by Marlon Madden
Two months ahead of its fourth review of the Barbados Economic Recovery and Transformation (BERT) programme, the International Monetary Fund (IMF) is giving the country a passing grade for the progress it has made thus far.
In fact, following a special request by Government for the IMF to discuss the implementation of the programme, the IMF’s Mission Chief to Barbados Bert van Selm said despite the challenges associated with the COVID-19 pandemic, the island continued to make good headway in executing its reform agenda.
“In this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform programme, while expanding critical investments in social protection,” he said, following an August 25-28 virtual staff visit.
“Good progress also continues to be made towards implementing structural reform under the Extended Fund Facility (EFF). The two structural benchmarks for the end of June 2020, related to tax and customs administration, were both met. A revised Central Bank law is expected to be ready to be sent to Parliament in September,” he added.
At the end of April, Prime Minister Mia Mottley announced an unprecedented $2 billion economic plan that was intended to help prop up the economy over the next two years while meeting several social needs.
In addition to a stimulus package for businesses, funds were provided for vulnerable households, and millions spent on readying the island’s quarantine and isolation facilities to adequately manage the COVID-19 pandemic.
Pointing out that the pandemic has had a major negative impact on the Barbados economy and that a double-digit decline in economic activity was projected for this year, van Selm acknowledged that the tourism sector came to a virtual standstill between March and June.
“Airlift declined precipitously, most hotels closed, and occupancy plummeted at facilities that remained open. In early July, the island cautiously started reopening the economy for international tourists after the authorities effectively halted local transmission of the disease,” the IMF official said.
Just last week, Barbados Hotel and Tourism Association (BHTA) officials reported that airlift was only at five per cent of what it was last year, hotel occupancy had declined by a whopping 91 per cent and is now in the vicinity of a mere six per cent, with 15 hotels opened.
The average daily rate declined by 41 per cent while revenue dropped dramatically by 96 per cent.
On the other hand, Government has managed to ramp up international reserves, which reached just over $1.2 billion or 15.3 weeks of import cover at the end of June.
Meanwhile, the Mottley administration has already negotiated with and secured approval from the IMF to target a primary surplus of one per cent, down from the initial six per cent that was agreed to under the EFF arrangement.
“International reserves, which reached a low of US$220 million – 5-6 weeks of import coverage – at end-May 2018, are now in excess of US$1 billion. All indicative targets for end-June under the EFF were met. The targets for international reserves, net domestic assets and the primary balance were met with some margin, which bodes well for meeting the end-September EFF targets,” said van Selm.
He added: “The team is looking forward to conducting discussions for the fourth review under the EFF in late October and would like to thank the authorities and the technical team for their openness and candid discussions.” ([email protected])