Barbados can immediately draw down US$64 million (BDS$128 million) from the International Monetary Fund (IMF), but the international financial institution says local authorities have indicated that they will not be requesting one cent of it at this time.
Government’s ability to access that amount of new loan funding now was revealed by the IMF when it announced that its executive board approved a three-year, US$257 million precautionary StandBy Arrangement (SBA) for Barbados yesterday. The IMF also concluded the country’s 2026 Article IV Consultation.
Senior IMF officials shared the information while voicing agreement that Barbados needed more structural reforms to boost potential growth over the medium-term, including “tackling infrastructure bottlenecks, improving the business environment and closing skills gaps”.
“The IMF executive board approved a new 36-month precautionary SBA for Barbados . . . equivalent to US$257 million,” the IMF announced.
“The executive board’s decision allows the authorities access to . . . equivalent to US$64 million. The Barbadian authorities have indicated that they will treat the SBA as precautionary.”
The IMF said the precautionary SBA “will provide critical insurance in the event shocks generate balance of payments needs, while continuing to help anchor macroeconomic stability and support reform implementation under the homegrown Barbados Economic Recovery and Transformation Plan 2026 (BERT 2026)”.
Key pillars
Barbados, the IMF added, has agreed to the following “key pillars” as part of the SBA arrangement: Sustaining strong fiscal accounts, balancing debt sustainability with development needs.
Maintaining ample international reserves to support the exchange rate peg.
Implementing structural reforms to continue building fiscal policy and institutional credibility and bolster financial stability.
Supporting the authorities’ efforts to boost productivity and competitiveness, and build resilience to natural disasters.
In a statement following the executive board’s discussion, Dr Nigel Clarke, IMF deputy managing director and acting chair of the board, said Government’s “strong implementation of the homegrown BERT 2022, supported by IMF arrangements, has reinforced macroeconomic stability and facilitated structural reforms.
“Public debt is on a firm downward path, international reserves have been rebuilt, access to capital markets has been restored, and important structural reforms have been completed to help boost growth and strengthen resilience,” said Clarke, who is Jamaica’s immediate-past minister of finance.
“While the economic outlook remains stable, it is subject to downside risks, amidst an external environment impacted by geopolitical tensions and global policy uncertainty.
“The authorities are committed to maintaining strong fiscal surpluses to keep debt on a declining path and achieve the public debt target of 60 per cent of GDP (gross domestic product) by fiscal year 2035/36,” he added.
Strenghten frameworks
Clarke also said Barbados’ fiscal reforms sought to further build policy credibility and strengthen policy frameworks and institutions.
“Efforts to support revenue mobilisation and improve public financial management remain priorities. Developing domestic debt markets will also be key to reducing rollover risks and mobilising domestic savings,” he stated.
“The exchange rate peg remains a critical anchor for macroeconomic stability, supported by ample international reserves. The financial system is stable and the authorities are pursuing important reforms to bolster resilience, including improvements to banking supervision and further enhancements to the anti-money laundering/combating the financing of terrorism framework.”
Clarke also said that “reforms to boost productivity, competitiveness and resilience will be critical to support economic transformation and deliver more sustainable and inclusive growth”.
The executive board’s assessment agreed with the “thrust of the staff appraisal”, which was shared by IMF Barbados mission chief Michael Perks as he spoke alongside Prime Minister Mia Amor Mottley when the precautionary SBA was announced at Ilaro Court last month.
The directors concurred with the need for the fiscal insurance amidst an uncertain external environment and vulnerability to natural disasters, while “stressing the importance of contingency planning and agile policymaking”. (SC)
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