Barbados: 2010 Article IV Consultation-Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion
IMF Staff Country Reports, December 15, 2010
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- Barbados: 2010 Article IV Consultation-Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion
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Bibliographic details
- Published: December 15, 2010
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781455212859.002
Summary and key findings
- The global crisis has hit Barbados "front and center."
- The broad economic weakness has hurt the labor market.
- Inflation remains "stubbornly elevated."
- The major challenge is to put public debt on a steady declining path to support both domestic and external stability.
- A decisive fiscal adjustment is recommended as the best way to protect the exchange rate peg.
- The current monetary stance is described as "broadly appropriate."
- Banks remain healthy, but tighter regulations are needed.
- Supervision of nonbank financial institutions needs to be revamped.
Policy recommendations
- Fiscal:
- Implement a decisive fiscal adjustment to place public debt on a steady declining path and support exchange rate stability.
- Monetary:
- Maintain the current monetary stance, characterized as "broadly appropriate."
- Financial sector:
- Tighten banking regulations despite banks being healthy.
- Revamp supervision of nonbank financial institutions.
Economic context and vulnerabilities
- Labor market:
- Economic weakness has negatively affected employment and labor market conditions.
- Inflation:
- Inflation is characterized as "stubbornly elevated," signaling persistent upward pressure on prices.
- External and domestic stability:
- Restoring a declining public debt trajectory is central to supporting both external and domestic stability.
- Exchange rate:
- Protecting the exchange rate peg is linked to credible fiscal consolidation.