The International Monetary Fund (IMF) Executive Board has completed the fifth and final reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with Barbados. This decision allows Barbados to draw approximately US$19 million under the EFF arrangement and about US$39 million under the RSF arrangement. The total disbursements under these facilities now amount to roughly US$116 million for the EFF and US$193 million for the RSF.
In 2024, Barbados experienced robust economic activity with an estimated growth rate of 4 percent, driven by sectors such as tourism, construction, and business services. Inflation decreased to an average of 1.4 percent due to lower global commodity prices. The country's external position improved significantly, with a current account deficit narrowing to 4.5 percent of GDP. Gross international reserves reached US$1.6 billion by the end of 2024.
Looking ahead, growth is projected at 2.7 percent in 2025, supported by tourism-related projects and government investment. However, inflation is expected to rise due to increasing costs of non-fuel imports and some domestic agricultural products. Despite a stable outlook, risks remain due to uncertain global economic conditions and natural disasters.
Barbados has met all quantitative performance criteria and exceeded its primary fiscal surplus target for FY2024/25. Public debt has fallen below 105 percent of GDP, with a goal of reducing it further to 60 percent by FY2035/36.
Mr. Bo Li, Deputy Managing Director and Acting Chair of the IMF Executive Board, stated: “The implementation of Barbados’ homegrown Economic Recovery and Transformation program has remained strong.” He noted that while risks are present due to external factors, maintaining fiscal surpluses will be crucial for achieving public debt targets.
Li emphasized that strengthening revenue mobilization and improving public financial management are essential steps for preserving fiscal sustainability in Barbados: “Finalizing ambitious reforms of state-owned enterprises is a priority,” he added.
The exchange rate peg remains vital for macroeconomic stability in Barbados, supported by ample international reserves: “Measures have been taken to strengthen the monetary policy framework,” Li remarked.
Efforts are underway in Barbados to enhance digital payments infrastructure with plans for a digital system launch in 2026: “Reforms to improve the business environment...are key,” Li concluded.