Fourth Review – IMF’s Extended Arrangement under the Extended Fund Facility for Barbados

Reproduced from the IMF Website David, Blogmaster

December 9, 2020
  • The Executive Board of the IMF concluded the fourth review of the IMF’s extended arrangement under the Extended Fund Facility (EFF) for Barbados. The completion of the review allows the authorities to draw SDR 65 million (about US$94 million). Access under the extended arrangement has been augmented by SDR 48 million (51 percent of quota, or about US$69 million) to help accommodate the shock.
  • Despite the challenges posed on the economy by the pandemic, Barbados continues its strong implementation of the comprehensive Economic Recovery and Transformation (BERT) plan aimed at restoring fiscal and debt sustainability and increasing reserves and growth.
  • The prolonged global coronavirus pandemic poses a major challenge for the economy, which is heavily dependent on tourism, and is expected to have a large impact on the balance of payments and the fiscal accounts.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the fourth review of the IMF’s extended arrangement under the Extended Fund Facility (EFF) for Barbados. The completion of the review allows the authorities to draw the equivalent of SDR 65 million (about US$94 million), bringing total disbursements to the equivalent of SDR 271 million (about US$390 million).

The four-year extended arrangement under the EFF was approved on October 1, 2018 (see Press Release No. 18/370). Including the augmentation approved by the Executive Board today, the extended arrangement is for an amount equivalent of SDR 322 million (about US$464 million).

Barbados continues its strong implementation of the comprehensive Economic Recovery and Transformation (BERT) plan aimed at restoring fiscal and debt sustainability and increasing reserves and growth. The prolonged global coronavirus pandemic poses a major challenge for the economy, which is heavily dependent on tourism, and is expected to have a large impact on the balance of payments and the fiscal accounts.

Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair said:

“The Barbadian authorities continue to make excellent progress in implementing their Fund-supported Economic Recovery and Transformation plan and have swiftly responded to address the impact of the pandemic . Prospects for continued strong program performance are good, but downside risks will continue to pose challenges in the period ahead.

“A primary balance target of minus 1 percent of GDP for fiscal year 2020/21, revised down from a surplus of 1 percent at the time of the third review, is appropriate to accommodate worse-than-anticipated revenue losses and support spending on public health and social protection. The new fiscal target is financed by additional resources from international financial institutions, including a second augmentation under the Extended Fund Facility.

“The fiscal accommodation will be compensated by higher primary surpluses in the medium term to ensure achievement of the long-term debt target of 60 percent of GDP. Medium-term fiscal adjustment will be supported by continued reform of state-owned enterprises (SOE) to secure space for investment in physical and human capital. Transfers to SOEs need to decline through a combination of stronger oversight, cost reduction, revenue enhancement, and mergers and divestment. Pension reform and introduction of a fiscal rule will also support medium-term fiscal sustainability.

“Progress in restoring fiscal sustainability will further be safeguarded by a new central bank law aimed at limiting financing of the government and strengthening the central bank’s mandate, autonomy, and decision-making structures.

“A strong recovery from the global pandemic will hinge on accelerating structural reform, including improving the business climate and promoting economic diversification. Strengthening resilience to natural disasters and climate change will be key to long-term sustained economic growth.”

252 thoughts on “Fourth Review – IMF’s Extended Arrangement under the Extended Fund Facility for Barbados

  1. Flindt is back in business, the cakes are still as good as ever, left turn BEFORE the white royal westmoreland sign on the same left heading north on the highway, not the coast road, the one above….quaint little building, kinda cart roadish….

  2. Have been watching for the past couple months a very beautiful tribute African youngsters are putting together for our ancestors stolen and brought across the atlantic and enslaved, it’s so out of this world as it emerges, am still trying to come to terms with the ingenuity, thought, care and creativity involved, while they are hard at work paying tribute and creating a beautiful monument that will resound across the earth, Barbados is trying to reenslave the descendants and survivors to cover up the billions of dollars they and the minority thieves robbed from the people and country over the last 30 years,…..good going, i’ll be sure these hardworking youngsters hear all about it..

  3. The government shouldn’t have borrowed a cent. Let everyone go home, businesses shut and beg for PPE etc. I bet yuh we happy owing the bank for cars, airline tickets and accommodation and house though? Bajans head like um bad.

  4. @ Enuff December 14, 2020 3:47 PM

    So why were you cussing the previous administration left, right and centre for borrowing and fiscal bullying?

    Remember the Credit Suisse loans, the SWT and NSRL?

    But the previous administration made a cardinal mistake by not taking OSA’s timely advice to ask the IMF for a financial bailout just like how the current one has done.

  5. Uh huh cuz the two are similar. Wunna continue to underestimate the economic impact of Covid. You get in goood yuh heeeaaaar!

  6. “But wait, Carsten is a white man? I thought you only supported black owned businesses”

    Northern…I didn’t say i bought the cake, it was offered to me and i ate it, I said that Flindt is back in business and the cake is still really good….do you know how expense those things are and if someone wants me to eat expensive cake, who am i to say no, a girl has to show some manners you know….and yes, i go out of my way to shop black, because it’s the right thing to do since this government pulled a nasty on the people, just like the last government and helped crooks rob the treasury and pension fund, so the right thing to do is try to uplift the black people who do business…

  7. Northern….life is strange, some time ago someone made friends with an acquaintance of mine, and only found out recently that this acquaintance is a die hard racist, they were appalled to find out, so now they know i got racist acquaintances too, am a friendly gal…

  8. Miller….don’t tell me that repulsive Fowl Enuff is trying to convince yall that Mia is doing the people some favor by digging a bigger and deeper debt trap that she fully expects Black people to repay, ya should ask the fowl when she is going to lock up those who stole the billion dollars in VAT and those thieving hoteliers/employers trying to get away with not paying workers severance, and the DLP crooks who also helped rob the country and people……the know it all should have an answer…

  9. Problem of rising debt
    THE COVID-19 PANDEMIC continues to have farreaching and major negative consequences for this country. If anyone doubted the pervasive nature of this deadly virus, which first reached Barbados in March, they only have to take a look at the fact that between January and September, tourism’s financial inflows fell by $963.5 million when compared to the same period last year.
    Increased borrowing and higher debt is another related aspect of the big fallout that many Barbadians may not be paying attention to. Given such a drastic drop in revenues from Barbados’ main breadwinner, the Mia Amor Mottley administration has had to turn to international financial institutions, and the Barbados-based Caribbean Development Bank, for funding. In other words, we have been getting more loans, money which has to be repaid, even though the interest would be lower than if the borrowings were on the open capital market.
    The Central Bank reported in its third quarter economic review that Government relied primarily on foreign sources for its financing during the first half of its 2020-2021 financial year, which is the period April 1 to September 30. Barbados received $375 million over that six-month period and the bank reported that almost all of this, 91 per cent, represented policy loans to supplement the revenue shortfalls induced by the pandemic.
    The remainder was for project funds specifically earmarked for ongoing capital works.
    Barbados’ debt-to-gross domestic product ratio, which fell after the debt restructurings, and as Government reduced the arrears it owed individuals and businesses, increased to 131 per cent at the end of September 2020, which the bank attributed to reduced economic output.
    The increased borrowing is also linked to the healthy state of the foreign reserves, which reached more than $2 billion at the end of the third quarter. About $554 million was added to the reserves in the first nine months of the year, and most of this was via loans from the International Monetary Fund (IMF) and Inter-American Development Bank (IDB).
    The Ministry of Finance has revealed that Government will have to pay $117 million more in debt than previously budgeted for. Recently, the IDB approved a $240 million loan for Barbados. Then the IMF approved a further $188 million, and its numbers indicate that it will end up lending Barbados $928 million.
    It is no wonder, therefore, that Prime Minister Mottley has been repeatedly lobbying for international debt relief for Barbados and other small nations. While the repayment terms are better, Barbados still has to repay money borrowed from the IMF, IDB and others. This is why the country not only requires debt relief, but also needs to have a big turnaround in tourism, while also protecting its vital international business and financial services sector from repeatedly unfair blacklists.
    Everything must be done to ensure that Barbados does not again end up with an unsustainable mountain of debt. The average citizen cannot afford that burden.
    It is no wonder, therefore, that Prime Minister Mottley has been repeatedly lobbying for international debt relief for Barbados and other small nations.

    Nation Editorial

  10. “Beg or BORROW.”

    wuhloss…yardfowls got even more to celebrate…more debt, deeper wider debt trap, wonder who’s going to repay all of that, the majority better get with the program, they don’t owe anyone anything, stop the nationalism and patriotism bullshit (it has long been a trap that too many black people are eager to fall into) or yall and ya children, grandchildren future generations will be repaying these loans, while the usual suspects continue TIEFING everything….let them go to hell, and find a way to pay back what they stole…they are the thieves, they always got a scam ready, let them use a few to find the money…..


    looks like the cliff restaurant lied to these workers, expose them worldwide, they don’t intend to pay severance, they were the first to try to get away with not paying workers in March, they had some kinda inside infor about what was coming, these crimes against workers and their families should be indictable and carry 20 and 25 year prison sentences….

    “Marlon MaddenPublished on
    December 15, 2020
    Months after being promised severance payments from the National Insurance Scheme (NIS), dozens of former workers at the Cliff Restaurant are yet to be paid and vowed continued protests outside the benefits agency.

    On Monday, placard-bearing ex-workers gathered outside the Sir Frank Walcott Building at Culloden Road to protest under the watchful eyes of police.

    The group’s spokesman, Jerome Farley, later told Barbados TODAY that they were simply fed up of the “run around” they were being given.

    “We were too silent for too long. We need our money,” said Farley.

    He explained that they have been promised payment from the NIS since August when they delivered their severance claims there, but to date, they are still awaiting this promise to be fulfilled although he was aware of several workers from other businesses who handed in their forms since they did have already received their severance payments.

    Farley said: “If we don’t get word by tomorrow we will be back at the Cliff and the NIS on Thursday to protest again,”

    The workers were laid off in March from the upscale St James restaurant, but it was in July that they were informed they were made redundant.”

  12. “Barbados does not again end up with an unsustainable mountain of debt”
    The author speaks as though the debt restructuring magically made the Nation’s debt sustainable? Maybe they should examine the expenditures which are producing that debt, and the associated cash flow issues.

  13. Only in barbados if yuh steal a 65 cent of loaf bread yuh would be hauled before a judge forthwith and sentenced
    Onlyin Barbados the big hoteliers get a free pass from justice when they steal from govt and the workers
    Along with govt handing over the treasury to these one armed bandits in back taxes owed
    Then if that was not enough govt straps the losses owed to the treasury known as debt to the lowly citizens shoulders
    This is who we are

    • @Northern Observer

      Maybe we should examine the underlying reasons for the debt, successive governments pandering to unbridled conspicuous consumption by the population. What did Michael Jackson sing about?


  14. @ Mariposa
    I have heard the nonsense about conspicuous consumption before. It is now a mantra and it seems to explain everything. Ignore it.
    The author has nothing sensible to say. Maybe he (if it is a he) can explain how conspicuous consumption (current account deficit) will impact government debt, apart from equal nonsense about foreign reserves and even that is contentious.
    We are in the position we are in because of poor management of the economy from independence to now.

    • What is an economy?

      “The production, consumption, and distribution of goods and services are used to fulfill the needs of those living and operating within the economy, which is also referred to as an economic system.”

      You always know everything.

      Here is another for you:

      “An economy is the large set of interrelated production and consumption activities that aid in determining how scarce resources are allocated.”

      A pity when you are on Michael Howard Facebook page and he posits the same vire you are as quiet as a Rh mouse. If you continue the blogmaster will just lift some of your comments to support.


  15. Talk about restructuring barbados economy is an exercise in futility
    The big wigs who control like it this way as long as there end is sweetened by govt hands and the poor pays the debt
    The talk of restructuring would be an elusive dream as elusive as turning sawdust into gold

  16. Hi Braniacs,
    Any thoughts. I believe in having a universal minimum wage and then sectors can do more then so be it.
    Disagree with first section. Agrees with the second.

    DofBU 6:49 a.m.
    “I feel each sector should have a national minimum wage which reflects its productivity. You don’t want a sector which has low productivity to have a minimum wage which would be inconsistent with that productivity.
    “It’s just not a matter of sitting down in a meeting and talking. People have to research wages, productivity and employee preferences on what the minimum wage is. It should not be a political wage; it has to rely on research because these other matters are intimately interwoven with wages, unemployment and productivity,” Howard added.

    • Every decision is soaked in the political in Barbados, this is our problem. it goes without saying a minimum wage must be driven by the numbers and how we want to drive productivity etc. Howard is on point.

  17. Latin America and the Caribbean Will Have Positive Growth in 2021, but It Will Not Be Enough to Recover Pre-Pandemic Levels of Economic Activity

    In its Preliminary Overview of the Economies of the region, ECLAC forecasts an average contraction of -7.7% for 2020 – the largest in 120 years – and a rebound of 3.7% in 2021.

    The Latin America and the Caribbean region will experience a contraction of -7.7% in 2020 but will have a positive growth rate of 3.7% in 2021, due mainly to a statistical rebound that will nonetheless be insufficient for recovering the economic activity levels seen prior to the coronavirus pandemic (in 2019), ECLAC indicated today in a new report.

    ECLAC released its Preliminary Overview of the Economies of Latin America and the Caribbean 2020 – one of the United Nations organization’s flagship annual reports – during a virtual press conference given by its Executive Secretary, Alicia Bárcena.

    According to the document by the Economic Commission for Latin America and the Caribbean (ECLAC), in a context of global contraction, Latin America and the Caribbean is the region in the developing world that has been hardest hit by the crisis stemming from COVID-19. In the decade prior to the pandemic, the region was on a low-growth trajectory, and in 2020 it faces an unprecedented combination of negative supply and demand shocks, which is translating into the worst economic crisis in the last 120 years.

    Although the significant fiscal and monetary efforts made by countries have served to mitigate the effects of the crisis, the pandemic’s economic and social consequences have been exacerbated by the structural problems that the region has suffered historically. In 2021, ECLAC foresees a positive GDP growth rate that will fundamentally reflect a statistical rebound, but the process of recovering pre-crisis levels of Gross Domestic Product (GDP) will be slow and will not conclude until 2024.

    “The growth dynamic in 2021 is subject to high uncertainty related to the risk of renewed outbreaks of the pandemic, the agility with which vaccines are produced and distributed, and the capacity to maintain fiscal and monetary stimulus to support aggregate demand and productive sectors. Making progress on sustainable and inclusive growth necessitates a productive transformation towards environmentally sustainable sectors, which would favor job creation and technological innovation,” Alicia Bárcena stated.

    The region’s weaknesses and structural gaps, its narrow fiscal space, inequality, limited coverage and access to social protection, elevated labor informality, productive heterogeneity and low productivity are central to understanding the extent of the pandemic’s effects on the region’s economies, their difficulties for implementing policies that would mitigate those effects, and the challenges they face in undertaking a sustainable and inclusive economic reactivation.

    Before the pandemic, the region already had low economic growth: 0.3% on average in the 2014-2019 period, with a 0.1% rate notched in 2019. With the arrival of the pandemic, this low economic growth was compounded by negative external shocks and the need to implement policies aimed at confinement, physical distancing and the suspension of productive activities, which meant that the health emergency ended up prompting the worst economic, social and productive crisis that the region has ever lived through. The contraction in economic activity has been accompanied by a significant rise in the unemployment rate, which is forecast at around 10.7% in 2020; a steep fall in labor participation; and a considerable increase in poverty and inequality.

    According to the projections released by the United Nations organization, South America is seen contracting by -7.3% in 2020 and growing by 3.7% in 2021; growth in Central America is expected to shrink by -6.5% in the current period and expand by 3.8% next year; while the Caribbean is seen contracting by -7.9% in 2020 and growing by 4.2% in 2021.

    ECLAC’s document emphasizes that to keep the region from perpetuating its low-growth dynamic, expansionary fiscal and monetary policies are needed along with environmental and industrial policies, all of which would enable the structural transformations that the region requires and would promote sustainable development.

    It also poses the need to prioritize spending on the economic and social reactivation and transformation by fostering employment-intensive and environmentally sustainable investment in strategic sectors; to extend the basic income to people living in situations of poverty; provide financing to Micro, Small and Medium-sized Enterprises (MSMEs); offer incentives for productive development, the digital revolution for sustainability and clean technologies; and universalize social protection systems.

    The report contends that beyond national efforts, the region’s economic reactivation and transformation will require financing and international cooperation. In this area, it stresses the need to utilize instruments such as the issuance and reallocation of the International Monetary Fund’s Special Drawing Rights (SDRs) to strengthen the reserves of the region’s countries and regional agreements; include vulnerable middle-income countries in the G20’s debt moratorium initiative (DSSI) and also set in motion the debt for climate change adaptation swap in the case of the Caribbean, along with the creation of a resilience fund; and capitalize multilateral, regional and national credit institutions.

    More information:

  18. Use the positive to spur growth
    With the Barbados economy making as much progress as is possible after COVID-19 struck, it is barely possible to make an informed judgement about where we will end up once the virus has been conquered or at least abated.
    But no matter what happens, the verdict is in – we will have to fight our way back to growth. And there are some encouraging signs on the horizon.
    Simon Cowell and other celebrities like centenarian Sir Tom Moore, who are spending this Christmas here with us, is good publicity for the island as a tourist destination. It is also testimony that Barbados has done exceedingly well in containing the virus.
    Remarkably, our Best-dos Santos centre, a certified Level 3 testing laboratory has tested 57 835 samples since March. This Herculean effort supporting the national policy of second tests has proved itself to be a pearl of wise scientific judgement.
    We have been able to impede the spread of the virus principally because the second test has shown its worth and utility as a scientific detection tool. And by and large, the public has followed the protocols.
    Our mantra
    That we are still open for tourism must be our mantra for the immediate future. If a picture is worth a thousand words, then the remarkable photographs of Simon Cowell recovering in the warm seawater of Barbados after he had broken parts of his back, and had to undergo six hours of surgery a few months ago, is a priceless endorsement of the hassle-free peace and quiet that obtains here.
    Equally worthwhile is the sight of World War II veteran Captain Sir Tom Moore spending Christmas here. He has handsomely praised the great welcome and said he felt “very safe here” because of the rigid protocols.
    We need to capitalise on these positive items so as to accelerate the economic rebound which the Economic Commission for Latin America and the Caribbean thinks will come next year. Its latest report tells us that the overall Caribbean region expects to grow by 3.7 per cent next year. The report also tells us that there was a contraction of growth of -7.7 per cent during 2020, and that it was the largest contraction for 120 years.
    Push feasible ideas
    That grim statistic speaks to the economic and social pain experienced during the past 12 months, but it should also energise us to get on with pushing every feasible idea and project that can help us back on the growth path.
    That is one good reason we need to build on these strong positive messages sent by global celebrities who are spending Christmas on our island at the end of a most challenging year.
    The Government should be complimented on the ongoing effort to ensure that this country is not blacklisted. These connected events raised by us matter because we need to fight back on a variety of policy issues to ensure that as conditions for recovery improve in a post-COVID-19 atmosphere that we will be better able to fire on all cylinders.
    We have done well in the face of extremely difficult events which threatened to destroy most of the economic progress achieved since our Independence. But with all that has happened, recovery beckons. We must now grasp the nettle of recovery.
    The sensible objective hence forward must be the renewal of economic growth.

    Source: Nation

    • Cox looks at major issues in Barbados
      By Tony Best As Barbados’ major economic and social challenges and opportunities for 2020 near an end, former Governor of the Central Bank, Winston Cox, has shared his overview on some of the major issues.
      He said that as the European Union moved to review its blacklisting of Barbados as an offshore financial centre early next year, the step was welcomed but the labelling remained a bitter pill to swallow.
      Cox said the strikes by Barbadian workers were a sign of deteriorating relations between labour and management and were unjustified.
      He also addressed Barbados’ expected access to newly approved COVID-19 vaccines. The soon to be launched vaccination effort, he pointed out, wouldn’t lead to the premature end of wearing masks and following the protocols that were effective in curbing the spread of the highly contagious and deadly COVID-19 pandemic.
      Cox next looked at Government’s proposed national minimum wage plan, which he said made sense and should become a fact of life.
      He also noted that the signs of an eventual rejuvenation of the lucrative tourism industry as seen in the rising number of visitors to Barbados’ shores were what the economic doctor ordered. He, however, cautioned that it was not going to usher in a quick economic turn-around.
      In a wide-ranging conversation with the Sunday Sun recently, Cox, a former top economic advisor to successive prime ministers, said that all signs, especially from the International Monetary Fund indicated the Barbados-IMF programme was “moving along according to expectations, in the face of the COVID-19 pandemic.
      Just as important, was the word the World Bank might reopen its lending window to Barbados. It was a good move and the country’s ongoing financial relationship with the Inter-American Development Bank was good news for the Caribbean country, he said.
      A good partner
      “The IDB has been a good partner for Barbados over the years and it remains that way for the country. It is very interesting that Barbados may be in line for a loan from the World Bank because 30 years ago back in the 1990s it graduated Barbados as a borrowing member, something the Government at the time fought against,” he recalled. “I was very much involved in the effort to forestall graduation. We fought very hard against it. A return would be a very important and useful source of long-term lending for Barbados,” he said.
      As for the IMF programme, he complimented both the Fund and Barbados for keeping it at a manageable and positive pace, adding it was going “according to expectations, even in the face of the slowdown in economic activity brought on by the COVID-19 pandemic,” stated Cox. “It would be appropriate to expect some adjustments to take that into account the economic consequences of the COVID pandemic. It would be against a backdrop of increased government spending to help ease the fallout on Barbadians. I would hope that they (Government) would be very careful not to allow the debt to rise too rapidly,” he warned.
      “The debt would always be a red flag. The rate of growth in the debt would always be a red flag. That is something Barbados would have to watch very carefully. The other red flag would be the foreign exchange reserves whether they are increasing, stable or falling,” he said.
      A key factor would be the performance of the tourism industry and he expressed the hope that “there would be a visitors to Barbados and I hope they are returning now that the vaccine is being deployed in many countries. We can hope for a steady growth in visitors, which could lead to a return of good economic health without threatening the nation’s public health.”
      When it came to the EU and the OECD’s (Organisation for Economic Cooperation and Development) unwarranted blacklisting of the country as an uncooperative financial services jurisdiction, Cox, who at different times sat on the executive boards of the World Bank and the IDB, said just when he thought Barbados had put those troubles behind it, they “popped up again”.
      It was hard to see any “reasonableness” in the EU’s action, Cox said.
      No reasoned argument
      He described the EU’s labelling as more of a “power play” by the Europeans instead of being “a reasonably argued position. It was an exercise of power rather than one of reasoned argument,” he said.
      The recent indication that the EU would review its action early next year was a welcomed step that hopefully would lead to better days for Barbados, he noted.
      “It was always a power play, an uneven application of principle because there are places in Europe like Luxembourg and Ireland which quite, frankly, suggested that the principles were being applied unevenly and harshly in the case of Barbados,” he said.
      The hard part was that ever since the issue of harmful tax competition was raised by the Europeans and the OECD, the Caribbean country had tried strenuously to cooperate with the OECD, but to no avail, he charged.
      “It seems that every step taken by Barbados would lead to some modification in the definition of what is a cooperative or non-cooperative jurisdiction,” he complained.
      In short, the EU and the OCED were constantly shifting the goalposts to suit themselves.
      Turning to the issue of the plan for a national minimum wage, Cox argued it should be expanded to cover workers other than shop assistants.
      “Quite frankly I don’t see why it should not be expanded to a much wider range of professions and employment,” said the former Central Bank Governor. “I think it is a move in the right direction by the government. I come down on the side of those who are in favour of a minimum wage.”
      He also suggested that the discussion should be broader to include the idea of guaranteed minimum income which has been gaining some traction in the personal support programme that many governments have introduced to support households and individuals adversely affected by the COVID-19 pandemic.
      Focusing on frequent wildcat strikes, Cox said while legitimate strikes were a “powerful (and needed) weapon in the armory of trade unions, and I hope they would always remain, wild cat strikes were unjustified.
      I don’t think anybody can justify wildcat strikes.”
      He struck a note of caution about the return of a sound economy in the wake of the pandemic, warning it was going to be a “slow” and lengthy process, with no overnight miracles.recovery” in that sector as hinted in published reports about a “steady stream of

      Source: Nation

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