- Continued strong growth in long-stay tourism has supported Barbados’ economic growth, but fiscal consolidation is contributing to a slowdown.
- The adjustment strategy should focus on addressing the high transfers, containing other current expenditures and maintaining a strong revenue effort.
- Urgent structural reforms are needed to support growth and improve the business climate for domestic and foreign investment.
An International Monetary Fund (IMF) team led by Judith Gold, visited Barbados during November 7-21 to conduct the 2017 Article IV Consultation discussions. At the conclusion of the visit, Ms. Gold issued the following statement:
“Continued strong growth in long-stay tourism has supported Barbados’ economic growth, but the fiscal tightening is contributing to a slowdown. Following last year’s improved performance of 1.6 percent, real growth is projected to slow to 0.9 percent for the year, reflecting ongoing fiscal consolidation efforts. Long-stay tourist arrivals continue to expand at a healthy pace. Inflation is projected to rise by year end to 5.5 percent, from 3.6 percent at end-2016. While credit growth remains subdued, financial soundness indicators suggest a relatively healthy banking sector.
“Although the current account balance is improving, net international reserves (NIR) have fallen further. The current account deficit narrowed to 4.4 percent of GDP in 2016, and it is expected to narrow further in 2017, as non-oil imports fall in response to the May 2017 budget measures. However, NIR continue to decline as government debt service exceeds new funding, and private foreign inflows remain weak. At end-September, NIR stood at B$550 million….”