The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.
Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
These statements highlight persistent barriers to further U.S. investment. Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy. To access the ICS, visit the U.S. Department of State Investment Climate Statements website.
Executive Summary
Barbados is the largest economy in the Eastern Caribbean. Barbados’ Gross Domestic Product (GDP) was 4.63 billion USD (9.26 billion Barbados dollars) in 2020. This represents an 11.6 percent drop from 2019 due to the impact of COVID-19 on the country’s tourism-dependent economy. Short-term forecasts project a slow recovery throughout 2021, with a gradual return to pre-pandemic levels by 2024. Unemployment was estimated at about 40 percent in the first quarter of 2021, representing a 30 percent increase from the same period a year prior.
The government of Barbados entered a standby arrangement with the International Monetary Fund (IMF) in late 2018. The 290 million USD (580 million Barbados dollars) Barbados Economic Recovery and Transformation (BERT) program aims to decrease the debt-to-GDP ratio, strengthen the balance of payments, and stimulate growth. While the government was on track to meet its IMF targets pre-pandemic, the program dampened income and spending power due to public sector layoffs, the introduction of new indirect taxes, and a decline in the construction sector. The impact of the pandemic required the IMF to adjust the program targets downwards several times. The IMF also approved additional lending into the program twice in 2020.
Barbados ranks 128th out of 190 countries rated in the 2020 World Bank Doing Business Report. The report highlighted some positive changes in getting access to electricity, trading across borders, and enforcing contracts but noted that registering property has become more difficult. The services sector continues to hold the largest growth potential, especially in the areas of international financial services, information technology, global education services, health, and cultural services. The gradual decline of the sugar industry has opened land for other agricultural uses. Investment opportunities exist in the areas of agricultural processing and alternative and renewable energy. Uncertainty about the trajectory of economic recovery of the tourism, commercial aviation, and cruise industries impacts the potential for projects in those sectors. The government has identified renewable energy and climate resilience projects as top priorities.
Barbados recently revised its tax regime to harmonize its domestic and international tax rates. This was in response to an Organization of Economic Cooperation and Development (OECD) initiative that addressed harmful tax practices. Some acts were repealed or amended, and some new measures were introduced. For further details, see https://www.investbarbados.org/investing-in-barbados/setting-up-in-barbados/revised-tax-regime/ .
Barbados bases its legal system on the British common law system. It does not have a bilateral investment agreement with the United States, but it does have a double-taxation treaty and a tax information exchange agreement.
In 2015, Barbados signed an intergovernmental agreement in observance of the United States’ Foreign Account Tax Compliance Act (FATCA), making it mandatory for banks in Barbados to report the banking information of U.S. citizens.
For the 2021 investment climate statement for Barbados, please click on the following link: https://www.state.gov/reports/2021-investment-climate-statements/barbados/ .