BRIDGETOWN, Barbados, Tuesday October 2, 2018 – The International Monetary Fund (IMF) has approved an Extended Fund Facility (EFF) which will give Barbados access to about US$290 million, over the next four years.
Under the agreement, which supports the home-grown Barbados Economic Recovery and Transformation (BERT) programme, the government will receive US$49 million in assistance immediately. The remainder will be available upon successful completion of seven semi-annual reviews, the IMF said.
The Washington-based financial institution said the EFF-supported programme aims to help Barbados restore debt sustainability, strengthen the external position, and improve growth prospects.
“Upfront fiscal consolidation, meaningful debt restructuring, and structural measures to support growth should put debt on a clear downward trajectory. The program will seek to protect vulnerable groups through strengthened social safety nets,” it said.
Chief Economic Counsellor and lead negotiator with the IMF, Ambassador Dr. Clyde Mascoll, said the money from the IMF would be given at a rate much lower than the private market.
“In addition to those funds from the IMF, there is the added bonus that the country will have access to additional finances from the Inter-American Development Bank, the Caribbean Development Bank and hopefully the World Bank,” he said, adding that the approval was a victory for the people of Barbados, who had been asked to play their part during these difficult economic times.
“It is not going to be easy going, but it does demonstrate the tenacity of Barbadians; the pride and industry that they have in putting their country first. We have a situation in which the Social Partnership played a very major role in getting us to reach this stage, where upon understanding the issues, they were able to ask their membership to participate in this journey that we are on.”
Mascoll said going the IMF route was unavoidable, given the extent of the country’s debt, plus the level of arrears left by the last administration, which exceeded BDS$1.5 billion (US$750 million) and pushed the overall debt to 175 per cent of GDP, the third highest of any country in the world.
The IMF acknowledged that when the new government took office in May this year, inherited a precarious economic situation. And in its statement announcing the EFF approval, it said the BERT programme would help address longstanding challenges.