Barbados: Sectoral Balance Sheet Mismatches and Macroeconomic Vulnerabilities
IMF Working Papers, January 1, 2012
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- Barbados: Sectoral Balance Sheet Mismatches and Macroeconomic Vulnerabilities
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Bibliographic details
- Authors: Charles Amo Yartey
- Published: January 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463933166.001
Summary and scope
- Paper author: Charles Amo Yartey
- Publication date: January 1, 2012
- Period analyzed: 2006 to 2009
- Methodology: balance sheet approach to analyze macroeconomic vulnerabilities, financial positions of the economy and main sectors, and sectors' exposure to changes in exchange rates
- Publication series: IMF Working Paper No. 2012/031
- Pages: 29
- Volume: 2012; Issue: 031; DOI: https://doi.org/10.5089/9781463933166.001; Stock No: WPIEA2012031; ISBN: 9781463933166; ISSN: 1018-5941
Key findings
- Aggregate economy balance sheet
- The balance sheet of the aggregate economy has been weakened by the recent deterioration in the balance sheet of the nonfinancial public sector.
- Public sector vulnerabilities
- Macroeconomic vulnerabilities have increased in Barbados since 2006 due to the high public debt and the deterioration in the net financial position with nonresidents.
- The balance sheet of the nonfinancial public sector has deteriorated significantly reflecting weak fiscal performance.
- Private sector resilience
- The private sector maintained a healthy position and seems resilient to shocks.
- Exchange rate and rollover exposures
- The central government is highly vulnerable to exchange rate shock.
- Debt rollover risks are likely to be limited since most external liabilities are long term and most domestic liabilities are held by the National Insurance System.
Sectoral analysis (selected points)
- Nonfinancial public sector
- Significant deterioration in balance sheet; linked to weak fiscal performance.
- Central government
- High vulnerability to exchange rate shocks.
- Debt rollover risk assessment: limited, owing to the long-term nature of most external liabilities and concentration of domestic liabilities with the National Insurance System.
- Private sector
- Maintained a healthy financial position during 2006–2009 and appears resilient to shocks.
- Net financial position with nonresidents
- Deterioration contributed to increasing macroeconomic vulnerabilities since 2006.
Subject coverage and keywords (as given)
- Subjects: Economic sectors, Financial crises, Financial sector, Financial statements, Foreign currency exposure, Money, Public financial management (PFM), Public sector
- Keywords: aggregate balance sheet, balance sheet information, balance sheet matrices, balance sheet weakness, banking system, Barbados, Financial sector, Financial statements, foreign currency assets, Foreign currency exposure, foreign currency mismatch, foreign currency position, foreign currency position of the CBB, foreign currency position of the sector, FX position, Global, net effect, Net financial position, net foreign currency position, position of the CBB, position of the public sector, position of the sector, Public sector, WP
Policy-relevant implications (derived from findings)
- Fiscal consolidation and public balance sheet repair are priorities to reduce macroeconomic vulnerabilities given the deterioration in the nonfinancial public sector balance sheet.
- Managing foreign exposure and exchange rate risks for the central government should be a priority given high vulnerability to exchange rate shock.
- Monitoring of external liabilities structure is needed even though most external liabilities are long term; continued reliance on the National Insurance System for domestic debt holdings may concentrate exposure.
- Preserve and strengthen private sector resilience to maintain shock-absorbing capacity in the economy.
IMF Working Paper No. 2012/031 — Charles Amo Yartey, January 1, 2012