May 22, 2024
A delegation from the International Monetary Fund (IMF) concluded a nine-day visit to Barbados, reaching a staff-level agreement on the third review of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). The IMF’s executive board will consider these reviews in June. The IMF noted that Barbados’ economy has returned to pre-pandemic levels, experiencing 12 consecutive quarters of growth, largely driven by tourism.
The IMF praised Barbados’ commitment to fiscal consolidation, debt sustainability, and structural reforms under the Barbados Economic Reform and Transformation (BERT 2022) program. A positive review by the IMF board could release US$19 million from the EFF and US$37 million from the RSF for Barbados.
In 2023 and 2024, the economy expanded, with GDP recovering to pre-pandemic levels and tourist arrivals exceeding averages from 2017-2019. Inflation moderated due to lower international food prices, although higher domestic crop prices posed a challenge. The current account deficit improved to 9% of GDP in 2023, with international reserves reaching US$1.6 billion by March 2024, covering about seven months of imports.
Potential risks to the outlook include a slowdown in tourism, regional conflicts raising commodity prices, higher external financing costs, or natural disasters. Barbados met all quantitative targets for March 2024, with the primary surplus increasing to 3.7% of GDP. The country aims for a 4% primary surplus by March 2025 and plans to reduce its debt ratio to 60% of GDP by 2036.
Structural reforms include state-owned enterprise reforms, public pension amendments, tax and customs reforms, and enhanced public procurement and financial management. Significant progress was made in anti-money laundering efforts, leading to Barbados’ exit from the Financial Action Task Force grey list.
Barbados is advancing its climate policy agenda, with a new Storm Water Management Act and an energy efficiency policy approved. Efforts to integrate renewable energy and enhance battery storage are also underway to ensure a stable electricity supply.
(Source: The Gleaner)
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