The International Monetary Fund (IMF) has reached a staff-level agreement with Barbados on a US$290 million dollar economic programme under the Extended Fund Facility.
The IMF’s Executive Board is expected to consider the proposed arrangement by October and once approved Barbados will have immediate access to US$49 million.
IMF Chief of Mission Bert van Selm made the announcement today at a press briefing with Prime Minister Mia Mottley at Government Headquarters.
Below is the full statement
At the request of the Government of Barbados, an International Monetary Fund (IMF) team led by Bert van Selm visited Bridgetown from August 30 to September 7, for discussions on possible IMF financial support for the Government of Barbados’s Economic Recovery and Transformation plan. At the end of the visit, Mr. van Selm made the following statement:
“I am pleased to announce that, in support of the Barbadian authorities’ economic reform program, the IMF team and the government of Barbados have reached staff-level agreement on a 48-months Extended Fund Facility, with access of SDR 208 million (equivalent to 220 percent of quota, or about US$290 million). If approved by the IMF Executive Board, SDR 35 million (about US$49 million) would be immediately available. Staff envisages that the IMF’s Executive Board would consider the proposed arrangement under the EFF by early October.
“In the last decade, the Barbadian economy has been caught in a cycle of low growth, widening fiscal deficits and increasing debt. International reserves have dwindled to US$240 million, well below reserve adequacy levels, while central government debt has become unsustainable.
“The new government that took office in May 2018 is rapidly developing plans to address the current vulnerabilities, in close consultation with its social partners. The Barbados’s Economic Recovery and Transformation Plan aims to restore macroeconomic stability and put the economy on a path of strong, sustainable and inclusive growth, while safeguarding the resilience of the financial sector. The authorities’ fiscal consolidation program, in conjunction with the announced debt restructuring, would place debt on a clear downward trajectory. The strategy of accelerating growth focuses on attracting new investment in areas such as renewable energy, creative and artistic industries, education and health services, agro-industries, research, the international business sector, and tourism.
“The authorities’ reform program, and the important commitment of IMF resources that it entails, is a vote of confidence in Barbados’ Economic Recovery and Transformation Plan. The cornerstone of the program is a strong front-loaded fiscal adjustment focused on curbing current expenditure, while maintaining space for bolstering social safety nets and infrastructure spending. In this context, the measures to reduce government expenditures announced in late August are a critical and important first step. These measures aim to improve the efficiency and effectiveness of public services and reduce government transfers to state-owned enterprises by reviewing user fees; exploring options for mergers; and strengthening oversight. The measures should help reach a primary surplus target of 6 percent of GDP in 2019/20.
“The fiscal adjustment will be complemented by a comprehensive debt restructuring, aimed at securing meaningful debt reduction, reducing financing needs, and restoring debt sustainability. Barbados’ central government debt will be put on a clear downward path towards a target of 60 percent of GDP by 2033, from an estimated 157 percent of GDP at present. 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.
“The success of Barbados’ program will require an extraordinary effort and resolve on the part of the authorities and other segments of society, as well as broad international support. While the initial implementation period will be challenging, Barbados will emerge stronger and more dynamic from the program, and it will be better poised to generate growth and job creation for the people of Barbados.
“The team would like to take this opportunity to thank Barbados’ authorities and the technical team for their openness and candid discussions.”
I do hope that this prevents the devaluation of the Barbados dollar and eliminates the stealing of the crown’s money
Next in line is the person that wanted to pave the strip of roadway going North.
I do not consider US$250 million to be of any great help given the financial crisis Barbados is in.
The Gov’t could have borrowed twice that from those two Canadian guys.
DT
and what interest rate and what condition – especially with our credit ratings?
@BREADFRUIT – $250 million? What a joke.
What the hell can that do to help Barbados out at this time?
Sttttuuuuppppeeess!
DT
How much do you want us to borrow?
understand that there is a limit that we can borrow which is tie to the amount we have contribute to the IMF funds.
The same thought came into my head, only 290M? I guess its better than nothing.
Barbados is lucky it will be receiving that amount. It is unable to repay it’s debts.
Wunna speaking like if you all did an evaluation and analysis of the Barbadian economy. Naisayers. Donald trimp go and sleep. Clown. Mia stay focus and navigate this fragile ship.
As the dear honorable lady said , …We got this … The world is seeing a new Barbados and with it a master (Priminister) ,this is hard ball not for the boys of the past ….Barbados is on its way forward………….. Hail, hail …….
Can you imagine?
Barbadians applauding a PM that defaulting on national debt to foreign creditors.
(Where all the outrage about downgrades now?)
Barbadians praising a PM that waive hundreds of millions in domestic private sector debt and then hand we over lock, stock and barrel to the IMF in order to borrow almost the same amount that was waived.
Barbadians curse a PM for one tax, but want everybody to sing kumbaya with a PM that introduce over ten new ones, with the most egregious tied to their water bills.
The last administration raped the country when they should have known that they “couldn’t tax their way to prosperity.”
(The figure used was about $22B taxed in ten years? No source cited in the original claim… but whatever.)
But now, Barbadians hearing that: “We must come together as one and make the sacrifice!”and we must now do our civic duty and bear the “bitter pill”.
I guess that BLP taxes better than DLP ones.
Well said ‘Capital one’ we were on a path to growth, though small, with the sale of Hilton and with the NSRL tax, now we are experiencing negative growth increase prices, anticipated lay-off, increase in bus fares, etc..
What is there to shout about, but hooray for Mia.