Barbados to get IMF funding on heels of successful EFF review

The International Monetary Fund (IMF) is making US$38 million (BDS$76 million) available to Barbados after the country successfully completed the first reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with the Washington-based financial institution.

The IMF said Barbados is implementing an ambitious homegrown economic reform and climate policy agenda aimed at strengthening fiscal sustainability, advancing structural reforms, unlocking the economy’s growth potential, increasing resilience to climate change, and greening the economy.

It said that these policies are supported by the EFF and RSF arrangements, which were approved on December 7, 2022, in an amount equivalent to US$304 million.

IMF’s First Deputy Managing Director and Acting Chair of the Executive Board, Gita Gopinath, in a statement issued after the reviews, said following a series of shocks in recent years, the Barbadian economy has recovered strongly amid a rebound in tourism.

She said while inflation has increased with the rise in global food and fuel prices, it is projected to moderate in the coming months.

“Fiscal performance has significantly improved, public debt is on a downward trajectory, and reserves have risen. The focus on reducing debt through higher primary surpluses, while maintaining adequate social and capital expenditure is appropriate,” said Gopinath.

She said important progress is being made on the structural reform agenda, including strengthening the duty and tax exemptions framework, enhancing tax compliance and risk management, and unlocking the economy’s growth potential.

“Continued progress on state-owned enterprise and pension reforms is important. The newly created Fiscal and Growth Councils are critical to help monitor the implementation of the authorities’ fiscal strategy and support the growth agenda,” she added.

The IMF official said that Barbadian authorities are focused on enhancing the monetary policy toolkit and taking steps to safeguard financial stability, adding it will be necessary to develop liquidity management instruments and take steps to strengthen the AML/CFT framework.

“The authorities are advancing their ambitious climate policy agenda to increase resilience to climate change and green the economy. Ongoing efforts to incorporate climate policy goals in the fiscal process, including by discussing climate change risks in the budget and enhancing public procurement, are welcome.

“The climate policy reforms are expected to help create an enabling environment that mobilises private sector investment in climate-related projects,” Gopinath added.

(PR/BT)