The International Monetary Fund (IMF) Friday said economic activity in Barbados is starting to recover from the coronavirus (COVID-19) pandemic and that a gradual economic recovery started last year.
An IMF mission headed by Bert van Selm has conducted a mission discussing the implementation of Barbados’ Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Fund Facility (EFF).“Following productive discussions, the IMF team and the Barbadian authorities reached staff level agreement on the completion of the seventh and final review under the EFF arrangement,” van Selm said, adding that the agreement is subject to approval by the IMF executive board, which is expected to consider the review in June”.
He said upon completion of the review, US$23 million will be made available to Barbados.
The IMF official said that economic activity in Barbados is starting to recover from the COVID-19 shock. He said tourism came to a virtual standstill in April 2020, and the economy contracted by 14 per cent in 2020.
“A gradual economic recovery started in 2021 and gained momentum in recent months, with tourism now just over 50 per cent of pre-pandemic levels,” van Selm said, noting however that risks to the outlook remain elevated, with higher global food and fuel prices starting to push up inflation in Barbados.
“In this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program. All quantitative targets for end-December 2021 and end-March 2022 under the EFF were met. International reserves, which reached a low of US$220 million (5-6 weeks of import coverage) in May 2018, are now at a comfortable level of US$1.5 billion,” he said.
The IMF mission chief said that the Barbados government took initiatives to facilitate renewable energy projects and adopted regulations for a procedural fiscal rule, while the Customs department took steps to improve trade facilitation and risk management.
“Progress in restoring macroeconomic stability prior to the onset of the COVID-19 pandemic facilitated a countercyclical fiscal policy response in financial year 2020/21 and financial year 2021/22. Barbados recorded a primary deficit of one per cent of gross domestic product (GDP) for the financial year 2021/22, unchanged from financial year 2020/21.”
He said that expenditure included funds for COVID-related expenditures as well as housing reconstruction for the most vulnerable in the aftermath of Hurricane Elsa.
“For financial year 2022/23, the authorities are targeting a primary surplus of one per cent of GDP, with revenue projections premised on a continued recovery in tourism. The authorities remain firmly committed to reducing public debt over time,” van Selm added.