Economist warns of repeat debt cycle as Barbados exits IMF programme

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arbados risks slipping back into a cycle of external debt and economic dependency despite the government’s claims of a successful exit from the International Monetary Fund (IMF) programme, a leading UWI economist has warned.

Professor Don Marshall challenged the government’s narrative as it ends its seven-year, IMF-backed, Barbados Economic Recovery and Transformation (BERT) programme. He described the exit as a case of “political success but policy failure”, arguing that despite improved debt ratios and foreign reserves, the economy remains structurally unchanged.

Barbados’ real GDP is projected to grow by 2.7 per cent in 2025, according to the IMF, with international reserves at $3.4 billion, equivalent to over seven months of import cover.

“How does the announcement of Barbados ending its arrangement with the IMF square with the recognition that it is seeking to draw down on the final tranche of IMF funding in June, and that it will immediately pursue other debt-tied loans in the international capital market?” Marshall asked in a statement to Barbados TODAY.

“In the same breath, the minister of finance makes clear that she will quickly resort to IMF lending again if storm clouds gather.”

The government has secured a staff-level agreement with the IMF for the final disbursement of US$114 million (BDS$228 million), and plans to pursue a precautionary standby arrangement to maintain access to the Fund in the event of future shocks.

Prime Minister Mia Mottley, who also serves as the finance minister, said last week that while the formal IMF programme is ending, structural reforms must continue, and Barbados must remain nimble, strengthen its institutions, and build skills.

But Professor Marshall suggested the country was far from self-reliant.

“The economy, however, has not been transformed or built out,” he said.

“And so, we are to immediately go on a whistle tour to borrow more money. The ruling regime will be returned to office, of course. It’s the partisan endgame in sight.”

He noted that the IMF’s original involvement in 2018 was to stabilise a debt and foreign exchange crisis, followed by another four-year programme after the COVID-19 pandemic.

Professor Marshall argued that despite meeting targets under both programmes, the long-term development vision remains unclear.

“All across the country, taxpayers are to receive a $300 share in the recovery bounty,” he noted.

“But from my vantage point as a student of development studies, we are witnessing the unfolding of a politically successful, policy failure.”

Professor Marshall also pointed to the case of Nigeria, which recently announced that it had fully repaid its US$3.4 billion debt to the IMF, with no further drawdowns, contrasting it with Barbados’ continued borrowing.

shannamoore@barbadostoday.bb