IMF says second phase of measures needed for economic recovery

The International Monetary Fund (IMF) Friday served notice that a second phase of measures will be needed to help Barbados’ economic recovery.

The warning came in a statement issued at the end of a July 2 to 12 visit to the island by an IMF staff team, led by Bert van Selm, which held discussions with various stakeholders on a pending IMF-supported economic recovery and transformation plan.

The IMF team said fiscal consolidation alongside a comprehensive debt restructuring exercise is critical for restoring debt sustainability and policy credibility.

It added that the budget approved in by Parliament on June 11, in which Prime Minister and Minister of Finance Mia Mottley announced a BDS$1.2 billion austerity package, was “a decisive step in the right direction”.

“The Budget targets a primary surplus of six per cent of GDP. Consistent with the message delivered by the Prime Minister and Minister of Finance during the Budget, a second phase of measures will be needed to achieve this target. This next phase will focus on reducing expenditures—notably by improving the efficiency and effectiveness of public services, reducing government transfers to state-owned enterprises by reviewing user fees, exploring options for mergers, and providing stronger oversight,” it said.

“Progress being made by the authorities in furthering good-faith discussions with domestic and external creditors is welcome. Continuing open dialogue and sharing information, will remain important in concluding an orderly debt restructuring process.”

The IMF said significant progress had been made during this IMF staff visit on the plan that could underpin financial support from the IMF.

“On its return to Washington the team will continue to analyze the Government’s comprehensive reform program. We will remain closely engaged with the authorities in the coming weeks,” the statement said.