The International Monetary Fund (IMF) has approved the final reviews of its Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) arrangements with Barbados, unlocking an immediate disbursement of about US$19 million under the EFF and US$39 million under the RSF, the Fund said in a statement on Friday.

The completion of the reviews brings total disbursements under the EFF to approximately US$116 million and under the RSF to about US$193 million since the start of the programmes. The IMF praised Barbados’s implementation of its home-grown Economic Recovery and Transformation (BERT 2022) plan, noting that the country had achieved the broad objectives of the Fund-supported arrangements.

“Macroeconomic stability has been reinforced, and reforms have been implemented to boost fiscal sustainability, enhance growth, and build resilience,” the IMF said.

Robust Growth, Lower Inflation

Barbados’ economy grew by an estimated 4 per cent in 2024, driven by tourism, construction, and business services. Inflation moderated to an average of 1.4 per cent, reflecting easing global commodity prices and stable domestic costs. The current account deficit narrowed to 4.5 per cent of GDP, supported by strong tourism receipts and lower import prices. Gross international reserves rose to US$1.6 billion at the end of 2024, providing more than seven months of import cover and supporting the country’s exchange rate peg.

The IMF expects growth to reach 2.7 per cent in 2025, buoyed by continued investment in tourism-related projects and public infrastructure. However, inflation is forecast to rise next year due to higher non-fuel import costs and some increases in domestic agricultural prices.

Fiscal Targets Exceeded, Debt Falls

Barbados exceeded its primary fiscal surplus target for the 2024/25 financial year and is aiming for a surplus of 4.4 per cent of GDP in 2025/26. Public debt has fallen below 105 per cent of GDP, and the government remains committed to reducing it to 60 per cent by the 2035/36 fiscal year.

The IMF noted that all quantitative performance criteria and indicative targets were met, and key structural benchmarks — including reforms at the Barbados Customs and Excise Department and the development of a public-private partnership framework — were achieved.

Risks Remain

Despite the strong performance, the IMF cautioned that the economic outlook is subject to downside risks due to global uncertainty and Barbados’ vulnerability to external shocks and natural disasters.

“Maintaining strong fiscal surpluses will be necessary to achieve the public debt target of 60 per cent of GDP by FY2035/36,” said Bo Li, IMF deputy managing director and acting chair. “The authorities’ focus on strengthening revenue mobilisation and improving public financial management is appropriate.”

The IMF welcomed ongoing efforts to reform state-owned enterprises, strengthen the monetary policy framework, and advance digital payments infrastructure, with a move to a digital payments system targeted for 2026.

Focus on Resilience and Growth

The Fund highlighted Barbados’ progress in integrating climate concerns into public financial management and the central bank’s inclusion of climate risk analysis in its stress testing. It also encouraged further reforms to improve the business environment, digitalise government services, and invest in skills and education.

“The authorities’ focus on boosting macroeconomic resilience to natural disasters and facilitating the transition to renewable energy is welcome,” the IMF said.