IMF – Barbados reaches staff-level agreement on third review under extended fund facility

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WASHINGTON, USA – At the request of the government of Barbados, an International Monetary Fund (IMF) team led by Bert van Selm conducted a mission via videoconferencing during April 27-30, 2020 to discuss implementation of Barbados’ Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Fund Facility (EFF).

To summarize the mission’s findings, van Selm made the following statement:

“The ongoing global coronavirus pandemic poses a major challenge for the economy, which is heavily dependent on tourism. An economic contraction of more than ten percent is projected for 2020. The shock will have a large impact on the fiscal accounts and the balance of payments. The government aims to accommodate the loss of government revenues and additional emergency outlays on health facilities and medical supplies, as well as provide income support to the most vulnerable groups in society.

“In response to the pandemic, the government of Barbados is now targeting a primary surplus of 1 percent of GDP for FY2020/21 (compared to 6 percent previously envisaged). Staff supports this easing of the fiscal stance and, subject to approval by the IMF executive board, proposes an augmentation of the extended facility in the amount of SDR66 million (about US$90 million).

“Following productive discussions, the IMF team and the Barbadian authorities reached a staff-level agreement on the completion of the third review under the EFF arrangement. The agreement is subject to approval by the IMF executive board, which is expected to consider the review in June. Upon completion of the review, SDR101 million (about US$140 million) will be made available to Barbados, bringing total disbursement under the program to SDR 206 million.

“Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program. International reserves, which reached a low of US$220 million (5-6 weeks of import coverage) at end-May 2018, have sharply increased since then, to more than US$850 million. The completion of the debt restructuring in December 2019 and meeting the primary surplus target of six percent of GDP for FY2019/20 have been very helpful in reducing economic uncertainty and reducing public debt.

“All program criteria for end-March 2020 under the EFF have been met. The program target for Net International Reserves was met by a wide margin, as was the target for the Central Bank of Barbados’ Net Domestic Assets (NDA).

“The team would like to thank the authorities and the technical team for their openness and candid discussions.”

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