Private investment has key role
The International Monetary Fund (IMF) is banking on private sector investment “partly replacing” the inflows from international financial institutions, but not in the short-term.
Its staff also said in the latest Barbados country report that future structural reforms were needed to enhance business facilitation.
“Private sector investment is expected to partly replace declining official inflows from international financial institutions over the medium-term. Exceptional international financial institutions support is expected to fall as the pandemic wanes,” the report said.
“Foreign direct investment, including into the tourism sector and renewable projects, would compensate for a decline in international financial institutions support but not to the full extent.
It added: “To attract foreign direct investment steadily over the medium- and long-term, it is important to accelerate structural reforms under the [Barbados Economic Recovery and Transformation] programme to enhance business facilitation, while resuming fiscal consolidation to further strengthen confidence in fiscal sustainability and macroeconomic stability.”
The IMF report said it was expected that “structural reforms and investments to unlock Barbados’ growth potential should be further accelerated once the global pandemic recedes”.
“While Barbados has been steadily improving its business climate – including by easing trading across borders, opening the electricity sector to independent power producers (IPPs), introducing a more reliable payment and digital identity system as well as enhancing financial access for small businesses – additional reforms to improve the business climate should be implemented to further unlock Barbados’ growth potential,” it said.
“Efforts to improve business facilitation and competitiveness are on-going, for example, with the recent amendments to the Corporate Act, 2021 aimed at digitalising the corporate registry and strengthening the regulatory framework.
“Further, based on the agreement with the [United Nations Conference on Trade And Development] reached in October 2021, the introduction of the ASYCUDA electronic single window system is expected to allow for more efficient processing of customs procedures and therefore increase Barbados’ competitiveness by making trading across borders easier,” the IMF said. (SC)