Barbados Political Environment Largely Stable with Few Risks

• The central near-term risk to Barbados’s political environment remains associated with the government’s fiscal consolidation plans. Barbados’s 36-month IMF-backed programme (the US$189.0Mn Extended Fund Facility (EFF)) is set to expire in December 2025, just under two years from now.
• The deal, largely aimed at correcting fiscal and external imbalances following the COVID-19 pandemic, is likely to prompt the government to keep fiscal policy tight in the upcoming FY2024/25 budget (April 1, 2024, to March 31, 2025).
• The government also appears on track to meet the IMF’s 3.5% of GDP primary surplus target for FY2023/24 while public debt continues to fall.
• These developments are largely in line with the government’s broader medium-term reform programme outlined in the Barbados Economic Recovery and Transformation (BERT) programme running from FY2022/23 to FY2026/27.
• Furthermore, the political environment remains stable thanks to falling inflation, the stability of democratic institutions, and warm ties with major powers. However, crime and drug trafficking are likely to remain a risk to the market’s security environment.

(Source: Fitch Solutions)