BARBADOS, IMF REACH US$290M ECONOMIC ASSISTANCE AGREEMENT
The International Monetary Fund (IMF) and the government of Barbados have agreed on a staff-level USD$290 million economic assistance programme as part of the Extended Fund Facility.
Bert van Selm, the IMF Chief of Mission, announced the agreement during a press briefing with Prime Minister Mia Mottley.
The IMF’s Executive Board is expected to consider the proposed arrangement by October and, once approved, Barbados will have immediate access to US$49 million, according to Barbados Today.
The IMF released an official statement on the agreement, stating that “The success of Barbados’ program will require an extraordinary effort and resolve on the part of the authorities and other segments of society, as well as broad international support. While the initial implementation period will be challenging, Barbados will emerge stronger and more dynamic from the program, and it will be better poised to generate growth and job creation for the people of Barbados.”
It concluded by declaring that the IMF “team would like to take this opportunity to thank Barbados’ authorities and the technical team for their openness and candid discussions.
Following the announcement, former president of the Barbados Economic Society (BES) Jeremy Stephen said he was pleasantly surprised by the amount of financing that the Mottley-led administration was able to secure with its homegrown austerity programme but urged caution.
The US$290 million was way more than a lot of persons expected, that a lot of people thought that the IMF would be willing to give Barbados with its own homegrown plan, which some people laughingly referred as a farce, said Stephen, who was initially skeptical of Government’s economic programme and negotiations with the IMF.
It does provide some level of comfort towards the balance of support that is mainly propping the reserves. That payment is essentially divided up into the eight tranches, which supports our energy needs, and to a lesser extent our imports, he said, explaining that the deal would aid in shoring up foreign reserves, which had fallen to a two-decade low in February this year.
Commenting on the program, Edward Clarke, president of the Barbados Chamber of Commerce and Industry (BCCI), said We’re very happy the IMF has been able to leave here with a plan to recommend to the board for support to the Barbados Government… To me, this is essential to move Barbados forward. I could not have seen Barbados getting out of this hole without major multilateral assistance.
In June, a group of IMF economists and officials described Barbados’ economy as being in a precarious economic situation.
With international reserves having dwindled to USD$220 million and unsustainable central government debt, van Selm stated, Barbadian authorities, in close consultation with their social partners, are rapidly developing a plan to address current economic vulnerabilities.
Barbados currently has the fourth-highest debt-to-GDP ratio in the world after Japan, Greece, and Sudan with the country’s figure standing at 175 percent. Based on this fact the IMF delegation also discussed the possibility of providing financial support for the government’s economic plan.
Source: NAM NEWS NETWORK