The International Monetary Fund (IMF) has approved a US$113-million, 36-month Extended Fund Facility (EFF) programme for Barbados in addition to US$189-million Resilient and Sustainability Fund (RSF).

Both funding facilities are geared towards maintaining and strengthening Barbados’ macroeconomic stability, support the structural reform agenda and increase resilience to climate change.

GRADUAL, SUSTAINED INCREASE IN PRIMARY SURPLUS

The IMF said the new programme will build on the achievements of the 2018-22 EFF and draw on the authorities’ updated economic reform programme (BERT 2022), including building resilience to natural disasters and climate change and transition risks.

Key elements of the programme include the gradual and sustained increase in primary surpluses and ambitious structural reforms, such as strengthening of tax and customs administration as well as Public Financial Management, adoption and implementation of pension reform, the rationalisation and consolidation of state-owned enterprises, and growth-enhancing measures, including additional steps to improve the business climate.

The programme targets a primary surplus of two per cent of gross domestic product (GDP) in FY2022/23, up from minus one per cent of GDP recorded in both FY 2020/21 and FY 2021/22.

IMF Deputy Managing Director and Acting Chair of the Board, Kenji Okamura said: “Barbados continues to make good progress in implementing its homegrown Economic Recovery and Transformation Plan, despite a very challenging global economic environment.”

DOWNWARD TRAJECTORY

He added that macroeconomic stability was restored in 2018 and 2019 with a combination of fiscal consolidation, comprehensive debt restructuring, and structural reforms to support growth. This created space for a countercyclical policy response to the COVID-19 pandemic in 2020 and 2021.

Public debt was put back on a clear downward trajectory starting financial year 2021/22.