Barbados: Third Reviews Under the Arrangement Under the Extended Fund Facility, Arrangement Under the Resilience and Sustainability Facility, and Request for Modification of Performance Criteria-Press Release; and Staff Report

BARBADOS IMFCountryReportNo.24/196 June2024 THIRDREVIEWSUNDERTHEEXTENDEDARRANGEMENTUNDERTHEEXTENDEDFUNDFACILITY,ARRANGEMENTUNDERTHERESILIENCEANDSUSTAINABILITYFACILITY,ANDREQUESTFORMODIFICATIONOFPERFORMANCECRITERIA InthecontextoftheStaffReportfortheThirdReviewsUndertheArrangementUndertheExtendedFundFacility,ArrangementUndertheResilienceandSustainabilityFacility,andRequestforModificationofPerformanceCriteria,thefollowingdocumentshavebeenreleasedandareincludedinthispackage: PressRelease TheStaffReportpreparedbyastaffteamoftheIMFfortheExecutiveBoard’sconsiderationonalapse-of-timebasis,followingdiscussionsthatendedonMay21,2024,withtheofficialsofBarbadosoneconomicdevelopmentsandpolicies.Basedoninformationavailableatthetimeofthesediscussions,thestaffreportwascompletedonJune12,2024. TheIMF’stransparencypolicyallowsforthedeletionofmarket-sensitiveinformationandprematuredisclosureoftheauthorities’policyintentionsinpublishedstaffreportsandotherdocuments. Copiesofthisreportareavailabletothepublicfrom InternationalMonetaryFundPublicationServicesPOBox92780Washington,D.C.20090Telephone:(202)623-7430Fax:(202)623-7201 E-mail:publications@imf.orgWeb:http://www.imf.orgPrice:$18.00perprintedcopy InternationalMonetaryFundWashington,D.C. ©2024InternationalMonetaryFund PR24/254 IMFExecutiveBoardConcludestheThirdReviewsUndertheExtendedFundFacilityandtheResilienceandSustainabilityFacilitywithBarbados FORIMMEDIATERELEASE TheIMFExecutiveBoardconcludedthethirdreviewsundertheExtendedFundFacility(EFF)andtheResilienceandSustainabilityFacility(RSF),allowingforanimmediatedisbursementofSDR14.175million(aboutUS$19million)undertheEFFandSDR28.35million(aboutUS$37million)undertheRSF. Barbados’economyhasrecoveredtopre-pandemiclevelsandtheexternalpositionhasimproved.GDPgrowthisexpectedtoremainstrongin2024,drivenbydynamismintourismandrelatedsectors. Implementationofthehome-grownBarbadosEconomicRecoveryandTransformation(BERT2022)planandtheambitiousclimatepolicyagendacontinuestobestrong. Washington,DC–June28,2024:TheExecutiveBoardoftheInternationalMonetaryFund(IMF)concludedtheThirdReviewsoftheExtendedFundFacility(EFF)andtheResilienceandSustainabilityFacility(RSF)arrangementswithBarbadosonalapse-of-timebasis.1TheconclusionofthereviewsallowstheauthoritiestodrawtheequivalentofSDR14.175million(aboutUS$19million)undertheEFFandSDR28.35million(aboutUS$37million)undertheRSF.ThisbringstotaldisbursementsundertheEFFtoSDR56.7million(aboutUS$75million)andSDR85.05million(aboutUS$112million)undertheRSF. In2023,theBarbadianeconomygrewbyanestimated4.4percent,drivenbyareboundintourismandrelatedsectors.Inflationmoderatedgraduallywiththeeasingofinternationalcommoditypricesbutremainedsomewhatelevatedduetohigherpricesofcertaindomesticcrops,reflectingadverseweatherconditionsandstrongerdemandfortourism-relatedservices.Theexternalpositionstrengthened,withthecurrentaccountdeficitnarrowingto9percentofGDPandampleinternationalreserves(US$1.5billionatend-2023;equivalenttoover7monthsofimports)continuingtosupporttheexchangeratepeg. GDPgrowthisexpectedtoremainstrongin2024,drivenbyfurthergrowthintouristarrivals.Inflationisprojectedtomoderateto3.1percentbyend-2024,inlinewithglobalcommoditypricetrendsandtherecoveryindomesticagriculturalproduction.Thecurrentaccountdeficitisexpectedtonarrowfurtherto7.4percentofGDP.Nevertheless,riskstotheoutlookremainelevated,withBarbadosremainingvulnerabletopotentialglobaleconomicandfinancialshocksandnaturaldisasters.Theserisksaremitigatedbytheauthorities’excellenttrackrecordofimplementationandstrongcommitmenttoreform. 1TheExecutiveBoardtakesdecisionsunderitslapse-of-timeprocedurewhentheBoardagreesthataproposalcanbeconsideredwithoutconveningformaldiscussions. 2 Programperformanceremainsstrong.AllquantitativeperformancecriteriaandindicativetargetsforthethirdreviewoftheEFFweremet.TheauthoritiesexceededtheprimarysurplustargetforFY2023/24andaretargeting4percentofGDPforFY2024/25.Publicdebthasfallenbacktopre-pandemiclevelsandtheauthoritiesremaincommittedtobringingitdownto60percentofGDPbyFY2035/36.Theauthoritiesmetkeystructuralbenchmarks,includingreformstostate-ownedenterprises,thepublicpensionscheme,thetaxandcustomsexemptionregimes,publicprocurementprocesses,andpublicfinancialmanagement.ThetwoRSFreformmeasuressetforthethirdreviewwerealsoimplemented,supportingthegovernment’sambitiousclimate-policyagenda.AnewStormwaterManagementActtoimprovefloodresiliencewastabledinParliamentandanEnergyEfficiencyandConservationPolicyFrameworkforgovernmentagenciesandpubliclightingwasapprovedbyCabinet. June12,2024 BARBADOS THIRDREVIEWSUNDERTHEEXTENDEDARRANGEMENTUNDERTHEEXTENDEDFUNDFACILITY,ARRANGEMENTUNDERTHERESILIENCEANDSUSTAINABILITYFACILITY,ANDREQUESTFORMODIFICATIONOFPERFORMANCECRITERIA EXECUTIVESUMMARY Context.Theauthorities’implementationofthehome-grownEconomicRecoveryandTransformation(BERT2022)planandtheirambitiousclimatepolicyagendaremainstrong,supportedbytheIMF’sExtendedFundFacility(EFF)andResilienceandSustainabilityFacility(RSF).In2023,theeconomycompleteditsre