Barbados on track to slash public debt to 60% of GDP by 2035, says IMF mission

Barbados’ economic recovery continues to impress international observers, with the International Monetary Fund (IMF) praising the nation’s robust growth and reform progress while warning of significant vulnerabilities to external shocks and natural disasters.

The IMF mission, led by economist Michael Perks, concluded a four-day visit to Barbados on Friday, delivering a positive preliminary assessment ahead of the fifth and final reviews of the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programmes scheduled for May.

The team highlighted Barbados’ estimated four per cent GDP growth in 2024, driven by tourism, business services, and construction, alongside moderated inflation at 1.4 per cent and a narrowing current account deficit of 4.5 per cent of GDP.

“Barbados’ economic growth remained robust in 2024. Real GDP growth is estimated at four per cent driven by business services, tourism, and construction. Inflation moderated to an average of 1.4 percent, reflecting an easing of global commodity prices and prices of domestic goods and services,” the IMF reported.

The country’s international reserves reached US$1.6 billion, or $3.2bn, equivalent to over seven months of imports, the bedrock for the strength of the Barbados dollar peg.

Fiscal performance was also commended, with a primary balance of 5.3 per cent of GDP through December 2024, keeping Barbados on track to meet its fiscal target of 3.8 per cent of GDP for FY2024/25. Public debt declined to around 100 per cent of GDP by the end of 2024, with the government reaffirming its commitment to reducing it further to 60 per cent by FY2035/36.

The IMF praised the government’s implementation of its home-grown Barbados Economic Recovery and Transformation (BERT 2022) programme and noted progress in structural reforms supported by IMF technical assistance. These include strengthening customs administration, enhancing public-private partnership frameworks, and improving liquidity forecasting at the Central Bank of Barbados.

“The authorities continue to make strong progress in implementing their ambitious economic reform programme. Targets for end-December 2024 under the Extended Fund Facility were met,” the IMF stated.

But, the IMF cautioned that Barbados remains highly vulnerable to global economic turbulence and natural disasters. “The near-term economic outlook remains positive, but risks continue to be high and tilted to the downside,” it warned.

The mission expressed gratitude for the Barbadian government’s cooperation during its visit and looked forward to concluding discussions during the May reviews. While acknowledging these positive developments, the IMF underscored that its findings represent staff views rather than those of its Executive Board.

(EJ/IMC1)