Bridgetown, Barbados – May 13, 2022: At the request of the Government of Barbados, an International Monetary Fund (IMF) team led by Bert van Selm conducted a mission between May 9-13, 2022 to discuss the implementation of Barbados’ Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Fund Facility (EFF). To summarize the mission’s findings, Mr. van Selm made the following statement:
“Following productive discussions, the IMF team and the Barbadian authorities reached staff-level agreement on the completion of the seventh and final review under the EFF arrangement. The agreement is subject to approval by the IMF Executive Board, which is expected to consider the review in June. Upon completion of the review, SDR 17 million (or about US$23 million) will be made available to Barbados.
“Economic activity in Barbados is starting to recover from the COVID-19 shock. Tourism came to a virtual standstill in April 2020, and the economy contracted by 14 percent in 2020. A gradual economic recovery started in 2021 and gained momentum in recent months, with tourism now just over 50 percent of pre-pandemic levels. Risks to the outlook remain elevated, with higher global food and fuel prices starting to push up inflation in Barbados.
“In this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program. All quantitative targets for end-December 2021 and end-March 2022 under the EFF were met. International reserves, which reached a low of US$220 million (5-6 weeks of import coverage) in May 2018, are now at a comfortable level of US$1.5 billion. The government took initiatives to facilitate renewable energy projects and adopted regulations for a procedural fiscal rule, while the customs department took steps to improve trade facilitation and risk management.
“Progress in restoring macroeconomic stability prior to the onset of the COVID-19 pandemic facilitated a countercyclical fiscal policy response in FY2020/21 and FY2021/22. Barbados recorded a primary deficit of 1 percent of GDP for FY2021/22, unchanged from FY2020/21. The expenditure envelope included funds for COVID-related expenditures as well as housing reconstruction for the most vulnerable in the aftermath of Hurricane Elsa. For FY2022/23, the authorities are targeting a primary surplus of 1 percent of GDP, with revenue projections premised on a continued recovery in tourism. The authorities remain firmly committed to reducing public debt over time.
“The team would like to thank the authorities and the technical team for their openness and candid discussions.”