The International Monetary Fund (IMF) will provide Barbados with an additional US$140 million as the country tries to right its economy amid the coronavirus (COVID-19) pandemic.
The Washington-based institution yesterday said it had reached a staff-level agreement with the nation following the third review of its economic reform programme.
Noting that Barbados had managed to increase its international reserves from US$220 million two years ago to US$850 million at the end of April 2020, the IMF said the nation had been both ‘open and candid’ in discussions.
“Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform programme.”– IMF mission chief Bert van Selm
An IMF mission, led by Bert van Selm, was conducted via videoconferencing from April 27-April 30, to discuss the implementation of the Barbados Economic Recovery and Transformation (BERT) plan, which is supported by the global body’s Extended Fund Facility (EFF).
Van Selm said the current COVID-19 pandemic poses a major challenge to the tourism-dependent economy, which is expected to contract by at least 10 per cent this year. “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,” he said.
However, the Barbados Government is now targeting a primary surplus of one per cent of gross domestic product (GDP) for the current fiscal year, compared to six per cent prior to the global outbreak, van Selm said. This is to enable the Government to direct resources to combat the virus threat.
He said the Government had met all the EFF’s criteria for the end of March 2020. This contributed to the staff mission’s decision to support an easing of the fiscal stance, and proposes a further US$90 million adjustment to the EFF, subject to approval by the IMF Executive Board.
The mission chief said “Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform programme. 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.,” adding that “The completion of the debt restructuring in December 2019 and meeting the primary surplus target of six per cent of GDP for FY2019/20 have been very helpful in reducing economic uncertainty and reducing public debt.”
The IMF Executive Board is expected to consider the review in June.