BUSINESS MONDAY: Debt-to-GDP ratio expected to exceed 130%

BARBADOS’ debt-to-GDP ratio is set to reach 133.6 per cent in 2020. This is according to the Inter-American Development Bank

(IDB) in its 2020 second quarter Caribbean Bulletin.

Rising indebtedness in Barbados was a hot political topic in the last general elections as the amount had surged to 158 per cent of GDP by early 2018.

However, the present Government, through a process of debt restructuring, suspension of debt repayment, and the write-off of approximately Bds$3.0 billion in debt held by the Central Bank of Barbados and the National Insurance Scheme, brought the debt-to-GDP ratio down to 119.5 per cent as at December 31, 2019.

The Bank said that the authorities in Barbados are increasing borrowing, particularly from multilateral institutions, to meet the country’s financing requirements.

“The debt-to-GDP ratio is now forecast to rise to 133.6 per cent of GDP by 2020, mainly as a result of the growing external debt,” the IDB stated.

“US$370 million in budget support and additional funds through a contingent line are being provided by the IDB, IMF, CAF (Latin American Finance),” it was pointed out.

In June this year, the IMF disbursed Bds$98 million in balance of payments support following a successful third review under the programme with the Fund.