IMF – Barbados reaches staff-level precautionary stand-by arrangement

• IMF staff and the Barbadian authorities have reached a staff-level agreement on a 36-month precautionary Stand-By Arrangement (SBA). The agreement—which is subject to approval by the IMF Executive Board—will enable Barbados to access SDR 189 million (about US$ 260 million). The IMF Executive Board is expected to consider the request in June.
• The new SBA will provide Barbados with insurance in a shock-prone external environment, while helping preserve macroeconomic stability and supporting reforms under the homegrown Barbados Economic Recovery and Transformation Plan 2026 (BERT 2026). BERT 2026 marks the next phase of Barbados’ reform journey, moving from stabilisation and growth toward long-term transformation into a high-performing, inclusive, and climate-resilient economy.
• Barbados enters the proposed arrangement from a position of strengthened macroeconomic credibility. Growth remains solid, fiscal performance continues to be strong, public debt remains on a declining path, international reserves remain ample, and Barbados successfully returned to international capital markets in 2025. However, the outlook remains subject to downside risks, including heightened global policy uncertainty, commodity price pressures, and Barbados’ vulnerability to natural disasters.

USA / BARBADOS – At the request of the Government of Barbados, an International Monetary Fund (IMF) team, led by Michael Perks, visited Barbados during May 4-14 to conduct the 2026 Article IV Consultation and discuss the Barbadian authorities’ latest homegrown Barbados Economic Recovery and Transformation Plan 2026 (BERT 2026), which could be supported by a 36-month precautionary Stand-By Arrangement.

Perks made the following statement:

“I am pleased to announce that the IMF team and the Barbadian authorities have reached a staff-level agreement on a precautionary SBA for the amount of SDR 189 million (about US$260 million). The SBA will provide insurance against external shocks, while continuing to anchor macroeconomic stability and support reforms under the homegrown BERT 2026 Plan. The latest phase of the BERT Plan focuses on economic transformation, with emphasis on boosting productivity and competitiveness, strengthening fiscal sustainability, deepening financial markets, strengthening human capital, and enhancing climate resilience.

“Guided by sound macroeconomic policies, economic activity remained robust in 2025, with growth estimated at 2.7 percent, driven by tourism, construction, and business services. The labor market remained strong and inflation continued to moderate to an average of 0.9 percent. The current account deficit reached 5.7 percent of GDP, while foreign direct investment strengthened significantly, supporting the balance of payments. Gross international reserves remained at about US$1.5 billion at end-2025 (equivalent to around 6 months of imports), ample to support the exchange rate peg. Fiscal performance continued to be strong, with the fiscal primary surplus reaching 4.2 percent of GDP in FY2025/26, and high corporate income tax revenues enabling an expansion of public investment in infrastructure and resilience.

“Looking ahead, growth is expected to remain positive in 2026, though at a more moderate rate, as external headwinds are partly offset by tourism-related construction and rising public investment. Higher commodity prices are expected to place upward pressure on inflation and the current account deficit, although international reserves are projected to remain ample. External conditions are expected to normalise thereafter, but the outlook remains subject to unusually high uncertainty, with risks tilted to the downside.

“Barbados made strong progress in implementing its first two BERT plans, supported by previous Fund arrangements. A gradual and sustained improvement in the fiscal accounts helped put public debt on a firm downward path, while important structural fiscal measures were implemented, including state-owned enterprise (SOE) and pension reforms. International reserves were rebuilt, and in 2025 Barbados successfully returned to international capital markets. Important steps were also taken to build resilience under the Resilience and Sustainability Facility.

“Building on previous achievements, the new precautionary SBA will support the BERT 2026 Plan’s transformation agenda by helping maintain prudent macroeconomic management. Fiscal policy will continue balancing debt sustainability with development needs. This will require sustaining strong primary fiscal balances to keep public debt on track to reach the 60 percent of GDP target by FY2035/36, while maintaining fiscal space for critical investment, resilience, and social spending. Any fiscal measures responding to external shocks should be temporary, targeted to the most vulnerable, and consistent with the fiscal anchor. Disciplined fiscal policy will also help to maintain ample international reserves and support the exchange rate peg, which remains an essential anchor for macroeconomic stability.

“Steadfast implementation of structural reforms will help further build policy credibility and strengthen policy frameworks and institutions. The SBA will support efforts to enhance: public financial management, including the fiscal framework, management of public-private partnerships and SOE oversight; revenue policy and administration; productivity and competitiveness; climate resilience; financial supervision; and the AML/CFT framework. The structural reform agenda will be supported by technical assistance from the Fund and other partners.

“The team would like to thank the authorities and other counterparts for their hospitality and the constructive and candid policy dialogue.”

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