The International Monetary Fund’s (IMF) executive board has given the green light for Barbados to immediately receive another $48 million, which would bring to $850 million the amount of IMF funding Government has received since 2018.
The approval, while announced on Thursday, was given on Wednesday as IMF directors concluded the 2021 Article IV Consultation and Sixth Review under the international financial institution Extended Arrangement for Barbados.
While giving Barbados a passing grade, the IMF’s deputy managing director and acting chair Bo Li said the country’s medium-term growth prospects “depend on accelerating structural reforms to improve the business climate, diversify the economy, and facilitate green and digital transformations”.
“Strengthening resilience to natural disasters and climate change, combined with an accelerated transition to renewable energy, is key to achieve more sustainable economic growth and reduce vulnerability to international oil price volatility,” he said.
“In this regard, the authorities’ ambitious target of reaching 100 per cent renewable energy by 2030 is commendable.”
Li said Government continued to “make good progress in implementing their comprehensive Economic Recovery and Transformation plan, despite the challenges caused by the ongoing global pandemic and two recent natural disasters”.
“Given that the outlook remains uncertain, the authorities need to maintain sound policies and their strong reform momentum to safeguard macroeconomic stability and boost potential growth,” he added.
The acting chair said a temporary relaxation of the primary balance target for fiscal year 2021/2022 was appropriate given the lingering impact of the pandemic and unexpected spending needs to address the impact of Hurricane Elsa and ash falls from nearby volcanic eruptions.
However, he said the authorities “will have to compensate this short-term fiscal accommodation with higher primary surpluses in the medium term to safeguard debt sustainability”.
Li said Government needed to complete several steps to improve its financial management. (SC)
