Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the fifth review of the IMF’s extended arrangement under the Extended Fund Facility (EFF) for Barbados. The completion of the review allows the authorities to draw the equivalent of SDR 17 million (about US$24 million), bringing total disbursements to the equivalent of SDR 288 million (about US$415 million).
The four-year extended arrangement under the EFF was approved on October 1, 2018 (see Press Release No. 18/370 ) and is for an amount equivalent of SDR 322 million (about US$464 million).
Barbados continues its strong implementation of the comprehensive Economic Recovery and Transformation (BERT) plan aimed at restoring fiscal and debt sustainability and increasing reserves and growth. The prolonged global coronavirus pandemic poses a major challenge for the economy, which is heavily dependent on tourism.
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair said:
“Barbados continues to make strong progress in implementing its homegrown Economic Recovery and Transformation plan, despite major challenges from the ongoing global pandemic . The authorities remain strongly committed to program implementation.
“The lower primary balance target, financed by additional support from international financial institutions, is appropriate to accommodate worse-than-anticipated revenue losses and support spending on public health and social protection. The delay in achieving the 60 percent of GDP debt anchor by two years would avoid jeopardizing economic growth and social cohesion. To help safeguard debt sustainability, sustaining ambitious primary surpluses over the medium and long term would be required.
“The authorities are committed to medium-term fiscal consolidation, supported by reform of state-owned enterprises (SOEs). Lower transfers to state-owned enterprises (SOEs) will create fiscal space for investment in physical and human capital, complemented by stronger SOE oversight, revenue enhancement, cost reduction, and mergers and divestments. Pension reform and the introduction of a fiscal rule will also support medium-term fiscal sustainability.
“The approved amended central bank law will limit its financing of the government and strengthen the central bank’s mandate, autonomy, and decision-making. The removal of Barbados from the EU list of non-corporative jurisdictions for tax purposes is welcome. Full implementation of the FATF action plan would allow Barbados to exit its grey list.
“A strong recovery after the global pandemic will depend on accelerating structural reforms to improve the business climate and facilitate green and digital transformation. Strengthening resilience to natural disasters and climate change is key to achieving long-term sustainable economic growth.”