Set a limit

THE IMF wants the Central Bank of Barbados to limit monetary financing to the Government.

The Fund’s Executive Board said as much while providing an assessment of the IMF 2019 Article IV Consultation with Barbados.
The assessment shows Barbados making progress with its IMF-sponsored programme.

However, according to an IMF statement, the Executive Directors encouraged steps to improve the governance framework of the Central Bank of Barbados.

“They underscored the need to limit monetary financing to the government, and strengthen the Bank’s mandate, autonomy and decision-making structure,” according to a news release by the Fund’s Executive Board.

The Board also wants the Government to press ahead with reforms to the country’s state-owned enterprises in order to achieve the targeted primary surplus of six per cent.

In addition, it is welcoming tax reforms to enhance revenue, and suggested that improvements in tax and customs administration are essential to support medium term revenue.

The Fund also completed the second review of Barbados’ economic reform programme supported by an arrangement under the Extended Fund Facility.

The Board said that it supports Government’s plans to reduce transfers to the SOEs by a combination of stronger oversight, reduce costs, revenue enhancement, and mergers and divestment.

“Reducing transfers to SOEs will create fiscal space for investment in physical and human capital,” the Fund said.

The Directors said they were encouraged by the authorities’ commitment and emphasized the importance of achieving and maintaining the targeted primary surplus of six per cent of GDP. “They considered that the 2019/2020 budget provides a solid basis for reaching this target,” said the Board.

Directors welcomed the debt restructuring agreement the authorities reached with their commercial external creditors , noting that the agreement will help to reduce uncertainty and improve the prospects for investment.

They also stressed the importance of structural reforms to strengthen competitiveness and unlock Barbados’ growth potential.

“They encouraged the authorities to continue ongoing efforts to improve the business environment by stimulating regulations and addressing key obstacles to growth,” they added.