IMF Executive Board Approves 36-month US$257 million Precautionary Stand-By Arrangement for Barbados and Concludes 2026 Article IV Consultation

IMF News, June 22, 2026

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Published: June 22, 2026

Arrangement overview and purpose

IMF approved a 36-month precautionary Stand-By Arrangement (SBA) for Barbados amounting to SDR 189 million (equivalent to US$257 million, or 200 percent of quota).
The Executive Board’s decision allows the authorities immediate access to SDR 47 million (equivalent to US$64 million).
The authorities have indicated they will treat the SBA as precautionary and have consented to publication of the Staff Report prepared for this consultation.
The SBA will:
- provide insurance in the event shocks generate balance of payments needs;
- help preserve macroeconomic stability; and
- support reforms under the homegrown Barbados Economic Recovery and Transformation Plan 2026 (BERT 2026).

Key pillars of the SBA

Sustaining strong fiscal accounts, balancing debt sustainability with development needs.
Maintaining ample international reserves to support the exchange rate peg.
Implementing structural reforms to continue building fiscal policy and institutional credibility and bolster financial stability.
Supporting efforts to boost productivity and competitiveness, and build resilience to natural disasters.

Recent macroeconomic performance and outlook

Economic activity in 2025:
- Growth estimated at 2.7 percent.
- Labor market remained strong.
- Inflation averaged 0.9 percent.
- Current account deficit reached 5.7 percent of GDP.
- Foreign direct investment strengthened significantly, supporting the balance of payments.
- Gross international reserves about US$1.5 billion at end-2025 (around 6 months of imports).
- Primary surplus of 4.2 percent of GDP in FY2025/26.
- High corporate income tax revenues supported expanded public investment in infrastructure and resilience.
- Financial soundness indicators continued to improve in 2025.
Outlook:
- Growth expected to remain stable in 2026.
- Risks tilted firmly to the downside amid high global policy uncertainty, elevated commodity prices, geopolitical tensions, and vulnerability to natural disasters.

Executive Board and Deputy Managing Director highlights

Deputy Managing Director Nigel Clarke emphasized:
- Strong implementation of BERT 2022 supported by IMF arrangements has reinforced macroeconomic stability and facilitated structural reforms.
- Public debt is on a firm downward path, international reserves rebuilt, access to capital markets restored, and important structural reforms completed.
- The SBA provides insurance in a shock-prone external environment while supporting the BERT 2026 plan.
- Authorities committed to maintaining strong fiscal surpluses to keep debt on a declining path and achieve the public debt target of 60 percent of GDP by FY2035/36.
- Fiscal reforms will build policy credibility and strengthen frameworks and institutions; revenue mobilization and public financial management remain priorities.
- Developing domestic debt markets is key to reducing rollover risks and mobilizing domestic savings.
- The exchange rate peg remains a critical anchor, supported by ample international reserves.
- Financial system stability is being reinforced via improvements to banking supervision and enhancements to the AML/CFT framework.
- Reforms to boost productivity, competitiveness, and resilience are critical: tackling infrastructure bottlenecks, improving the business environment, investing in skills and education, boosting resilience to natural disasters, and facilitating transition to renewable energy.

Executive Board Assessment — Directors’ views and recommendations

Directors agreed with the thrust of the staff appraisal and welcomed the BERT plan focused on economic transformation.
Key shared assessments and recommendations:
- Outlook remains stable but risks are tilted to the downside; precautionary SBA is appropriate to provide insurance and support reform implementation.
- Support for maintaining high primary fiscal surpluses to preserve debt sustainability and achieve the 60 percent debt target by FY2035/36.
- Additional revenue windfalls should be used to boost resilience through critical capital spending and further buildup of fiscal buffers.
- Any additional measures to cushion shocks should be temporary and targeted to the most vulnerable.
- Developing domestic debt markets will reduce rollover risks and mobilize domestic savings.
- Fiscal reforms: implement the new tax exemption framework, deepen revenue administration reforms, and improve public financial management (including oversight of state‑owned enterprises and implementing the new Public‑Private Partnership framework).
- Consider removing the foreign exchange fee to reduce market distortions and continue long‑term efforts to strengthen monetary policy operations.
- Financial sector reforms: strengthen banking supervision, develop a resolution framework, operationalize the new deposit insurance scheme, and continue strengthening the AML/CFT framework.
- Structural reform priorities to boost potential growth: tackle infrastructure bottlenecks, improve the business environment, and close skills gaps.
- Commendation of authorities’ commitment to build resilience to external shocks and natural disasters and to facilitate the transition to renewable energy.
It is expected the next Article IV consultation with Barbados will be held in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements.

Selected economic indicators (2024–2026) — key figures from Table 1

I. Social and Demographic Indicators (most recent year)

Population (2025 est., thousand): 282.7
Adult literacy rate (2014): 99.6
Per capita GDP (2025 est., US$ thousand): 28.7
Poverty rate (individual, 2016): 15.8
Life expectancy at birth in years (2022): 76.8
Gini coefficient (2016): 34.1
Rank in UNDP Development Index (2023): 69.0
Unemployment rate (2025): 6.6
Main products, services and exports: tourism, financial services, rum, sugar, and chemicals.

II. Economic Indicators — Projection (2024 / 2025 / 2026)

CY Real GDP: 3.4 / 2.7 / 2.2
CPI inflation (average): 1.5 / 0.9 / 3.1
CPI inflation (end of period): 0.4 / 1.6 / 3.8
Exports of goods and services: 13.2 / 4.4 / 4.5
Imports of goods and services: 7.8 / 8.2 / 7.6
Net domestic assets: 6.8 / 5.8 / (blank)
Of which: Credit to the non financial private sector: (blank)
Broad money: 7.5 / 3.5 / (blank)

CG Public finances (fiscal year) 1/

Revenue and grants: 27.2 / 26.8 / 28.5
Expenditure: 28.1 / 27.1 / 29.2
Fiscal Balance: -0.8 / -0.2 / -0.7
Interest Expenditure: 4.9 / 4.2 / (blank)
Primary Balance: 4.0 / (blank) / (blank)

Public sector debt (fiscal year) 2/

Public sector debt: 98.9 / 96.0 / 91.8
External: 39.6 / 38.4 / 37.1
Domestic: 59.3 / 57.6 / 54.8

Balance of payments (calendar year)

Current account balance: -3.7 / -5.7 / -6.0
Capital and financial account balance: 5.0 / 6.2 / (blank)
Net Errors and Omissions: -0.1 / -1.3 / 0.0
Overall balance: 1.2 / -0.9 / -2.3

Memorandum items:

Gross international reserves (US$ million): 1,593 / 1,523 / 1,333
Nominal GDP, CY (BDS$ millions): 15,195 / 15,888 / 16,646
Nominal GDP, FY (BDS$ millions): 15,413 / 16,078 / 16,859

Notes:

Fiscal year is from April to March.
Public sector debt includes government-guaranteed debt, expenditure and debt arrears (if any), and IMF loans provided to the CBB for BOP support under the 2018 EFF.
US dollar amounts have been calculated using today’s exchange rate: (SDR 0.73601/US$).

Press Release No. 26/219, June 22, 2026.