BRIDGETOWN, Barbados – An emergency plan has been created to fix Barbados’ ailing economy, and it includes getting assistance from the International Monetary Fund (IMF) and suspending payments to external creditors as it restructures government debt.

And while the strategy announced by Prime Minister Mia Mottley has received the full backing of the Social Partnership, a regional credit ratings agency is not as impressed by the debt payment move and has given the country its first downgrade under the new Barbados Labour Party (BLP) administration.

Last Friday evening, following a meeting with the Social Partnership, Mottley announced at a press conference a multi-pronged plan to address critically-low levels of international reserves, unsustainably high levels of public indebtedness, poor growth and major failings in public infrastructure and social safety nets.

And part of the plan involves getting balance of payments support from the IMF.

She said she had already given the Washington-based institution notice, having spoken with its managing director Christine Lagarde and “briefed her on the present state of the public finances of Barbados; the current debt and reserve positions, and assured her that we are committed to taking decisive action to rebuild Barbados”.

“In turn, Madame Lagarde assured me that the International Monetary Fund stands ready to lend Barbados the necessary assistance and support to these actions,” she said. “The Government has invited a mission from the IMF to visit Bridgetown shortly. I am advised by the Governor of the Central Bank that that mission shall be here as early as Tuesday given the urgency that we have expressed.”

Largarde later issued a statement confirming that an IMF team led by Bert van Selm will visit Barbados to start discussions on how the Fund can support the authorities’ economic plan.

“Our ultimate goal is to help Barbados achieve higher living standards and more inclusive growth for the years ahead,” the brief statement said.

Prime Minister Mottley also announced that, with the country in debt to the tune of more than BDS$15 billion (US$7.5 billion), with public debt as high as 171 per cent of GDP – the third highest in the world behind Japan and Greece – her administration will be restructuring the debt.

“After extensive consultation in the last week with our Social Partners, with our Government, I announce today that we will seek the cooperation of our domestic and external creditors in the restructuring of our public debt. From today, we are suspending payments due on debts owed to external commercial creditors.

The announcement has resulted in regional rating agency CariCRIS dropping Barbados’ rating to ‘CariC’ on the foreign currency rating and ‘CariC’ local currency rating.

It placed Barbados on a “rating watch”, as it listed the island’s level of creditworthiness as “poor”.