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Barbados Today – Change is coming to Government’s pension arrangements for civil servants, the International Monetary Fund has declared after its latest review of the Barbados economy.
Following a virtual visit earlier this week by the Bert van Selm-led IMF team, the Washington-based international financial institution said an actuarial review of the civil service pension system was completed last November and would be the basis for “upcoming public pension reform”.
There was no immediate comment from the Ministry of Finance on the IMF’s statement.
While no details were offered on what changes were likely to the existing pension scheme for thousands of public officers, the financial burden of public sector pensions has long been targetted by previous IMF missions.
In 2019, van Selm’s team declared that public sector pension arrangements were a “risk” to the IMF programme with Barbados.
“Additional challenges include reforming the civil service pension system and strengthening the effectiveness of customs. The tasks are arduous, but there is no alternative route to restoring fiscal and external sustainability to spur a sustained economic recovery,” the IMF said then.
Yet, in its latest commentary on the economy, the IMF team noted: “In this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform programme, while expanding critical investments in social protection.”
It said key indicative targets for the end-December under the Extended Fund Facility (EFF) were met. International reserves, which fell to a low of US$220 million (5-6 weeks of import coverage) in May 2018, stood at more than US$1.3 billion at the end of 2020.
At the same time, the team cautioned that the prolonged COVID-19 pandemic continues to have a major impact on Barbados. The economy is estimated to have contracted by about 18 per cent in 2020, with a gradual recovery projected to start in 2021.
On the vital tourism industry, it cited the slump in arrivals which remain “a fraction of normal levels, and recent increases in COVID-19 cases in key source markets, including the United States and the United Kingdom, will likely delay the recovery”.
It said also that the current outbreak of COVID-19 and ongoing lockdown will reduce economic activity in the first quarter of this year.
But the IMF praised the administration’s performance, even amid economic shocks caused by COVID-19.
It said: “Strong steps have been made in implementing structural reforms. A new central bank law, aimed at strengthening the autonomy of the bank while limiting the provision of credit to the Government, was adopted by Parliament in December 2020.”
In the statement, van Selm also noted that a new procurement law to strengthen the “fairness, integrity and transparency” of the procurement process is expected to be debated in Parliament later this month.
The IMF is expected to conduct its fifth review under its Extended Fund Facility with Barbados in May.