IMF Executive Board Completes First Review Under the IMF’s Extended Fund Facility for Barbados and Approves US$48.7 Million Disbursement
June 24, 2019
- The completion of the review enables an immediate disbursement of SDR 35 million (about US$48.70 million). A four-year EFF arrangement was approved on October 1, 2018.
- Fiscal adjustment is ongoing, with the authorities targeting a primary surplus of 6 percent of GDP in FY2019/20 and several years thereafter.
- A public debt restructuring is complementing the fiscal consolidation. The restructuring of domestic public debt completed in November 2018 has helped to substantially reduce the public debt burden. The authorities are engaging in good faith negotiations with external commercial creditors.
On June 24, 2019, the Executive Board of the International Monetary Fund
(IMF) completed the first review of Barbados’ economic reform program
supported by an arrangement under the Extended Fund Facility (EFF). The
completion of the review allows the authorities to draw the equivalent of
SDR 35 million (about US$48.70 million), bringing total disbursements to
SDR 70 million (about US$97.40 million).
The four-year EFF arrangement amount equivalent to SDR 208 million (about
US$289.41 million, or 220 percent of Barbados’s quota in the IMF) was
approved by the Executive Board on October 1, 2018 (see Press Release No.
Barbados has embarked on a comprehensive Economic Recovery and
Transformation (BERT) plan aimed at restoring fiscal and debt
sustainability, addressing falling reserves, and increasing growth. The
program seeks to protect vulnerable groups through strengthened social
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing
Director and Acting Chair said:
“Barbados has made a strong start in implementing its ambitious and
homegrown economic reform program. All performance criteria for March
2019 were met, and all structural benchmarks have been implemented,
although a few with minor delays.
“The FY2019/20 budget provides a solid basis for the targeted fiscal
consolidation of 6 percent of GDP. The adjustment effort is supported by
several new taxes, ongoing reforms in public financial management, a
reduction of transfers to State‑Owned Enterprises (SOEs), and adequate
provisions for social safety nets and capital expenditure. If necessary,
the authorities stand ready to take additional measures to reach the
targeted primary surplus. The planned adoption of a fiscal rule in 2020
will help sustain the adjustment effort over the medium and long term.
“Reform of SOEs is critical for achieving the primary surplus target and
maintaining it over the medium term. To secure fiscal space for investment
in physical and human capital, transfers to SOEs are envisaged to
significantly decline by a combination of stronger oversight of SOEs, cost
reduction, revenue enhancement, and mergers and divestment.
“A comprehensive public debt restructuring complements the fiscal
consolidation. The domestic debt restructuring completed in November 2018
has significantly reduced Barbados’s public debt burden without
jeopardizing financial stability. The authorities are continuing good faith
negotiations with external commercial creditors, which together with the
domestic debt restructuring, should help restore debt sustainability.
“The fixed exchange rate has served as a key anchor for macroeconomic
stability and international reserves have increased. The exchange rate peg
and monetary regime would be further bolstered by the planned reforms to
strengthen the central bank’s mandate, autonomy, and decision‑making
“Structural reforms target improvements in the business environment to
increase growth over the medium term. With the adoption of a new Town and
Country Planning Law in January 2019, the process for providing
construction permits has been streamlined. Going forward, the authorities
intend to carefully review and address the different obstacles to growth.
“Adequate social spending and an improved safety net are key priorities for
the program. The authorities have launched a training and outplacement
program to mitigate the impact on unemployment from layoffs at the central
government and SOEs.”
IMF Communications Department
PRESS OFFICER: Randa Elnagar
Phone: +1 202 623-7100Email: MEDIA@IMF.org