Barbados - Financial Sector Assessment : Based on the Joint International Monetary Fund (IMF) - World Bank Financial Sector Assessment Program (FSAP) Update

The principal objective of the mission was to update the FSAP conducted in 2002 focusing on financial system stability and specific institutional development issues. The mission also provided an assessment of the observance of international standards and codes in financial regulation and supervision for the banking and securities sectors as well as of the development needs of the financial system and its potential contribution to economic development. Preliminary results of the mission were discussed with the authorities during the subsequent IMF Article IV mission. The 2008 FSAP update for Barbados took place in the context of considerable turmoil in global financial markets. Encouragingly, the financial system in Barbados has been little affected by this turmoil and the macroeconomic situation remains robust with economic growth continuing to benefit from healthy tourism numbers and ongoing construction activity. As a result, the unemployment rate continues near historic lows. Nonetheless, economic prospects are tied to continuing tourism and, as such, to the slowing economic performance in Europe, particularly the United Kingdom, and the United States. The offshore financial sector appears insulated from the onshore banking system, thus limiting the risk of contagion. Barbados will continue to face competition from offshore financial centers in the region. To differentiate itself, the country is seeking to continue strengthening its reputation for stability and a selective licensing process, and to develop a workforce with strong skills in financial services. However, the authorities continue to face the challenge of overseeing a large number of very heterogeneous financial institutions with constrained resources.