IMF says Barbados’ economy continues to face challenges

SOURCE: CMC- The International Monetary Fund (IMF) Friday said that following a modest economic recovery in 2021, Barbados continues to face economic challenges owing to the global coronavirus (COVID-9) pandemic.

“The ongoing COVID-19 pandemic continues to pose economic challenges to Barbados. Tourism has rebounded in recent months, leading to real GDP (gross domestic growth) growth of 1.4 per cent for 2021, and 11.5 per cent in the fourth quarter of 2021 (over the same quarter in 2020). A gradual economic recovery is expected over the medium term, but risks to the outlook remain high,” said Bert van Selm, who led a virtual IMF mission to the island.

It said that during the February 7-11 virtual visit, the IMF delegation discussed the implementation of Barbados’ Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Fund Facility (EFF).

The four-year extended arrangement under the EFF was approved on October 1, 2018 and is for an amount equivalent to US$464 million.

The IMF Mission Chief said that in this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform programme, while expanding critical investments in social protection.

“All indicative targets for end-December under the EFF were met. International reserves, which reached a low of US$220 million at end-May 2018, increased to US$1.5 billion at the end of 2021. “

He said Barbados recorded a 0.5 per cent of GDP in primary surplus over the first three quarters of the financial year 2021/22, which bodes well for meeting the primary balance target of minus one  per cent of GDP) for the full fiscal year.

“Strong steps have been made in implementing structural reforms. The Fair Credit Reporting Act, adopted by parliament in December, will support financial sector development. The Minister of Finance issued regulations for a procedural fiscal rule in December—a key milestone towards enhancing fiscal sustainability.

“The Barbados Customs and Excise Department took important steps to improve performance management, risk management, and trade facilitation during 2021. Work has been initiated on reforms to enhance the sustainability of the public sector pension scheme,” Van Selm added.

He said that the IMF delegation is looking forward to conducting discussions for the seventh review under the EFF in May