Above: Barbados (CJ Photo)

By the Caribbean Journal staff

Barbados continues to face “considerable economic challenges,” according to the International Monetary Fund.

The fund recently concluded 10 days of discussions with Barbados for the 2013 Article IV consultation, led by mission chief Nicole Laframboise.

Real GDP output is projected to fall by 0.7 percent, according to Laframboise, as tourism receipts have remained flat and public debt has increased.

“The Barbados economy continues to face considerable economic challenges,” she said. “The authorities agreed with staff on the need for urgent policy adjustments and deeper reforms over an extended period to restore fiscal and external sustainability.”

Inflation did decline this year, however, falling to an average of 2.3 percent for 2013.

The IMF mission chief said it would be “critical to address weaknesses in the oversight and operations of the statutory bodies, whose financial performance in many instances is not available.”

“In the near term, the authorities could establish an independent oversight mechanism tasked with enforcing compliance and accountability,” she said. “Equally urgent, the operations of the main state entities should be reviewed with a view to identifying their strategic purpose, reducing losses and raising efficiency. Fund technical assistance in support of reform of statutory bodies is expected to start in early 2014.”

The IMF held discussions during its visit with Tourism Minister Richard Sealy, Industry Minister Donville Inniss and Central Bank Governor DeLisle Worrell, among others.

“A number of large scale private investment and public works projects are expected to come on stream in the coming months, supporting a rebound in capital inflows and offsetting the drag on growth from fiscal adjustment,” Laframboise said. “While these projects should enhance competitiveness, the role of the state should be carefully considered, particularly in the productive sectors, and contingent liabilities of the state minimized.”