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In this 2019 photo, Minister in the Ministry of Finance Ryan Straughn, Prime Minister of Barbados Mia Mottley and International Monetary Fund Resident Representative Dr Bert van Selm attend a press briefing on the first review of Barbados’ Economic Program under the Extended Fund Facility. (Photo: Twitter @bvanselm)

Barbados NIR exceeds US$1B

In this 2019 photo, Minister in the Ministry of Finance Ryan Straughn, Prime Minister of Barbados Mia Mottley and International Monetary Fund Resident Representative Dr Bert van Selm attend a press briefing on the first review of Barbados’ Economic Program under the Extended Fund Facility. (Photo: Twitter @bvanselm)

… successfully meets targets of IMF programme

Barbados’s net international reserves has surpassed US$1 billion, almost five times the amount it reached in mid-2018, according to International Monetary Fund Mission Chief for Barbados Bert van Selm.

An aerial view of Bridgetown, the capital of Barbados (Photo: businessinsider.com)

“In this very challenging environment, 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, are now in excess of US$1 billion,” van Selm wrote in the fourth review of the Barbados’ Economic Recovery and Transformation programme (BERT).

“All quantitative targets for end-September under the EFF (Extended Fund Facility) were met. The programme 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),” he continued.

The Central Bank of Barbados (File photo)

COVID-19 fallout

Notwithstanding these achievements, the IMF mission chief pointed out that the ongoing coronavirus (COVID-19) pandemic has significantly impacted the island’s economic activities, especially since Barbados relies heavily on tourism. As result, van Selm predicts, Barbados will record a double-digit decline for 2020.

Describing the pandemic’s negative effects on tourism in that Caribbean country, the IMF reviews states, “Tourism came to a virtual standstill between March and June 2020: airlift declined precipitously, most hotels closed, and occupancy plummeted at facilities that remained open. In early July, the island cautiously started reopening the economy for international tourists, after the authorities effectively halted local transmission of the disease. However, tourism arrivals remain at a fraction of normal levels.”

“International reserves, which reached a low of US$220 million (5-6 weeks of import coverage) at end-May 2018, are now in excess of US$1 billion,”

— International Monetary Fund Mission Chief for Barbados Bert van Selm

In response to the loss of government revenues, due to the COVID-19 crisis, the Bajan authorities have adjusted primary balance targets from a 6.0 per cent surplus to -1.0 per cent of gross domestic product.

Awaiting approvals

Van Selm notes that IMF staff, at present, supports the easing of the targets given the Government’s obligations of supporting health facilities, purchasing medical supplies, and providing social protection for the most vulnerable. Moreover, they propose an increase of US$66 million to the EFF, which is subject to the approval of the IMF executive board, to help ease the fiscal deficit and related balance of payment demands.

Barbados’s tourism arrivals remain at a fraction of normal levels. (File photo)

Still, with what seems a successful completion of the fourth review of the BERT, van Selm has indicated that his team has reached an agreement with the Bajan authorities and expects, after review by the IMF executive board, a disbursement of US$90 million under the EFF.

“Tabling of a revised central bank law to parliament is expected shortly; this is a critical safeguard for continued macroeconomic stability and will be a prior action for the completion of this EFF review,” the IMF mission chief said.