February 15, 2022
- Following a modest economic recovery in 2021, Barbados continues to face economic challenges owing to the global pandemic.
- Implementation of the Barbados Economic Recovery and Transformation (BERT) program remains strong, despite the COVID-19 shock.
- Program targets under the Fund-supported program for end-December 2021 were met, and international reserves reached US$1.5 billion at the end of 2021.
At the request of the Government of Barbados, an International Monetary Fund (IMF) team led by Bert van Selm conducted a staff visit via videoconferencing from February 7-11, 2022. During the visit, the team discussed the implementation of Barbados’ Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Fund Facility (EFF). To summarize the mission’s findings, Mr. van Selm made the following statement:
“The ongoing COVID-19 pandemic continues to pose economic challenges to Barbados. Tourism has rebounded in recent months, leading to real GDP growth of 1.4 percent for 2021, and 11½ percent in Q4 2021 (over the same quarter in 2020). A gradual economic recovery is expected over the medium term, but risks to the outlook remain high.
“In this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program, while expanding critical investments in social protection. All indicative targets for end-December under the EFF were met. International reserves, which reached a low of US$220 million at end-May 2018, increased to US$1.5 billion at the end of 2021. Barbados recorded a small (½ percent of GDP) primary surplus over the first three quarters of FY2021/22, which bodes well for meeting the primary balance target (minus 1 percent of GDP) for the full fiscal year. Preparation of a budget for FY2022/23 is well underway.
“Strong steps have been made in implementing structural reforms. The Fair Credit Reporting Act, adopted by parliament in December, will support financial sector development. The Minister of Finance issued regulations for a procedural fiscal rule in December—a key milestone towards enhancing fiscal sustainability. The Barbados Customs and Excise Department took important steps to improve performance management, risk management, and trade facilitation during 2021. Work has been initiated on reforms to enhance the sustainability of the public sector pension scheme.
“The team is looking forward to conducting discussions for the seventh review under the EFF in May and would like to thank the authorities and the technical team for their openness and candid discussions.”