All targets under BERT for end-December 2021 were met

Following a modest economic recovery in 2021, Barbados economic continues to face challenges owing to the global pandemic, is the latest assessment of the International Monetary Fund (IMF) of the Bajan economy.

The assessment came at the conclusion of a February 7 – 11 virtual staff visit, as part of the Barbados Economic Recovery and Transformation (BERT) programme, which the IMF concluded remains strong, despite the COVID-19 shock. The IMF mission team assessed that the targets under BERT for end-December 2021 were met, declaring international reserves reaching US$1.5 billion at the end of 2021.

According to mission lead Bert Van Selm, “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 per cent for 2021, and 11.5 per cent 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”.

Barbados recorded a small (0.5 per cent of GDP) primary surplus over the first three quarters of FY2021-22, which bodes well for meeting the primary balance target (minus one per cent of GDP) for the full fiscal year. The IMF also commended the “strong steps” made in implementing structural reforms, highlighting the Fair Credit Reporting Act and the issuance of regulations for a procedural fiscal rule in December among others.

Gradual economic recovery over the medium term

The IMF expects a gradual economic recovery over the medium term, but risks to the outlook remain high. According to the IMF, “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”.

The IMF reported that, “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”.

In addition, the IMF praised the Barbados Customs and Excise Department for taking 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,” the IMF mission team said in conclusion.