At the request of the Government of Barbados, an International Monetary Fund (IMF) team led by IMF Deputy Mission Chief, Caribbean II Division, Bert Van Selm, visited Bridgetown from May 7–17, 2019 to discuss implementation of the BERT plan, supported by the IMF under the Extended Fund Facility (EFF).
In a statement following the review, Van Selm said: “The IMF team and the Barbadian authorities reached staff-level agreement on the completion of the first review under the EFF arrangement.”
Under the agreement, subject to approval by the IMF Executive Board, upon completion of the review, SDR 35 million (about US$49 million) will be made available to Barbados, bringing the total disbursement to SDR 70 million (US$98 million).
According to Van Selm, “International reserves, which reached a low of US$220 million (5-6 weeks of import coverage) at end-May 2018, have more than doubled since then.”
“The rapid completion of the domestic part of a debt restructuring has been very helpful in reducing economic uncertainty, and the new terms agreed with creditors have put debt on a clear downward trajectory. The authorities have started the reform of State-Owned Enterprises (SOEs) by tightening reporting requirements and shedding excess staff.
The IMF official said “All program targets for end-March under the EFF have been met. The program target for Net International Reserves was met by a wide margin, as was the target for the Central Bank of Barbados’ Net Domestic Assets (NDA). The targets for the primary surplus, central government grants to SOEs, central government domestic arrears, and social spending were also met.”
“In March, parliament adopted a budget FY2019/20 targeting a primary surplus of 6 percent of GDP. Full year effects of reforms set in motion during FY2018/19, including the introduction of several new taxes (an airline travel fee, room levies, a new fuel tax, and a new health service contribution), should help achieve this target,” Van Selm noted.
He added that “A broadening of the base of the VAT and the land tax, adopted in March 2019 in the context of the FY2019/20 budget, will help support revenue. The budget approved for FY2019/20 provides a solid basis for the targeted fiscal consolidation; the authorities stand ready to take additional measures if necessary to reach the targeted 6 percent primary surplus.”
The IMF official pointed out that “The Barbadian authorities continue to make good progress in implementing structural benchmarks under the EFF, including those that contribute to an improved business climate such as a new Planning and Development Act passed in January 2019 and a Sandbox regime to regulate fintech start-ups set up in October 2018.”
In addition, “a new Public Financial Management Act passed in January 2019 introduced wide-ranging measures to strengthen fiscal transparency and accountability. The government has also introduced a system for monitoring SOE arrears on an ongoing basis and has submitted a consolidated report on the performance of SOEs to parliament.”
“Progress being made by the authorities in furthering good-faith discussions with external creditors is welcome. Continuing open dialogue and sharing of information will remain important in concluding an orderly debt restructuring process,” Van Selm concluded.
- Countries: Barbados
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