Barbados’ economy has been severely impacted by the COVID-19 pandemic, mainly due to the gradual reopening of the tourism sector which, according to the Central Bank of Barbados (CBB), accounts for 40 percent of the island’s economic activity.  COVID-19 has reduced income and spending power due to rising unemployment and economic uncertainty. It has crippled the productive sectors and is expected to have long term effects. The World Bank ranks Barbados as a high-income country which makes it ineligible for some official development assistance.  Barbados continues to battle a high debt to GDP ratio which has been further exacerbated by the impact of COVID-19.  Some large-scale infrastructural projects are funded by the Caribbean Development Bank (CDB).  The United States is not a member of the CDB and U.S. companies are largely ineligible for these tenders except in specific cases. 

Tariffs remain high, although Barbados has lowered its tariffs and simplified its tariff system to fulfill its World Trade Organization (WTO) obligations.  The government grants duty-free concessions for some international businesses and tourism enterprises.  However, import duties on food products remain prohibitive, especially for franchise businesses.  Barbados’ economy is small, and new enterprises that might compete with entrenched local establishments, especially in the retail and restaurant sectors, may face a de facto veto of their license due to local interests.  Although the government has not approved licenses for importers of U.S. ice cream and poultry products, some U.S.  franchises including Burger King, KFC, Little Caesar’s Pizza, Payless Shoe Source, Starbucks and Subway, have been licensed to operate. 

Government red tape and customs inefficiencies are frequently cited as impediments to trade.  The government recognizes that customer service has been a weakness and is focused on improving it through training.  A previously announced 17.5 percent value added tax (VAT) on online purchases of goods and services consumed in Barbados has yet to be collected.  The tax will be collected at the point of sale.  This will be added to the existing foreign exchange commission of two per cent on all purchases of foreign currency including cash, bank drafts and wire transfers, credit, debit, and travel cards.  The commission is applied to the Barbados dollar value of the foreign currency transaction.  Anyone conducting purchases of foreign currency is required to pay this commission, except residents and non-residents making payments from their foreign currency accounts, including entities in the International Business and Financial Services (IBFS) sector.  Other concerns have been raised regarding compliance with international anti-money laundering best practices.