The International Monetary Fund (IMF) today warned that a second phase of measures will be needed, in light of the $1.2 billion austerity package announced by Prime Minister and Minister of Finance Mia Mottley in her June 11 Budget.
The warning came at the end of a ten-day visit to the island by an IMF staff team, led by Bert van Selm, which held discussions with various stakeholders on a pending IMF-supported economic recovery and transformation plan.
In a release today, the IMF also revealed that this next phase of adjustment would focus on reducing expenditures “by improving the efficiency and effectiveness of public services, reducing Government transfers to state-owned enterprises, by reviewing user fees, exploring options for mergers, and providing stronger oversight”.
Following is the full statement issued at the conclusion of the July 2- 12 visit, which came at the request of the newly elected Mia Mottley-led Government .
“The Barbadian authorities, in close consultation with their social partners, are taking effective steps to address current economic vulnerabilities. The IMF stands ready to partner with Barbados to restore macroeconomic stability in order to secure strong, durable and inclusive growth in the years ahead.
“Fiscal consolidation alongside a comprehensive debt restructuring exercise is critical for restoring debt sustainability and policy credibility. In this context, the authorities’ revised Budget for 2018/19, approved by Parliament on June 11, is a decisive step in the right direction. The Budget targets a primary surplus of six per cent of GDP.
“Consistent with the message delivered by the Prime Minister and Minister of Finance during the Budget a second phase of measures will be needed to achieve this target. This next phase will focus on reducing expenditures—notably by improving the efficiency and effectiveness of public services, reducing government transfers to state-owned enterprises by reviewing user fees, exploring options for mergers, and providing stronger oversight.
“Progress being made by the authorities in furthering good-faith discussions with domestic and external creditors is welcome. Continuing open dialogue and sharing information, will remain important in concluding an orderly debt restructuring process.
“Significant progress has been made during this IMF staff visit on the plan that could underpin financial support from the IMF. On its return to Washington the team will continue to analyze the Government’s comprehensive reform program. We will remain closely engaged with the authorities in the coming weeks.
“The team would like to thank the authorities for open and candid discussions, and looks forward to building on this engagement in the period ahead.” (End of text)