IMF Completes Fifth Review With Barbados
Washington, DC: The Executive Board of the International Monetary Fund (IMF) today concluded the fifth and final reviews of the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements with Barbados. The completion of the reviews allows the authorities to draw the equivalent of SDR 14.175 million (about US$19 million) under the EFF arrangement and SDR 28.35 million (about US$39 million) under the RSF arrangement, bringing total disbursements under the EFF arrangement to SDR 85.05 million (about US$116 million) and SDR 141.75 million (about US$193 million) under the RSF arrangement. The authorities have consented to the publication of the staff report prepared for these reviews. [1]
Economic activity in 2024 remained robust, with growth estimated at 4 percent, driven by tourism, construction, and business services. Inflation moderated to an average of 1.4 percent due to easing global commodity prices and prices of domestic goods and services. The external position strengthened further, with the current account deficit narrowing to 4.5 percent of GDP, supported by tourism receipts, declining import prices, and one-off current transfers. Gross international reserves reached US$1.6 billion at end-2024, equivalent to over 7 months of import cover, providing continued strong support to the exchange rate peg.
The near-term outlook is stable. Growth is expected to reach 2.7 percent in 2025, supported by construction of tourism-related projects and government investment. Inflation is expected to pick up in 2025 due to the rising cost of non-fuel imports and some 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.
Program performance has remained strong. All quantitative performance criteria and indicative targets were met. The authorities exceeded the primary fiscal surplus target for FY2024/25 and are targeting 4.4 percent of GDP for FY2025/26. Public debt has fallen below 105 percent of GDP, and the authorities remain committed to bringing it down to 60 percent of GDP by FY2035/36. The authorities 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.
Following the Executive Board discussion on Barbados, Mr. Bo Li, Deputy Managing Director and Acting Chair, issued the following statement:
“The implementation of Barbados’ homegrown Economic Recovery and Transformation program has remained strong, supported by the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements. 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.
“Maintaining strong fiscal surpluses will be necessary to achieve the public debt target of 60 percent of GDP by FY2035/36. The authorities’ focus on strengthening revenue mobilization and improving public financial management is appropriate. These measures will be key to preserving fiscal sustainability and creating space for public investment. Finalizing ambitious reforms of state-owned enterprises is a priority. The authorities are taking the necessary steps to mobilize external financing.
“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 digitalization 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.”
[1] Under the IMF’s Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires member consent. The staff report will be published shortly on the www.imf.org/Barbados page.
https://www.imf.org/en/News/Articles/2025/06/20/pr-25210-barbados-imf-concludes-5th-reviews-under-the-eff-and-resil-and-sustainability-facility