The Executive Board of the International Monetary Fund (IMF) today approved a US$290 million Extended Arrangement under the Extended Fund Facility for Barbados to help the island restore debt sustainability, strengthen the external position, and improve growth prospects.
The approvals allows for the the immediate disbursement of about US$49 million.
Below is the IMF’s statement on the agreement
On October 1, 2018, the Executive Board of the International Monetary Fund (IMF) approved a four-year Extended Arrangement under the Extended Fund Facility (EFF) for Barbados for an amount equivalent to SDR 208 million (about US$290 million, or 220 percent of Barbados’s quota in the IMF). The Board’s decision enables the authorities to purchase the equivalent of SDR 35 million (or about US$49 million) immediately. The remainder will be available upon successful completion of seven semiannual reviews.
The EFF-supported program aims to help Barbados: restore debt sustainability, strengthen the external position, and improve growth prospects. Upfront fiscal consolidation, meaningful debt restructuring, and structural measures to support growth should put debt on a clear downward trajectory. The program will seek to protect vulnerable groups through strengthened social safety nets.
Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said:
“The Barbadian authorities have developed a homegrown economic program to address longstanding challenges, which will be supported under the IMF’s Extended Fund Facility. Over the last decade, Barbados’s economy has experienced low growth, while fiscal and external imbalances have gradually widened to reach an unsustainable situation, with very high debt and very low reserves. The authorities’ reform program seeks to address these challenges with a combination of front-loaded fiscal consolidation, measures to boost growth, and debt restructuring, while protecting social spending.
“Fiscal consolidation is key to the adjustment effort. The authorities aim to increase the primary surplus to 6 percent of GDP in FY2019/20 and maintain it at that level for several years thereafter. Reducing transfers to state-owned enterprises will be key in reaching the primary surplus targets. The program aims to reduce these transfers with a combination of much stronger oversight of state-owned enterprises, improved reporting, cost reduction, revenue enhancement, and mergers and divestment. A planned comprehensive review of tax policies is expected to lead to improvements in the tax system. The adoption of a fiscal rule and reforms in public financial management will help sustain the fiscal reform effort.
“A comprehensive debt restructuring will complement the fiscal consolidation. The authorities have identified parameters that would provide debt relief without jeopardizing financial stability, and an exchange offer for domestic debt (Barbados dollar-denominated) to private creditors was launched on September 7, 2018. The proposed debt restructuring includes features, including a natural disaster clause, that are expected to help the authorities stay current on their future debt obligations. It is important to continue good faith negotiations with domestic and external creditors.
“Bold structural reforms are needed to improve Barbados’s growth potential and competitiveness. There is significant room for improvement in key business facilitation processes, including speeding up the process for providing construction permits and faster clearing of goods through customs.
Adequate social spending and an improved safety net are key priorities for the program. Targeted reforms, to be pursued in close collaboration with development partners, aim at improving the efficiency and effectiveness of social spending.”
Looks like Team Barbados dotted the i’s and crossed the t’s before making their submission to the IMF. Pretty impressive work. But now the hard part really starts!
Dat money should not be a loan. It should be an IOU – one of many too.
Confidence in our very capable Prime Minister. That is what it’s all about.
Excellent well done PM
God is incharge n all will be well
U r a great lady
No weapons that r formed against u shall prosper
Borrowing US 290 million from the IMF is NOT any win for this already failed, reckless and incompetent BLP government!
Borrowing from various sources does NOT correct our financial problems.
Furthermore, it WORSENS them!
For, when some already lower than expected credits are diverted from giving receipts to those who have been productive to rightly fulfil debt obligations on the government of Barbados’ part, and to give to an unproductive financial institution – the IMF – what is rightfully theirs though, it means then that the government of Barbados will be in deeper financial trouble in the final analysis.
Add to that disgusting situation, the government of Barbados proceeding to borrow more and more funding from the IADB, the CDB, etc.
Dr. Mascoll cannot be serious in his self-serving self-congratulations at seeing this BLP government sliding more and more into this already henious sinister DEBT TRAP.
He cannot be serious!!
It will further mean that there are some fundamental problems, deficiencies and weaknesses in our core financial system and that are NOT being dealt with.
Whenever these severe and rampant financial problems, deficiencies and weaknesses are corrected and replaced with the “right and developmental” financial systems, this is where we – as a country – will be victorious – NOT IN ANY obtaining any funds from the imperialist IMF.
Dr. Mascoll get real!!
What is this barbadians drinkkng people all excited at getting a loan with pain and suffering attached
All this free education fuh nothing
What are barbadians drinking people all excited at getting a loan with pain and suffering attached
All this free education fuh nothing