WASHINGTON, DC – The International Monetary Fund (IMF) has approved a new 36-month precautionary Stand-By Arrangement (SBA) for Barbados providing critical insurance in the event shocks generate balance of payments needs, while continuing to help anchor macroeconomic stability and support reform implementation under the homegrown Barbados Economic Recovery and Transformation Plan 2026 (BERT 2026).
The IMF said that the US$257 million SBA allows the authorities immediate access to US$64 million.
The Washington-based financial institution said that having made significant progress in implementing its first two BERT plans, supported by previous IMF arrangements, Barbados enters the new SBA in a stronger macroeconomic position.
It said that the outlook remains stable but subject to significant downside risks, amid high global policy uncertainty, elevated commodity prices, and vulnerability to natural disasters.
Key pillars of the SBA include sustaining strong fiscal accounts, balancing debt sustainability with development needs; maintaining ample international reserves to support the exchange rate peg as well as implementing structural reforms to continue building fiscal policy and institutional credibility and bolster financial stability.
It will also include supporting the authorities’ efforts to boost productivity and competitiveness, and build resilience to natural disasters.
The IMF said that guided by sound macroeconomic policies, economic activity remained robust in 2025, with growth estimated at 2.7 per cent.
It said that the labour market remained strong and inflation continued to moderate to an average of 0.9 per cent and that the current account deficit reached 5.7 per cent of gross domestic product (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 – around six months of imports – ample to support the exchange rate peg.
The IMF said that fiscal performance continued to be strong, with a primary surplus of 4.2 per cent of GDP in the financial year 2025/26, and high corporate income tax revenues supporting expanded public investment in infrastructure and resilience.
It said financial soundness indicators continued to improve in 2025. Growth is expected to remain stable in 2026. However, risks to the outlook are tilted firmly to the downside, amid an external environment impacted by geopolitical tensions and global policy uncertainty, and Barbados’ vulnerability to natural disasters.
“The authorities’ strong implementation of the homegrown Barbados Economic Recovery and Transformation Plan (BERT) 2022, supported by IMF arrangements, has reinforced macroeconomic stability and facilitated structural reforms,” said Nigel Clarke, the IMF Deputy Managing Director and Acting Chair of the executive board.
He said public debt is on a firm downward path, international reserves have been rebuilt, access to capital markets has been restored, and important structural reforms have been completed to help boost growth and strengthen resilience.
“While the economic outlook remains stable, it is subject to downside risks, amidst an external environment impacted by geopolitical tensions and global policy uncertainty. The new precautionary Stand-By Arrangement will provide Barbados with insurance in a shock-prone external environment, while helping preserve macroeconomic stability and supporting reforms under the next phase of the BERT 2026 plan.”
Clarke said that Barbados authorities are committed to maintaining strong fiscal surpluses to keep debt on a declining path and achieve the public debt target of 60 per cent of GDP by the financial year 2035/36.
He said fiscal reforms aim to further build policy credibility and strengthen policy frameworks and institutions. Efforts to support revenue mobilization and improve public financial management remain priorities. Developing domestic debt markets will also be key to reducing rollover risks and mobilizing domestic savings.
“The exchange rate peg remains a critical anchor for macroeconomic stability, supported by ample international reserves. The financial system is stable and the authorities are pursuing important reforms to bolster resilience, including improvements to banking supervision and further enhancements to the AML/CFT framework.
“Reforms to boost productivity, competitiveness, and resilience will be critical to support economic transformation and deliver more sustainable and inclusive growth. Priorities include tackling infrastructure bottlenecks, improving the business environment, and investing in skills and education. Efforts to boost resilience to natural disasters and facilitate the transition to renewable energy will also strengthen long-term balance of payments stability,” Clarke added.
