Barbados reaches staff-level agreement with IMF
International Monetary Fund (IMF) has reached a staff-level agreement with Barbados on an economic programme under the Extended Fund Facility.
In a statement, the IMF said, at the request of the Government of Barbados, a team led by Bert van Selm visited Bridgetown from August 30 to September 7 for discussions on possible financial support for its Economic Recovery and Transformation Plan.
At the end of the visit, van Selm made the following statement:
“I am pleased to announce that, in support of the Barbadian authorities’ economic reform programme, the IMF team and the government of Barbados have reached staff-level agreement on a 48-months Extended Fund Facility, with access of SDR 208 million (equivalent to 220 percent of quota, or about US$290 million). If approved by the IMF Executive Board, SDR 35 million (about US$49 million) would be immediately available.
"Staff envisages that the IMF’s Executive Board would consider the proposed arrangement under the EFF by early October," said van Selm.
He noted that in the last decade, the Barbadian economy has been caught in a cycle of low growth, widening fiscal deficits and increasing debt.
He further said that international reserves have dwindled to US$240 million, well below reserve adequacy levels, while central government debt has become unsustainable.
The IMF said that Barbados’s Economic Recovery and Transformation Plan aims to restore macroeconomic stability and put the economy on a path of strong, sustainable and inclusive growth while safeguarding the resilience of the financial sector.
The Fund said the cornerstone of the programme is a strong front-loaded fiscal adjustment focused on curbing current expenditure while maintaining space for bolstering social safety nets and infrastructure spending.
“The success of Barbados’ program will require an extraordinary effort and resolve on the part of the authorities and other segments of society, as well as broad international support. While the initial implementation period will be challenging, Barbados will emerge stronger and more dynamic from the program, and it will be better poised to generate growth and job creation for the people of Barbados," underscored van Selm.