At the end of a 10-day visit to the island, a team from the Washington-based lending agency said that while the Barbadian authorities, in close consultation with their social partners, were taking effective steps to address current economic vulnerabilities; and the measures outlined in the budget by Prime Minister Mia Mottley last month were a good first right, a second round of measures would be needed.

“Fiscal consolidation alongside a comprehensive debt restructuring exercise is critical for restoring debt sustainability and policy credibility. In this context, the authorities’ revised Budget for 2018/19, approved by Parliament on June 11, is a decisive step in the right direction.

“The Budget targets a primary surplus of six per cent of GDP. Consistent with the message delivered by the Prime Minister and Minister of Finance during the Budget, a second phase of measures will be needed to achieve this target,” the IMF team, led by Bert van Selm, said in a statement issued at the end of the visit.

It added that this phase would focus on reducing expenditures—notably by improving the efficiency and effectiveness of public services, reducing government transfers to state-owned enterprises by reviewing user fees, exploring options for mergers, and providing stronger oversight.

The IMF team added that progress was being made by the authorities in furthering good-faith discussions with domestic and external creditors.

However, it noted, “continuing open dialogue and sharing information, will remain important in concluding an orderly debt restructuring process,” it said.

The officials indicated that the IMF stood ready to partner with Barbados to restore macroeconomic stability in order to secure strong, durable and inclusive growth in the years ahead.

In this regard, it said significant progress had been made during the visit on the plan that could underpin financial support from the IMF.

“On its return to Washington, the team will continue to analyze the Government’s comprehensive reform program. We will remain closely engaged with the authorities in the coming weeks,” the statement said.

During the July 2 to 12 visit, the IMF team held discussions with various stakeholders, including government officials, trade unions and the private sector.