Barbados is on track for a “gradual economic recovery” in the coming months, but International Monetary Fund (IMF) chief Bert Van Selm warned on Friday that growth remained subject to significant risks.
Van Selm, who this week led virtual discussions with local authorities on the implementation of Barbados’ Economic Recovery and Transformation (BERT) plan, supported by the IMF under the Extended Financing Facility (EFF) , said the global coronavirus pandemic continues to pose major challenges to the economy despite positive indicators.
“Tourism has rebounded in recent months, leading to real GDP (gross domestic product) growth of 1.4% for 2021 and 11.5% in the fourth quarter of 2021 (compared to the same quarter in 2020). A gradual economic recovery is expected over the medium term, but risks to the outlook remain high,” he said in a statement released today at the end of the talks.
Despite the impact of the COVID pandemic, the Washington-based financial body remains satisfied with the government’s economic management under the four-year Extended Fund Facility (EFF) program.
Van Selm said: “In this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform agenda, while increasing critical investments in social protection.
“All indicative end-December targets under the EFF have been met. International reserves, which hit a low of $220 million at the end of May 2018, rose to $1.5 billion at the end of 2021.
The IMF further pointed out that the country recorded a small primary surplus (½% of GDP) in the first three quarters of 2021/22, which he said bodes well for achieving the primary balance target (minus 1% of GDP ) for the entire fiscal year.
The Fund noted that preparations for this year’s budget are underway as the implementation of key structural reforms continues.
“The Fair Credit Reporting Act, passed by Parliament in December, will support the development of the financial sector. The Minister of Finance published in December a regulation on a procedural fiscal rule, a key step towards improving fiscal sustainability.
“The Barbados Customs and Excise Department has taken significant steps to improve performance management, risk management and trade facilitation in 2021. Work has begun on reforms to strengthen the sustainability of the customs regime. retirement from the public sector,” added Van Selm.
He said the IMF delegation looked forward to discussions in May for the seventh review under the EFF. (SOUTH DAKOTA)