An International Monetary Fund team has reached a staff level agreement with Barbadian authorities on the fourth review of Barbados’ Economic Recovery and Transformation or BERT program supported by the IMF Extended Fund Facility.

A statement posted in the IMF website today says the Government has lowered its primary balance target to minus 1 percent of GDP for fiscal year 2020 to 2021 to fight the coronavirus pandemic.

To help finance the emerging fiscal deficit and related balance of payments needs, an augmentation of the Extended Fund Facility of about US$66 million is also proposed.

This after an IMF team led by Bert van Selm conducted a virtual mission between this week, October 26th to 30th, to discuss implementation of the BERT plan.

Their report noted that the COVID-19 pandemic has had a major impact on Barbados’ economy, with a double-digit decline in economic activity projected for 2020 after tourism came to a virtual standstill between March and June.

The IMF says that despite this very challenging environment, Barbados continues to make good progress in implementing what it calls an ambitious and comprehensive economic reform program.

It notes that the BERT program target for Net International Reserves was met by a wide margin, as was the target for the Central Bank of Barbados’ Net Domestic Assets.

And in response to the pandemic, the Government of Barbados is now targeting a primary balance of minus 1 percent of GDP for fiscal year 2020 to 2021 compared to a surplus of 6 percent of GDP envisaged prior to the pandemic.

The IMF says the lowered primary balance target accommodates the loss of government revenues stemming from the pandemic and facilitates emergency outlays on health facilities, medical supplies, and income support to the most vulnerable.