IMF agrees on final $114m as economic programme concludes

Barbados has secured a staff-level agreement with the International Monetary Fund that will unlock the final tranche of funding, worth about $114 million, marking the successful conclusion of the country’s economic recovery programme, the Fund’s senior official on Barbados announced on Thursday.

Michael Perks, leader of an IMF exit mission disclosed that agreement had been reached with the Mia Mottley administration on the completion of the fifth and final reviews of the $114 million Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).

Perks, whose team spent the past week here, told journalists at a press conference at Ilaro Court that the agreement is subject to approval by the IMF Executive Board, which is expected to consider the reviews next month.

The completion of the final reviews will mark the successful conclusion of the arrangements and will allow Bridgetown to draw the remaining Special Drawing Rights — worth about US$19 million (BDS$38 million) – under the EFF, and about US$38 million (BDS$76 million) — under the RSF arrangement, the mission chief said.

Perks gave high marks on the performance of the Barbadian economy.

He said: “The economy grew strongly in 2024 and continues to expand in 2025, driven by tourism, construction, and business services. Inflation has moderated further, due to an easing of global commodity prices and prices of domestic goods and services. The external position has improved, with a significant strengthening of the current account in 2024.”

Perks also noted that international reserves have increased to almost US$1.7 billion or $3.4b, equivalent to over seven months of import cover, ample to support the fixed exchange rate peg of $2 to US$1. “Real GDP,” he added, “is projected to grow by 2.7 per cent in 2025, sustained by construction related to tourism projects and public investment.”

But the IMF official added a note of caution: “Nevertheless, the economic outlook is subject to significant downside risks, given heightened global uncertainty and Barbados’ vulnerability to external shocks and natural disasters.”

Despite this, he remained upbeat on the performance of the BERT programme.

“Programme performance remains strong,” he said. “All quantitative performance criteria and indicative targets for the fifth review of the EFF were met. The fiscal primary surplus reached 4.3 per cent of GDP in FY2024/25, with strong corporate tax revenues and prudent current spending controls enabling a significant increase in capital investment aimed at boosting infrastructure and resilience.”

Perks noted that for this fiscal year, the budget aims to reach a primary surplus of 4.4 per cent of GDP, consistent with programme projections. Public debt continues to decline, and the authorities remain firmly committed to reaching the 60 per cent of GDP target by the 2035-2036 fiscal year.

He said: “The structural reform agenda is advancing, supported by technical assistance from the Fund and development partners. All three structural benchmarks were met, including completing the assessment of human resource needs at the Barbados Customs and Excise Department, preparing a draft public-private partnership framework and developing a daily liquidity forecasting framework by the Central Bank of Barbados.”

Barbados’ efforts to strengthen growth and the business environment also continue to progress, including measures to address the skills gap, he said.

“The authorities have completed both reform measures for the fifth RSF review,” he said. “Key elements to strengthen the integration of climate concerns into public financial management have been delivered, including the development of public investment project appraisal guidelines, deepening of fiscal risk analysis, and preparation of a PPP framework.”

The Central Bank has also included physical climate risks in its bank stress testing exercise, he reported.

The IMF official also took note of the government’s creation of a new Resilience and Regeneration Fund, repurposing the previous Catastrophe Fund with an expanded role and additional financing for disaster mitigation, response, and regeneration. (EJ)