BRIDGETOWN, Barbados – The International Monetary Fund (IMF) Thursday said that it has reached a staff-level agreement with Barbados on the completion of the fifth and final reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with Barbados.
An IMF delegation, led by Michael Perks is due to end a week long visit to the island on Friday, discussing the implementation of the Barbados’ Economic Recovery and Transformation (BERT 2022) plan, supported by the Washington-based financial institution.
Perks said that following “productive discussions,” the IMF team and the Barbados authorities have reached a staff-level agreement which is subject to approval by the IMF Executive Board in June.
He said the completion of the final reviews will mark the successful conclusion of the arrangements and will allow the authorities to draw the remaining US$19 million under the EFF arrangement and US$38 million under the RSF arrangement.
Perks said that the economy grew strongly in 2024 and continues to expand in 2025, driven by tourism, construction, and business services. Inflation has moderated further, due to an easing of global commodity prices and prices of domestic goods and services.
He said the external position has improved, with a significant strengthening of the current account in 2024.
International reserves have increased to almost US$1.7 billion, equivalent to over seven months of import cover, ample to support the exchange rate peg. Real gross domestic product (GDP) is projected to grow by 2.7 per cent in 2025, sustained by construction related to tourism projects and public investment.
“Nevertheless, the economic outlook is subject to significant downside risks, given heightened global uncertainty and Barbados’ vulnerability to external shocks and natural disasters,” Perks said, adding that the programme performance remains strong.
“All quantitative performance criteria and indicative targets for the fifth review of the EFF were met. The fiscal primary surplus reached 4.3 per cent of GDP in financial year 2024/25, with strong corporate tax revenues and prudent current spending controls enabling a significant increase in capital investment aimed at boosting infrastructure and resilience.
“For financial year 2025/26, the budget aims to reach a primary surplus of 4.4 per cent of GDP, consistent with programme projections,” Perks said, noting that public debt continues to decline, and the authorities remain firmly committed to reaching the 60 per cent of GDP target by the financial year 2035/36.
“The structural reform agenda is advancing, supported by technical assistance from the Fund and development partners. All three structural benchmarks (SBs) were met, including completing the assessment of human resource needs at the Barbados Customs and Excise Department, preparing a draft public-private partnership (PPP) framework and developing a daily liquidity forecasting framework by the Central Bank of Barbados (CBB).
“ Efforts to strengthen growth and the business environment also continue to progress, including measures to address the skills gap.”
Perks said that Barbados has completed both reform measures for the fifth RSF review. He said key elements to strengthen the integration of climate concerns into public financial management have been delivered, including the development of public investment project appraisal guidelines, deepening of fiscal risk analysis, and preparation of a PPP framework.
“The CBB has also included physical climate risks in its bank stress testing exercise. In addition, the government has created a new Resilience and Regeneration Fund, repurposing the previous Catastrophe Fund with an expanded role and additional financing for disaster mitigation, response, and regeneration,” Perks said.
