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International Monetary Fund. Western Hemisphere Dept.

1. While Barbados has made good progress in implementing the Economic Recovery and Transformation (BERT) plan, it faces major economic challenges owing to the protracted global pandemic. International reserves have gradually increased to around US$1.3 billion by end-March 2021 from a low of US$220 million in 2018, while public debt declined from 158 percent of GDP at end-FY2017/18 to 125 percent at end-FY2019/20 before rebounding owing to the COVID-19 pandemic. Macroeconomic stability was restored prior to the pandemic with a combination of strong fiscal adjustment, a comprehensive sovereign debt restructuring, and growth-enhancing structural reforms. However, the collapse of tourism since April 2020 has stalled economic activity and led to a significant fall in government revenues. Since the IMF Executive Board approved a four-year Extended Arrangement under the Extended Fund Facility (EFF) on October 1, 2018, four reviews have been successfully completed in a timely manner, with all program QPCs and ITs met. The fourth review was completed on December 9, 2020.

International Monetary Fund. Western Hemisphere Dept.
Barbados has made good progress in implementing its Economic Recovery and Transformation (BERT) plan to restore fiscal and debt sustainability, rebuild reserves, and increase growth. International reserves have increased to US$1.3 billion at end-March 2021, supported by IFI loans. This, and a successful 2018-19 public debt restructuring, have helped rebuild confidence in the country’s macroeconomic framework. However, a virtual standstill in the tourism sector during the pandemic took a significant toll in 2020, with the economy contracting by 18 percent. While Barbados was successful in containing the outbreak during 2020, a surge in COVID-19 cases in early 2021 resulted in the country’s second national lockdown in February. Economic growth is projected at 3 percent for 2021 premised on a modest recovery of tourism in the second half of the year, but the outlook remains highly uncertain, and risks are elevated, also in light of the possible impact of recent volcanic activity in neighboring Saint Vincent.