An International Monetary Fund (IMF) team, led by Michael Perks, concluded a visit to Barbados on November 6, following discussions with the Barbadian government. The talks focused on the country's Economic Recovery and Transformation (BERT 2022) plan under the Extended Fund Facility (EFF) and reform measures under the Resilience and Sustainability Facility (RSF).
Perks announced that "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 RSF arrangements with Barbados." This agreement is pending approval by the IMF Executive Board in December. If approved, it will enable Barbados to draw approximately US$19 million under the EFF arrangement and about US$38 million under the RSF arrangement.
The Barbadian economy grew by an estimated 3.9% year-on-year from January to September 2024. Growth was primarily driven by tourism and construction sectors despite Hurricane Beryl's impact on coastal infrastructure and fishing. The hurricane's macroeconomic impact is expected to be moderate due to its timing during off-peak tourist season.
Perks noted that inflation has slowed down due to easing international commodity prices. The external position has improved with a reduction in current account deficit from 9.5% of GDP in 2023 to 5% through September this year. International reserves were reported at US$1.6 billion at end-September, equating to seven months' worth of imports.
The economic outlook remains positive but acknowledges vulnerabilities due to global shocks and natural disasters like Hurricane Beryl.
Barbados met all quantitative performance criteria for EFF’s fourth review, comfortably achieving its primary surplus target for FY 2024/25's first half, setting it on course for an end-year target of 3.8% of revised GDP. Public debt decreased to around 105% of revised GDP by end-September 2024, with a commitment to reduce it further.
Structural reforms are advancing well as part of efforts supported by technical assistance from international partners. Key areas include tax administration improvements and public financial management enhancements.
In terms of climate policy progress supported by RSF arrangements, a new Electricity Supply Bill aims at boosting competition in renewable energy investment markets has been introduced in Parliament. Furthermore, strategies are being adopted for monitoring climate change risks while mobilizing climate finance continues with support from development partners.
"The team would like to thank the authorities and other counterparts for their hospitality and constructive dialogue," Perks concluded.