Although Barbados’ economy is on the right track, there remains a lot of work to be done, says the International Monetary Fund’s (IMF) Mission Chief for Barbados, Bert van Selm.
He expressed this view recently during an interview with the Barbados Government Information Service, when he was on island for the IMF’s final mission for 2019.
Mr. van Selm said: “The economy, in my view, is performing very well…. Over the last 18 months, the Government has made an excellent start and done very good work in turning around the economy. Today, the international reserves are at a much more comfortable level, more than US$600 million; that is from just over US$200 million from when this Government took office in May 2018, so that is major progress.
“With regard to public debt, public debt has been put on a clear downward trajectory…. It was close to 160 per cent of GDP, now it is…coming down and the debt restructuring agreement with both domestic and external [creditors] has been extremely helpful in this regard, supported by measures to boost growth and fiscal consolidation, of course. These measures should help to keep Barbados’ debt on a clear downward trajectory, so things look much better than they did 18 months ago.”
He stressed that it was important for the debt to remain on that downward trajectory with prudent fiscal management, so Government’s target of 60 per cent by 2033 could be realized.
However, the IMF Mission Chief stated that it was important now for growth to be taken to a higher level with a number of measures, including improving the business climate and strengthening state-owned enterprises (SOEs).
He opined that in the area of doing business, Government was off to a very strong start and highlighted the new town and country planning legislation as an important step.
“This should help a lot in making it easier to get permits for new construction. But I think at the same time the Government of Barbados, and this is a view that we share, believes that there is a lot that can be done to further strengthen the business climate to make it easy to start a business; [and] to improve Customs services, which is very important for a small open economy like Barbados,” he stated.
Mr. van Selm explained that the IMF would be lending assistance by sending a Customs expert here to work with government. This move, he said, indicates the importance of improving the business climate in Barbados.
“But, there are many things that can be done also in terms of digitizing government services…. So, there is an opportunity to make it much easier to do business in Barbados and that should also lead to higher growth rates,” he added.
He noted that further reform of state-owned enterprises was key. “SOEs play a very important role in the economy of Barbados, from health services to water supply to sanitation services to education. In many of these areas, the Government of Barbados and we ourselves also see further room for strengthening the operations of the SOEs to make them more customer oriented and more efficient, so a lot of work remains to be done in that area.
“We are looking forward to supporting the Government of Barbados in efforts to reform these areas over the remaining years of the fund-supported programme,” he stated.
The IMF’s Mission Chief said Barbados has so far met all of the fiscal targets under the Barbados Economic Recovery and Transformation (BERT) Programme.
He added that the primary surplus target had been met with a wide margin, and the target for social spending under the programme had also been achieved.
The Executive Board of the IMF approved the staff-level agreement on an Extended Fund Facility (EFF) on October 1, 2018, which has given Barbados access to about US$290 million, over four years.
The IMF team visits Barbados four times yearly – two staff visits and two review missions. During the staff visits, which are shorter, the IMF officials have discussions with government and the Central Bank on the economy’s performance, as well as meet with labour unions, private sector, banks and academia to ascertain their views on the economy, and suggest ways to improve it.
In addition, every quarter, the IMF meets with the BERT Monitoring Committee, and Mr. van Selm expressed the view that the functioning of such a group was a great way to monitor what was happening domestically in the economy.
With regard to the review mission, which is a longer visit, he explained that an analysis is carried out under the EFF programme, which supports the BERT programme. Reports are prepared, he said, which are taken to the IMF Board, and if all goes well, it leads to the disbursement of funds.
And, in this country’s case, all certainly went well as it was announced on Monday that Barbados has passed its latest IMF review “with flying colours”, and it now has access to almost BDS$100 million from that Washington-based institution.