November 6, 2024
PRESS OFFICER: Meera Louis
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Bridgetown, Barbados: At the request of the Government of Barbados, an International Monetary Fund (IMF) team led by Michael Perks visited Barbados between October 31 and November 6 to discuss the implementation of Barbados’ Economic Recovery and Transformation (BERT 2022) 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. Perks made the following statement:
“Following productive discussions, the IMF team and the Barbadian authorities reached a staff-level agreement on the completion of the fourth reviews of the EFF and the RSF arrangements with Barbados. The agreement is subject to approval by the IMF Executive Board, which is expected to consider the reviews in December. The completion of the reviews will allow the authorities to draw the equivalent of SDR 14.175 million (about US$19 million) under the EFF arrangement and SDR 28.35 million (about US$38 million) under the RSF arrangement.”
“Between January and September 2024, the Barbadian economy grew by an estimated 3.9 percent year-on-year, driven by dynamism in the tourism and construction sectors. While Hurricane Beryl caused significant damage to some coastal infrastructure and the fishing sector, its macroeconomic impact is expected to be moderate, in part given its occurrence during the off-peak tourist season. Inflation continued to slow with the easing of international commodity prices and lower domestic service prices, offsetting higher prices of certain domestic food and agricultural products and rising freight costs. The external position strengthened further, with the current account deficit narrowing to 5 percent of GDP through September, down from 9.5 percent of GDP during the same period in 2023. International reserves remain ample at US$1.6 billion at end-September (equivalent to around 7 months of imports), continuing to support the exchange rate peg. The near-term economic outlook remains positive, but Barbados is still vulnerable to global shocks and natural disasters, as demonstrated by the impact of Hurricane Beryl.”
“Program performance remains strong. All quantitative performance criteria and indicative targets for the fourth review of the EFF were met. Having comfortably met the primary surplus target during the first half of FY 2024/25, the authorities are on track to meet the end-year target of 3.8 percent of revised GDP.[1] Public debt declined to around 105 percent of revised GDP by end-September 2024 and the authorities continue to be firmly committed to bringing debt down to 60 percent of GDP by FY 2035/36.”
“The Barbadian authorities continue to advance structural reforms, supported by technical assistance from the Fund and development partners. Key structural benchmarks were met, including measures to strengthen tax and customs administration, improve public financial management, and enhance public investment and procurement. Efforts envisaged in the BERT plan to strengthen growth and the business environment are also progressing.”
“Meanwhile, the government is making good progress with its ambitious climate-policy agenda, supported by the RSF arrangement. A new Electricity Supply Bill has been tabled in Parliament, with the aim of enhancing competition in the electricity market and encouraging local participation in renewable energy investment. To safeguard financial stability and economic resilience, the Central Bank of Barbados has adopted a strategy for building its capacity to monitor and assess climate change risks. The authorities also continue to advance efforts to mobilize climate finance, supported by the IMF and other development partners, including the new debt-for-climate conversion, which will generate savings for upfront green investment to enhance water supply and resilience.”
“The team would like to thank the authorities and other counterparts for their hospitality and the constructive and candid policy dialogue.”
[1] The authorities published rebased GDP statistics in July 2024, which resulted in an upward revision to nominal GDP for 2023 of 5 percent.
