Barbados continues to face “considerable economic challenges,” according to the International Monetary Fund after a ten day visit to the Caribbean nation.
At the conclusion of the visit, Nicole Laframboise, the IMF mission chief, issued the following statement:
“The Barbados economy continues to face considerable economic challenges. The authorities agreed with staff on the need for urgent policy adjustments and deeper reforms over an extended period to restore fiscal and external sustainability. Weak exports and tourism arrivals, slow growth, and expansive fiscal policy have led to a sharp increase in public debt and fiscal financing pressures. Real output is projected to fall by 0.7 percent in 2013. Inflation has declined and is forecast to average 2.3 percent for 2013. In the external sector, tourism receipts have remained flat and the current account deficit is projected to widen to 11.4 percent of GDP this year. Together with a sharp drop in private capital inflows in 2013, international reserves have fallen this year to US$468 million at end-October.
“In this environment, the fiscal position has come under increasing strain. The central government deficit is expected to rise to 9.5 percent of GDP in 2013/14 and central government debt had risen to 94 percent of GDP by September 2013. Spending cuts under the authorities’ budget proposals announced in August are broadly on track, but tax revenues are falling short of projections. The authorities plan to take additional measures to strengthen adjustment and reduce pressures on the balance of payments.
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