IMF says country on course for medium-term upturn, with risks

Barbados is on course for “gradual economic recovery” in the coming months, but International Monetary Fund (IMF) official Bert Van Selm cautioned Friday that growth remains subject to significant risks.

Van Selm, who this week led virtual talks with local authorities on the implementation of Barbados’ Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Fund Facility (EFF), said the global coronavirus pandemic continues to pose major challenges to the economy despite positive indicators.

“Tourism has rebounded in recent months, leading to real GDP (Gross Domestic Product) growth of 1.4 per cent for 2021 and 11.5 per cent in the fourth quarter of 2021 (over the same quarter in 2020). A gradual economic recovery is expected over the medium term, but risks to the outlook remain high,” he said in a statement issued today as the talks ended.

Despite the impact of the COVID pandemic, the Washington-based financial body remains satisfied with Government’s economic management under the four-year Extended Fund Facility (EFF) Programme.

Van Selm said: “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.

“All indicative targets for end-December under the EFF were met. International reserves, which reached a low of US$220 million at end-May 2018, increased to US$1.5 billion at the end of 2021.”

The IMF further highlighted  that the country recorded a small (½ per cent of GDP) primary surplus over the first three quarters of 2021/22, which it said bodes well for meeting the primary balance target (minus 1 per cent of GDP) for the full fiscal year.

The Fund noted that preparations for this year’s budget are underway while the implementation of key structural reforms are continuing.

“The Fair Credit Reporting Act, adopted by Parliament in December, will support financial sector development. The Minister of Finance issued regulations for a procedural fiscal rule in December—a key milestone towards enhancing fiscal sustainability.

“The Barbados Customs and Excise Department took important steps to improve performance management, risk management and trade facilitation during 2021. Work has been initiated on reforms to enhance the sustainability of the public sector pension scheme,” Van Selm added.

He said that the IMF delegation is looking forward to conducting discussions in May for the seventh review under the EFF. (SD)