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Barbados growth forecast cut to 2%

Published:Sunday | November 7, 2021 | 12:09 AM

Barbados is expected to grow at a slower pace than previously projected, the International Monetary Fund said Friday.

The island led by Prime Minister Mia Mottley is now expected to grow by two per cent this year, down a point from the earlier forecast of three per cent, while noting that Barbados continues to make “good progress” in implementing its comprehensive economic reform programme.

The fund’s assessment comes after the country’s sixth review of the US$290 million Extended Fund Facility that provides backing for Barbados’ reform programme, referred to as BERT, which the agency said was on track.

“All quantitative programme targets for end-June and end-September 2021 have been met. Further, all structural benchmarks for the sixth review have been met, with the exception of the adoption of the Fair Credit Reporting Act, planned for end-October 2021 and slightly delayed,” the IMF said.

Once the IMF Executive Board signs off on the review, which is expected to happen in December, Barbados is expected to receive a draw of SDR 17 million in IMF currrency, or about US$24 million, which would take its total drawdown to SDR 305 million.

During 2020, with the tourism sector at “a virtual standstill”, the Barbados economy contracted by 18 per cent. It is projected to climb out of that hole this year, but the IMF noted that while Barbados reserves have improved to around US$1.4 billion, helped in part by alleviated pressures on the country’s purse after a successful 2018-19 public debt restructuring, “COVID-19 waves weigh on a nascent economic recovery”, as well as two disaster shocks – volcanic ash falls from neighbouring St Vincent in April and the Category One Hurricane Elsa in July.

“Economic growth is projected at two per cent for 2021 premised on a modest recovery of tourism towards end of 2021 – down from three per cent projected at the time of the fifth EFF review,” the IMF said. “The outlook remains highly uncertain, and risks are elevated,” it warned.

CMC