The IMF’s Executive Board Approves Additional Funding for Barbados

The Executive Board of the International Monetary Fund has approved the staff level agreement reached between its Bert Van Selm led team and the Barbados Government in May 2021. As a result, the island will now receive another US $24 million in financing from the agency, bringing its total borrowings under the Enhanced Fund Facility (EFF) arrangement to USD $415 million.

The approval also makes official changes to the terms of the programme, including a new primary balance target of 0 percent of GDP for fiscal year 2021/22 (April 2021 to March 2022) and an extension of the timeline for Barbados to reach a debt-to-GDP ratio of 60 percent.

In a statement released by Deputy Managing Director and Acting Chair Tao Zhang, he commented on the new terms:

“The lower primary balance target, financed by additional support from international financial institutions, is appropriate to accommodate worse-than-anticipated revenue losses and supports spending on public health and social protection. The delay in achieving the 60 percent of GDP debt anchor by two years would avoid jeopardizing economic growth and social cohesion. To help safeguard debt sustainability, sustaining ambitious primary surpluses over the medium and long term would be required.”

He also previewed what will be necessary for Barbados’ economy to rebound in the aftermath of COVID-19.

“A strong recovery after the global pandemic will depend on accelerating structural reforms to improve the business climate and facilitate green and digital transformation. Strengthening resilience to natural disasters and climate change is key to achieving long-term sustainable economic growth.”

Read the full statement here.