An International Monetary Fund (IMF) mission team led by Michael Perks has reached a preliminary, staff-level agreement with Barbados on the completion of key economic reviews under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF). This agreement is now awaiting approval by the IMF Executive Board, which will consider it in December.

Economic Growth and Stability on the Rise

Barbados’ economy demonstrated strong growth in 2024, expanding by an estimated 3.9% year-on-year, driven by robust tourism and construction activities. Despite Hurricane Beryl’s impact on coastal infrastructure, the broader economy remains resilient, supported by slowing inflation and a strengthened external position. The current account deficit has narrowed significantly, and international reserves are healthy at $1.6 billion, equivalent to around seven months of imports.

Commitment to Fiscal Discipline and Climate Resilience

The Barbadian authorities continue to make progress on their Barbados Economic Recovery and Transformation (BERT 2022) plan. Their fiscal strategy, including a primary surplus target of 3.8% of GDP, is on track, while public debt has been reduced to 105% of GDP, with a long-term goal of bringing it down to 60% by 2035.

In parallel, the government is advancing a forward-looking climate agenda under the RSF, introducing a new Electricity Supply Bill in Parliament to encourage competition and investment in renewable energy. Efforts to mobilize climate finance, including a debt-for-climate swap, are underway to secure funding for essential green infrastructure, such as water resilience projects.

Program Performance and Structural Reforms

The IMF noted Barbados’ strong program performance, with all quantitative targets met. Structural reforms, including enhanced tax and customs administration, are progressing well, fostering a more robust business environment. Additionally, the Central Bank of Barbados is implementing strategies to monitor climate risks, underscoring the island’s dedication to sustainable, resilient growth.

Looking Ahead

With the IMF’s continued support, Barbados remains committed to implementing fiscal and climate policies that ensure inclusive and sustainable economic growth. The positive momentum in 2024 positions the nation to bolster its resilience against future economic and environmental challenges.