Barbados has reached a significant milestone in its economic recovery journey with the successful conclusion of its IMF-supported reform programme, securing the final loan disbursement of approximately US$116 million (BDS$232 million) under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).
The IMF Executive Board approved the fifth and final reviews of both programmes on Friday, paving the way for an immediate disbursement of US$19 million (BDS$38 million) under the EFF and US$39 million (BDS$78 million) under the RSF. This brings the total IMF financial support to Barbados since 2018 to US$309 million (BDS$618 million).
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Strong Track Record of Reform and Resilience
Prime Minister Mia Mottley noted that while the seven-year partnership with the IMF has officially ended, her government remains open to future support if necessary: “The IMF will remain on speed dial.”
Since entering the EFF arrangement in October 2018, Barbados has implemented a wide range of economic reforms through its homegrown Barbados Economic Recovery and Transformation (BERT) programme. The initial US$145 million loan was later expanded to address COVID-19-related shocks, increasing total access to US$225 million. In 2023, the programme was reinforced with a new agreement combining economic reform and climate resilience measures through both the EFF and RSF.
Deputy Managing Director and acting chair of the IMF Executive Board, Bo Li, praised Barbados for its strong programme implementation:
“Growth has been robust, inflation has moderated, the fiscal and external positions have improved, and the public debt-to-GDP ratio continues to decline.”
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Key Economic Highlights:
- 2024 GDP growth estimated at 4%, driven by tourism, construction, and business services.
- Inflation fell to an average of 1.4%, supported by easing global commodity prices.
- Current account deficit narrowed to 4.5% of GDP.
- Gross international reserves reached US$1.6 billion (BDS$3.2 billion), covering over 7 months of imports.
- Public debt is on a declining trajectory, with a target of 60% of GDP by FY2035/36.
- Government exceeded its fiscal surplus target in FY2024/25 and is aiming for 4.4% of GDP in FY2025/26.
Looking Ahead: Reforms and Opportunities
While optimistic, the IMF highlighted ongoing vulnerabilities, particularly from external shocks and natural disasters. Bo Li noted the importance of maintaining strong fiscal surpluses, strengthening public financial management, and completing state-owned enterprise reform.
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Key policy directions for the next phase of growth include:
- Enhancing macroeconomic resilience to climate risks.
- Expanding digital government services and investing in skills development.
- Transitioning to renewable energy and modernising the payments system by 2026.
- Continuing to support private sector growth through a stronger business environment.
The IMF concluded that Barbados’ economy is now on a more stable and sustainable path, with a forecast of 2.7% growth in 2025 as new tourism-related construction and public investment projects come online.
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