## IMF Reaches Staff Level Agreement on the Fourth Review of Barbados’ Economic Program Under the Extended Fund Facility

_IMF News, October 30, 2020_

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**Canonical URL:** [IMF Reaches Staff Level Agreement on the Fourth Review of Barbados’ Economic Program Under the Extended Fund Facility](https://www.imf.org/en/news/articles/2020/10/30/pr20326---barbados---imf-reaches-staff-level-agreement-4th-review-economic-program-under-eff)

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## Bibliographic details
- Published: October 30, 2020

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### Mission and procedural status
- IMF team led by Bert van Selm conducted a virtual mission between October 26-30, 2020 to discuss implementation of Barbados’ Economic Recovery and Transformation (BERT) plan under the Extended Fund Facility (EFF).
- IMF team and Barbadian authorities reached a staff-level agreement on the completion of the fourth review under the EFF arrangement.
- Agreement is subject to approval by the IMF Executive Board, which is expected to consider the review in December.
- Upon completion of the review, SDR 65 million (69 percent of quota, or about US$90 million) will be made available to Barbados.
- A revised central bank law is expected to be tabled to parliament shortly; this is a critical safeguard and will be a prior action for completion of this EFF review.

### Economic impact of COVID-19 and fiscal stance
- The COVID-19 pandemic has had a major impact on Barbados’ economy, with a double-digit decline in economic activity projected for 2020.
- Tourism specifics:
  - Tourism came to a virtual standstill between March and June 2020: airlift declined precipitously, most hotels closed, and occupancy plummeted at facilities that remained open.
  - In early July, the island cautiously started reopening the economy for international tourists after effectively halting local transmission.
  - Tourism arrivals remain at a fraction of normal levels.
- Fiscal policy adjustments:
  - The Government has lowered its primary balance target to minus 1 percent of GDP for FY2020/21.
  - This compares to a surplus of 6 percent of GDP envisaged prior to the pandemic, and a surplus of 1 percent of GDP at the time of the third EFF review.
  - The lowered primary balance target accommodates the loss of government revenues and facilitates emergency outlays on health facilities, medical supplies, and income support to the most vulnerable.
- Financing proposal:
  - To help finance the emerging fiscal deficit and related balance of payments need, an augmentation of the EFF in the amount of SDR 48 million (51 percent of quota, about US$66 million) is proposed.
  - This augmentation would bring total access under the program to SDR 322 million or 341 percent of quota.

### Program performance and external buffers
- International reserves and program targets:
  - International reserves, which reached a low of US$220 million (5-6 weeks of import coverage) at end-May 2018, are now in excess of US$1 billion.
  - All quantitative targets for end-September under the EFF were met.
  - The program target for Net International Reserves was met by a wide margin, as was the target for the Central Bank of Barbados’ Net Domestic Assets (NDA).

### Staff assessment and next steps
- Staff supports the easing of the fiscal stance in response to the pandemic.
- Subject to IMF Executive Board approval, staff proposes the SDR 48 million augmentation to help finance the emerging fiscal deficit.
- The IMF team thanked the authorities and technical team for their openness and candid discussions.

*IMF press release, October 30, 2020.*

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## References

- [IMF COVID-19 Hub](https://www.imf.org/en/Topics/imf-and-covid19)
- [Policy Tracker](https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19)
- [Financial Assistance](https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker)
- [Questions & Answers](https://www.imf.org/en/About/FAQ/imf-response-to-covid-19)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2020/10/30/pr20326---barbados---imf-reaches-staff-level-agreement-4th-review-economic-program-under-eff_