Caption: Barbados Prime Minister Mia Mottley
WASHINGTON– The executive board of the International Monetary Fund (IMF) Friday said it had concluded the fifth and final reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with Barbados.
The Washington-based financial institution said that as a result of the completion of the reviews, Barbados will be allowed to draw down the US$19 million under the EFF arrangement and US$39 million under the RSF arrangement.
It said this brings the total disbursements under the EFF arrangement to US$116 million and US$193 million) under the RSF arrangement.
According to the IMF, economic activity in 2024 remained robust, with growth estimated at four per cent, driven by tourism, construction, and business services. Inflation moderated to an average of 1.4 per cent due to easing global commodity prices and prices of domestic goods and services.
The IMF said that the external position strengthened further, with the current account deficit narrowing to 4.5 per cent of gross domestic product (GDP), supported by tourism receipts, declining import prices, and one-off current transfers.
It said gross international reserves reached US$1.6 billion at end-2024, equivalent to over seven months of import cover, providing continued strong support to the exchange rate peg.
According to the financial institution’s Barbados’ near-term outlook is stable and that growth is expected to reach 2.7 per cent in 2025, supported by construction of tourism-related projects and government investment.
It said inflation is expected to pick up in 2025 due to the rising cost of non-fuel imports and some domestic agricultural products.
“Nevertheless, risks to the outlook are tilted to the downside, amidst the highly uncertain external economic environment and Barbados’ continued vulnerability to global shocks and natural disasters,” the IMF warned.
It said programme performance has remained strong. All quantitative performance criteria and indicative targets were met. The authorities exceeded the primary fiscal surplus target for the financial year 2024/25 and are targeting 4.4 per cent of GDP for the financial year 2025/26.
Public debt has fallen below 105 per cent of GDP, and the authorities remain committed to bringing it down to 60 per cent of GDP by the financial year 2035/36.
The IMF said Barbados met the EFF structural benchmarks for the review, including completing the assessment of human resource needs at the Barbados Customs and Excise Department, preparing a public-private partnership (PPP) framework, and developing a daily liquidity forecasting framework.
“Both reform measures for the RSF fifth review were also implemented. Key elements to strengthen the integration of climate concerns into public financial management have been completed, including the development of project appraisal guidelines, the deepening of fiscal risk analysis, and the preparation of the PPP framework. The Central Bank of Barbados has also included physical climate risk analysis in its bank stress testing,” it added.
IMF deputy managing director, Bo Li, said the implementation of Barbados’ homegrown Economic Recovery and Transformation programme has remained strong, supported by the EFF and the RSF arrangements. ‘
Li said the completion of the fifth and final reviews marks the successful conclusion of the Fund arrangements.
“While the outlook is stable, risks remain tilted to the downside, given the highly uncertain external economic environment and Barbados’ vulnerability to shocks and natural disasters. The authorities remain strongly committed to ensuring macroeconomic stability and implementing structural reforms to boost potential growth and build resilience.”
Li said maintaining strong fiscal surpluses will be necessary to achieve the public debt target of 60 per cent of GDP by the financial year 2035/36.
“The authorities’ focus on strengthening revenue mobilisation and improving public financial management is appropriate. These measures will be key to preserving fiscal sustainability and creating space for public investment. Finalising ambitious reforms of state-owned enterprises is a priority. The authorities are taking the necessary steps to mobilise external financing.”
Li said that the exchange rate peg remains a critical anchor for macroeconomic stability, supported by ample international reserves.
“Measures have been taken to strengthen the monetary policy framework and financial safety nets. Efforts to enhance the local payments market and infrastructure are advancing, with the goal of moving to a digital payments system in 2026.
“Reforms to improve the business environment and boost growth potential are key. Important measures include advancing the digitalisation of government services and investing in skills and education. The authorities focus on boosting macroeconomic resilience to natural disasters and facilitating the transition to renewable energy is welcome,” Li added. (CMC)
