IMF Reaches Agreement with Barbados on US$260Mn Precautionary Programme

  • The International Monetary Fund (IMF) and the government of Barbados have reached a staff-level agreement on a 36-month precautionary Stand-By Arrangement (SBA) valued at Special Drawing Rights1 (SDR) 189Mn, or approximately US$260Mn. The agreement remains subject to approval by the IMF Executive Board 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.
  • The SBA will support efforts to enhance public financial management, including the fiscal framework, management of public-private partnerships and State-Owned Enterprise (SOE) oversight; revenue policy and administration; productivity and competitiveness; climate resilience; financial supervision; and the Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) framework. The structural reform agenda will be supported by technical assistance from the Fund and other partners.
  • According to the IMF, Barbados enters the proposed arrangement from a position of strengthened macroeconomic credibility. Guided by sound macroeconomic policies, economic activity remained robust in 2025, with growth estimated at 2.7%, driven by tourism, construction, and business services. Additionally, gross international reserves remained at about US$1.5Bn at end-2025, equivalent to around 6 months of imports, and remain ample to support the exchange rate peg.
  • Fiscal performance continued to be strong, with the fiscal primary surplus reaching 4.2% of GDP in FY2025/26, and high corporate income tax revenues enabling an expansion of public investment in infrastructure and resilience. Furthermore, fiscal policy will continue to balance debt sustainability with development needs. This will require sustaining strong primary fiscal balances to keep public debt on track to reach the 60% of GDP target by FY2035/36, while maintaining fiscal space for critical investment, resilience, and social spending as noted by the IMF.
  • However, the outlook remains subject to downside risks, including heightened global policy uncertainty, commodity price pressures, and Barbados’ vulnerability to natural disasters. 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.

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1Special drawing rights are supplementary foreign exchange reserve assets defined and maintained by the IMF. SDRs are units of account for the IMF, and not a currency per se. SDRs represent a claim to currency held by IMF member countries for which they may be exchanged.

(Source: IMF)