Decision pending on new IMF progamme

A decision on whether Barbados will enter another programme with the International Monetary Fund (IMF) will be made within the next two months.

This was revealed on Friday by Prime Minister Mia Mottley, who said that with the Barbados Economic Recovery and Transformation (BERT) programme set to end in September, discussions would soon be held to determine the way forward.

The news followed the completion of a visit to Barbados by an IMF team headed by Bert van Selm, for its seventh and final review of the BERT under the Extended Fund Facility (EFF).

The Mottley administration entered into the BERT with the IMF shortly after assuming office in 2018.

The programme’s goal was to generate economic growth and restore debt and fiscal sustainability over a three-phase, five-year period during which Barbados was to receive over half a billion dollars from the IMF.

“As to what we do at the end of this programme which comes to an end on September 30, those are the discussions that we will start once this mission’s report passes the [IMF] board at the end of June,” she told members of the media during a press conference at Ilaro Court on Friday morning.

She was flanked by Governor of the Central Bank Cleviston Haynes, Minister of State in the Ministry of Finance Ryan Straughn, Director of Finance and Economic Affairs Ian Carrington, Senior Economic Advisor to Government Dr Kevin Greenidge, and Economic Advisor Dr Clyde Mascoll.

“From July, we will start discussing: will we have a successor programme? If so, what type of successor programme? Will we go into it on our own? Is it time or is it right to go on your own when interest rates are rising globally, or do you stay with the comfort of concessional interest rates by having a programme and working closely with the other regional development banks or international financial institutions, especially given our vulnerability to climate and especially given the fact that COVID, even though reduced, is still very much with us,” Mottley said.

“The world looks too much like it did 100 years ago and, therefore, if we look at the geopolitical instability that is there we have to see how best we can build on what we have from the last four years while at the same time starting to build confidence globally that Barbados is looking different, functioning different, feeling different.

“I think we are still going to go with a roadshow in September to start to tell our story to the capital markets, because whether we go back into an IMF programme or not we believe that our story, which is a credible story, has to be told in order to be able to start to . . . get our way back to investment grade, which we hoped would have been much further along had we not had the intervention of the pandemic and the climate crisis,” the Prime Minister added.

While saying her administration’s last three-and-a-half years in office had been challenging, Mottley credited the IMF for much of the country’s success.

In particular, she said was the fact that the Government had repaid 98 per cent of the $1.7 billion debt it had inherited in 2018.

Mottley added that even though Barbados was not yet out of the woods, the country had endured a “rewarding relationship” with the IMF.

“I say rewarding because we haven’t agreed on everything but the respect that both sides have had for each other and the understanding of what we are facing both domestically and internationally, allowed us in every instance to resolve those differences in a way that inured to the benefit of the country in the long term,” she said.

Van Selm announced that the IMF had reached a Staff Level Agreement in relation to the EFF, following its latest review.

He said upon review by the IMF’s Executive Board in June, US$23 million would be made available to the country.

Van Selm lauded Barbados for the progress it had made, even as he noted the economy continues to recover from the Covid-19 pandemic.

“In this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform programme.

“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,” the IMF official said. (RB)