Barbados implementing comprehensive economic recovery plan: IMF

The Executive Board of the International Monetary Fund (IMF) concluded the fifth 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 17 million (about US$24 million), bringing total disbursements to the about US$415 million.

The four-year extended arrangement under the EFF was approved on October 1, 2018 and 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. Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair said: "Barbados continues to make strong progress in implementing its homegrown Economic Recovery and Transformation plan, despite major challenges from the ongoing global pandemic.

The authorities remain strongly committed to program implementation. "The lower primary balance target, financed by additional support from international financial institutions, is appropriate to accommodate worsethan-anticipated revenue losses and support spending on public health and social protection. The delay in achieving the 60 percent of GDP debt anchor by two years would avoid jeopardizing economic growth and social cohesion.

To help safeguard debt sustainability, sustaining ambitious primary surpluses over 2 the medium and long term would be required.

"The authorities are committed to medium-term fiscal consolidation, supported by reform of state-owned enterprises (SOEs). Lower transfers to state-owned enterprises (SOEs) will create fiscal space for investment in physical and human capital, complemented by stronger SOE oversight, revenue enhancement, cost reduction, and mergers and divestments.

Pension reform and the introduction of a fiscal rule will also support mediumterm fiscal sustainability. "The approved amended central bank law will limit its financing of the government and strengthen the central bank's mandate, autonomy, and decision-making. The removal of Barbados from the EU list of non-corporative jurisdictions for tax purposes is welcome. Full implementation of the FATF action plan would allow Barbados to exit its grey list.

Meanwhile, following the statement issued on June 11 by the Creditor Committee for Chad under the Common Framework for Debt Treatments beyond the DSSI, Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said, "I very much welcome the statement issued on June 15 by the Creditor Committee for Chad. This is a key milestone on the path to the debt relief that Chad urgently needs, together with envisaged financial support from IMF, the World Bank, and other development partners.

The statement also demonstrates concrete progress in implementing the G20's Common Framework, which sends a positive signal to other countries that may need debt treatments to support a strong and lasting recovery from this unprecedented crisis.

"Let me thank each of the members of the Creditor Committee for their intensive work on Chad's requested debt treatment, including their recognition of Chad's dire economic and financing situation following the combined shocks of the COVID-19 pandemic, oil-price decline, climate change, and terrorist attacks. [2] These shocks, together with the measures taken to contain the spread of the pandemic, have had a contractionary impact on the economy and exacerbated poverty, generating significant financing needs and leading to Chad's debt being assessed as unsustainable, despite the fiscal efforts and structural reforms under the envisaged IMFsupported program. A debt treatment is therefore critical to move forward.

"The Creditor Committee's support for Chad's envisaged IMF-supported program, together with its commitment to negotiate debt restructuring terms, accordingly, provides the IMF with official financing assurances. Speedy steps towards debt treatments by Chad's private creditors, on comparable terms to the debt treatment under the Common Framework, are now essential to pave the way for the IMF Executive Board to consider approval of a Fund-supported program for Chad. I therefore strongly endorse the call by the Creditor Committee for private creditors commit to negotiate such debt treatments without delay.

"Approval of such a program by the IMF Executive Board will in turn facilitate much needed financing from Chad's main development partners in support of the authorities' IMF-supported reform and stabilization program, helping to put the economy on a sustainable path of growth and poverty reduction." On January 27, IMF staff completed staff level agreement with the Chadian authorities on a new medium-term program that could be supported by IMF resources of about US$572 million under an Extended Credit Facility arrangement.