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Barbados: Sectoral Balance Sheet Mismatches and Macroeconomic Vulnerabilities

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  • Charles Amo Yartey

Abstract

This paper uses the balance sheet approach to analyze macroeconomic vulnerabilities in Barbados between 2006 and 2009. It discusses the financial position of the economy and its main sectors and the sectors' exposure to changes in exchange rates. The main finding of the analysis is that the balance sheet of the aggregate economy has been weakened by the recent deterioration in the balance sheet of the nonfinancial public sector. Macroeconomic vulnerabilities have increased in Barbados since 2006 due to the high public debt and the deterioration in the net financial position with nonresidents. The private sector, however, maintained a healthy position and seems resilient to shocks. The paper also finds the balance sheet of the nonfinancial public sector has deteriorated significantly reflecting weak fiscal performance. While the central government is highly vulnerable to exchange rate shock, debt rollover risks are likely to be limited since most of external liabilities are long term and most domestic liabilities are held by the National Insurance System.

Suggested Citation

  • Charles Amo Yartey, 2012. "Barbados: Sectoral Balance Sheet Mismatches and Macroeconomic Vulnerabilities," IMF Working Papers 2012/031, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2012/031
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    References listed on IDEAS

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    Cited by:

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    3. Devendra Kumar Jain & Rup Singh & Henali Kumar & Nikeel Kumar & Arvind Patel, 2022. "Why does currency denomination in external liabilities of small island developing states matter? Evidence from Fiji," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 9(3), pages 447-464, September.
    4. Ms. Svetlana Cerovic & Jose Saboin, 2016. "Dominican Republic: Sectoral Financial Positions and Macroeconomic Vulnerabilities," IMF Working Papers 2016/208, International Monetary Fund.

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