulnerable groups through strengthened social safety nets."
    },
    {
      "heading": "Fiscal consolidation and public finances",
      "content": "- Program calls for upfront fiscal consolidation and aims to increase the primary surplus to 6 percent of GDP in FY2019/20 and maintain it at that level for several years thereafter.\n- Key fiscal measures include:\n  - Reduced transfers to state-owned enterprises (SOEs).\n  - Higher taxes on tourism.\n  - Increased personal income tax and corporate income tax rates.\n  - Adoption of a fiscal rule and Public Financial Management (PFM) reforms.\n- Fiscal context and targets (in percent of GDP unless otherwise indicated):\n  - Revenue and grants: 25.9 (2015); 28.2 (2016); 28.4 (2017); 29.6 (2018 est.); 31.1 (2019 projection).\n  - Expenditure: 34.9 (2015); 33.6 (2016); 32.7 (2017); 30.9 (2018 est.); 28.5 (2019 projection).\n  - Fiscal Balance: -9.1 (2015); -5.3 (2016); -4.3 (2017); -1.3 (2018 est.); (2019 projection not separately listed).\n  - Interest Expenditure: 7.6 (2015); 3.4 (2016); (2017 onward not fully tabulated).\n  - Primary Balance: -2.0 (2015); 3.3 (2016); 6.0 (2017).\n  - Central government gross debt (incl. guaranteed and arrears): 146.7 (2015); 149.1 (2016); 157.3 (2017); 123.6 (2018 est.); 116.7 (2019 projection).\n  - External debt share: 33.9 (2015); 31.2 (2016); 28.3 (2017); 26.9 (2018 est.);  (2019 projection:  ).\n  - Domestic debt share: 112.8 (2015); 117.9 (2016); 129.0 (2017); 96.8 (2018 est.); 90.8 (2019 projection)."
    },
    {
      "heading": "State-owned enterprises (SOEs)",
      "content": "- Transfers from central government to SOEs are 7½ percent of GDP.\n- Program aims to reduce SOE transfers by about 2 percentage points of GDP using:\n  - Much stronger oversight of SOEs and improved reporting.\n  - Cost reduction, including reduction of the wage bill.\n  - Revenue enhancement, including increases in user fees.\n  - Mergers and divestment.\n- IMF emphasized that reducing transfers to SOEs will be key in reaching the primary surplus targets."
    },
    {
      "heading": "Debt restructuring",
      "content": "- A comprehensive debt restructuring will complement fiscal consolidation.\n- Authorities identified parameters intended to provide debt relief without jeopardizing financial stability.\n- An exchange offer for domestic debt (Barbados dollar-denominated) to private creditors was launched on September 7, 2018.\n- Proposed restructuring includes features, including a natural disaster clause, expected to help authorities stay current on future debt obligations.\n- IMF stressed the importance of continuing good faith negotiations with domestic and external creditors."
    },
    {
      "heading": "Structural reforms to boost growth and competitiveness",
      "content": "- Program calls for bold structural reforms to improve growth potential and competitiveness, including:\n  - Improvements in business facilitation: speeding up provision of construction permits, faster clearing of goods through customs, getting electricity, and registering property.\n  - Financial and labor market liberalization policies.\n- Social priorities:\n  - Adequate social spending and an improved safety net, with targeted reforms pursued in close collaboration with development partners to improve efficiency and effectiveness of social spending."
    },
    {
      "heading": "Recent economic developments",
      "content": "- New government took office in May 2018 and inherited a precarious economic situation.\n- Over the last decade, Barbados experienced very low growth, widening fiscal and external imbalances, very high debt, and very low reserves.\n- Public debt increased to 157 percent of GDP; international reserves dropped to 5–6 weeks of import coverage.\n- Fiscal deficit remained large at about 4 percent of GDP in FY2017/18.\n- Central Bank of Barbados (CBB) reported a contraction of 0.6 percent in the first half of 2018 (over the same period last year).\n- Government announced comprehensive debt restructuring, including commercial external debt and treasury bills, on June 1, 2018; significant progress reported with domestic and external creditors."
    },
    {
      "heading": "Selected economic, financial, and social indicators (table highlights)",
      "content": "- Social and demographic (most recent year where indicated):\n  - Population (2016 est., thousand): 280.4\n  - Adult literacy rate: 99.7\n  - Per capita GDP (2016 est., US$ thousand): 17.8\n  - Poverty rate (individual, 2010): 19.3\n  - Life expectancy at birth in years (2013): 75.3\n  - Gini coefficient (2010): 47.0\n  - Rank in UNDP Development Index (2014): 57\n  - Unemployment rate (2016 est.): 9.9\n  - Main products, services and exports: tourism, financial services, rum, sugar, and chemicals.\n- Economic indicators (annual percentage change, selected):\n  - Real GDP: 2.2 (2015); 2.3 (2016); -0.2 (2017); -0.5 (2018 est.); -0.1 (2019 projection).\n  - CPI inflation (average): -1.1 (2015); 1.5 (2016); 4.4 (2017); 4.2 (2018 est.); 0.8 (2019 projection).\n  - CPI inflation (end of period): -2.5 (2015); 3.8 (2016); 6.6 (2017); 0.0 (2018 est.); 1.4 (2019 projection).\n  - Exports of goods and services: 3.2 (2015); 2.9 (2016); 2.8 (2017).\n  - Imports of goods and services: -3.9 (2015); 0.2 (2016); -0.4 (2017); 4.3 (2018 est.); 3.1 (2019 projection).\n  - Real effective exchange rate (average): 8.0 (2015); 0.9 (2016); 2.5 (2017).\n  - Broad money: 3.7 (2015); 3.6 (2016); -0.6 (2017); 4.7 (2018 est.).\n- Balance of payments and reserves:\n  - Current account balance: -6.1 (2015); -3.8 (2016); -3.1 (2017); -3.4 (2018 est.); (2019 projection not separately listed).\n  - Capital and financial account balance: 4.5 (2015); 5.4 (2016); 6.8 (2017).\n  - Gross international reserves (US$ million): 478.4 (2015); 358.5 (2016); 227.7 (2017); 342.0 (2018 est.); 516.7 (2019 projection).\n  - Reserves in months of imports of G&S: 2.1 (2015); 1.3 (2016).\n  - Reserves in percent of ARA: 105.3 (2015); 72.6 (2016); 43.8 (2017); 65.8 (2018 est.); 95.1 (2019 projection).\n  - Nominal GDP, CY (BDS$ millions): 9,451 (2015); 9,681 (2016); 9,979 (2017); 10,343 (2018 est.); 10,414 (2019 projection).\n  - Nominal GDP, FY (BDS$ millions): 9,509 (2015); 9,756 (2016); 10,070 (2017); 10,361 (2018 est.); 10,480 (2019 projection).\n\nSource: Press Release No. 18/370, IMF, October 1, 2018.\n\n---\n\n\n References\n\n- Mitsuhiro Furusawa\n- Barbados and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/10/01/pr181370-imf-exec-board-approves-us-290-million-ext-arr-under-ext-fund-facility-barbados"
    }
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    "Published: October 1, 2018",
    "Executive Board approved a four-year Extended Arrangement under the Extended Fund Facility (EFF) for Barbados equivalent to SDR 208 million (about US$290 million, or 220 percent of Barbados’s quota in the IMF).",
    "The Board’s decision enables the authorities to purchase the equivalent of SDR 35 million (or about US$49 million) immediately.",
    "The remainder will be available upon successful completion of seven semiannual reviews.",
    "Restore debt sustainability.",
    "Strengthen the external position.",
    "Improve growth prospects.",
    "Protect vulnerable groups through strengthened social safety nets.",
    "Program calls for upfront fiscal consolidation and aims to increase the primary surplus to 6 percent of GDP in FY2019/20 and maintain it at that level for several years thereafter.",
    "Key fiscal measures include:",
    "Fiscal context and targets (in percent of GDP unless otherwise indicated):",
    "Transfers from central government to SOEs are 7½ percent of GDP.",
    "Program aims to reduce SOE transfers by about 2 percentage points of GDP using:",
    "IMF emphasized that reducing transfers to SOEs will be key in reaching the primary surplus targets.",
    "A comprehensive debt restructuring will complement fiscal consolidation.",
    "Authorities identified parameters intended to provide debt relief without jeopardizing financial stability.",
    "An exchange offer for domestic debt (Barbados dollar-denominated) to private creditors was launched on September 7, 2018.",
    "Proposed restructuring includes features, including a natural disaster clause, expected to help authorities stay current on future debt obligations.",
    "IMF stressed the importance of continuing good faith negotiations with domestic and external creditors.",
    "Program calls for bold structural reforms to improve growth potential and competitiveness, including:",
    "Social priorities:",
    "New government took office in May 2018 and inherited a precarious economic situation.",
    "Over the last decade, Barbados experienced very low growth, widening fiscal and external imbalances, very high debt, and very low reserves.",
    "Public debt increased to 157 percent of GDP; international reserves dropped to 5–6 weeks of import coverage.",
    "Fiscal deficit remained large at about 4 percent of GDP in FY2017/18.",
    "Central Bank of Barbados (CBB) reported a contraction of 0.6 percent in the first half of 2018 (over the same period last year).",
    "Government announced comprehensive debt restructuring, including commercial external debt and treasury bills, on June 1, 2018; significant progress reported with domestic and external creditors.",
    "Social and demographic (most recent year where indicated):",
    "Economic indicators (annual percentage change, selected):",
    "Balance of payments and reserves:",
    "[Mitsuhiro Furusawa](http://www.imf.org/external/np/omd/bios/mf.htm)",
    "[Barbados and the IMF](http://www.imf.org/external/country/BRB/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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