The International Monetary Fund (IMF) again boosted the Government’s coffers after approving almost $280 million under its ongoing funding and economic reform programme with Barbados.
The funds were approved after the IMF’s Executive Board and officials from the Ministry of Finance met today and concluded the third review of its extended arrangement under the Extended Fund Facility (EFF) for Barbados.
The completion of the review of the Barbados Economic Recovery and Transformation (BERT) programme allows Government to draw the equivalent of [$278 million] US$139 million, bringing total disbursements to around [$566 million] US$283 million.
Prime Minister Mia Mottley said the decision showed that even through the COVID-19 pandemic the country was still meeting its goals.
Of the $280 million, she said $180 million would assist the country to get through the health crisis.
She said some of the remaining money could be used to shore up the country’s foreign reserves which currently stand at $1.7 billion.
Mottley said: “This [IMF] Board approval shows that we were on track with our programme… and more importantly, our plans for how we intend to get out of COVID-19 have been accepted by the Fund and hence, that separate support of [$180 million] US$90 million.
“We are happy with the fact that the approval by the Board would have confirmed that up until March we were on target with all of what we said we would do.
“They are also looking at what we do going forward with COVID-19 and quite frankly, even though we are very much in an uncertain environment, we have set out a broad framework of measures that we believe are the start, even if not the end, because we don’t know what else COVID-19 has to offer as we go forward.
“Even though we are definitely not out of the woods, we are on the right path and we need to stay focused and do what we have to do.”
Deputy Managing Director of the IMF and Acting Chair Tao Zhang praised Barbados for continuing to meet the austerity programme’s targets despite the negative impacts of COVID-19.
Zhang said: “Barbados continues to make good progress in implementing its comprehensive Economic Recovery and Transformation plan, with all performance criteria for end-March 2020 met. Prospects for continued strong program performance are good.
“The policy response to the global coronavirus pandemic is adequate with a reduced primary surplus target of one per cent of GDP for fiscal year 2020/21 to accommodate significant revenue losses and support spending on public health and social protection.
“The reduction of the primary surplus is financed by additional resources from international financial institutions, including an augmentation of the IMF’s extended facility.”
Zhang said accommodation in the fiscal year 2020/21 would be compensated by higher primary surpluses in the medium term to ensure that the debt target of 60 per cent of GDP in fiscal year 2033/34 is reached.
But Zhang maintained that it was essential for Government to “reform” state-owned enterprises (SOEs) – through a raft of budget cuts, reduced public funding, mergers and sales.
He said: “To secure fiscal space for investment in physical and human capital, transfers to SOEs need to decline after the global coronavirus pandemic with a combination of stronger oversight of SOEs, cost reduction, revenue enhancement, and mergers and divestment.
“Progress in restoring fiscal sustainability must be safeguarded by adopting a new Central Bank law that limits its financing of the Government to short-term advances and strengthens the Central Bank’s mandate, autonomy, and decision-making structures.
“A strong recovery after the global pandemic will depend on accelerating structural reforms. There is much room for improvement in the business climate. Establishing a credit registry and credit collateral registry, in addition to broadening the types of eligible collateral, would facilitate access to credit. In addition, priority should also be given to improving resilience to natural disasters and climate change.”
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