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WASHINGTON, Jun 20, CMC – Barbados is set to receive its final disbursement of about US$58 million, as the International Monetary Fund Executive Board on Friday concluded the fifth and final reviews under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with the island.
The Washington-based financial institution stated that, as a result of the completed reviews, Barbados will be allowed to draw down US$19 million under the EFF arrangement and US$39 million under the RSF arrangement.
This brings total disbursements under the EFF to US$116 million and under the RSF to US$193 million.
According to the IMF, economic activity in 2024 remained robust, with growth estimated at 4%, driven by tourism, construction, and business services. Inflation moderated to an average of 1.4% due to easing global commodity prices and the prices of domestic goods and services.
The IMF noted that the external position strengthened further, with the current account deficit narrowing to 4.5% of gross domestic product (GDP), supported by tourism receipts, declining import prices, and one-off current transfers.
Gross international reserves reached US$1.6 billion at the end of 2024, equivalent to over seven months of import cover, providing continued strong support to the exchange rate peg.
The Fund stated that Barbados’ near-term outlook is stable, with growth expected to reach 2.7% in 2025, supported by tourism-related construction and government investment.
Inflation is expected to rise in 2025, due to the increasing cost of non-fuel imports and certain domestic agricultural products.
“Nevertheless, risks to the outlook are tilted to the downside amidst the highly uncertain external economic environment and Barbados’ continued vulnerability to global shocks and natural disasters,” the IMF warned.
It reported that programme performance has remained strong. All quantitative performance criteria and indicative targets were met. The authorities exceeded the primary fiscal surplus target for the 2024/25 financial year and are targeting 4.4% of GDP for 2025/26.
Public debt has fallen below 105% of GDP, and the authorities remain committed to reducing it to 60% of GDP by the 2035/36 financial year.
The IMF said Barbados met the EFF structural benchmarks for the review, including completing the assessment of human resource needs at the Barbados Customs and Excise Department, preparing a public-private partnership (PPP) framework, and developing a daily liquidity forecasting framework.
“Both reform measures for the RSF fifth review were also implemented. Key elements to strengthen the integration of climate concerns into public financial management have been completed, including the development of project appraisal guidelines, the deepening of fiscal risk analysis, and the preparation of the PPP framework. The Central Bank of Barbados has also included physical climate risk analysis in its bank stress testing,” it added.
IMF Deputy Managing Director Bo Li said the implementation of Barbados’ homegrown Economic Recovery and Transformation Programme has remained strong, supported by the EFF and RSF arrangements.
Li said the completion of the fifth and final reviews marks the successful conclusion of the Fund arrangements.
“While the outlook is stable, risks remain tilted to the downside, given the highly uncertain external economic environment and Barbados’ vulnerability to shocks and natural disasters. The authorities remain strongly committed to ensuring macroeconomic stability and implementing structural reforms to boost potential growth and build resilience.”
Li added that maintaining strong fiscal surpluses will be necessary to achieve the public debt target of 60% of GDP by the 2035/36 financial year.
“The authorities’ focus on strengthening revenue mobilisation and improving public financial management is appropriate. These measures will be key to preserving fiscal sustainability and creating space for public investment. Finalising ambitious reforms of state-owned enterprises is a priority. The authorities are taking the necessary steps to mobilise external financing.”
Li also stated that the exchange rate peg remains a critical anchor for macroeconomic stability, supported by ample international reserves.
“Measures have been taken to strengthen the monetary policy framework and financial safety nets. Efforts to enhance the local payments market and infrastructure are advancing, with the goal of moving to a digital payments system in 2026.
“Reforms to improve the business environment and boost growth potential are key. Important measures include advancing the digitalisation of government services and investing in skills and education. The authorities’ focus on boosting macroeconomic resilience to natural disasters and facilitating the transition to renewable energy is welcome,” Li added.
