The International Monetary Fund (IMF) will make US$139 million available to Barbados under its Extended Fund Facility (EFF).
The decision was made known yesterday, June 3, following the IMF’s completion of its third review of the four-year EFF for the island.
With the newly-approved disbursement, the island’s total funding increased to US$283 million, of a possible US$377 million, said the IMF.
According to the global financial body, the nation’s economy is facing a major challenge due to the coronavirus pandemic, which will have a large impact on its balance of payments and fiscal accounts.
This downturn comes despite Barbados’ strong implementation of the Economic Recovery and Transformation (BERT) plan, aimed at restoring its fiscal and debt sustainability and increasing growth and reserves, which stood at US$850 million as at April 2020.
IMF Deputy Managing Director and Acting Chair, Tao Zhang, said “Barbados continues to make good progress in implementing its comprehensive Economic Recovery and Transformation plan, with all performance criteria for end-March 2020 met. Prospects for continued strong program performance are good.
“The policy response to the global coronavirus pandemic is adequate with a reduced primary surplus target of one per cent of GDP for fiscal year 2020/21 to accommodate significant revenue losses and support spending on public health and social protection. The reduction of the primary surplus is financed by additional resources from international financial institutions, including an augmentation of the IMF’s extended facility.”
Zhang continued that the current fiscal year will see higher primary surpluses being used over the medium term to ensure the debt target of 60 per cent of GDP by 2033/2034 is reached.
Guaranteeing a strong recovery after the pandemic will depend on hastening structural reforms, Zhang said. “There is much room for improvement in the business climate. Establishing a credit registry and credit collateral registry, in addition to broadening the types of eligible collateral, would facilitate access.”
He concluded by saying priority should be given to improving the nation’s resilience to natural disasters and climate change.