{"id":217884,"date":"2024-12-03T14:01:14","date_gmt":"2024-12-03T18:01:14","guid":{"rendered":"https:\/\/antiguanewsroom.com\/?p=217884"},"modified":"2024-12-03T14:01:15","modified_gmt":"2024-12-03T18:01:15","slug":"antigua-and-barbuda-prepares-2025-budget-amidst-slowing-growth","status":"publish","type":"post","link":"https:\/\/antiguanewsroom.com\/antigua-and-barbuda-prepares-2025-budget-amidst-slowing-growth\/","title":{"rendered":"Antigua and Barbuda Prepares 2025 Budget Amidst Slowing Growth"},"content":{"rendered":"
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Antigua and Barbuda Prepares 2025 Budget<\/strong><\/p>

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Amidst Slowing Growth<\/strong><\/p>\n\n\n\n

As Antigua and Barbuda\u2019s government officials sharpened their pencils and rolled out their spreadsheets to prepare the 2025 National Budget, several key economic and financial factors (me nah qualify fi talk bout the political factors) likely loomed large in their deliberations. These economic and financial factors are likely to have been slowing economic growth<\/strong>, debt, fiscal and financing pressures<\/strong> and climate change adaptation<\/strong> while seeking to exploit opportunities in the Blue Economy, digitization and renewable energy<\/strong>.<\/p>

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Slowing economic growth<\/u><\/strong><\/p>

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The International Monetary Fund (IMF) has already sounded the alarm, projecting that global economic growth will stabilize at 3.2% in 2025, which is consistent with the forecasted rate for 2024. This steady growth reflects a gradual recovery from recent economic disruptions, though it remains below the pre-pandemic average of 3.8% observed between 2000 and 2019. The IMF projects Antigua and Barbuda’s Real Gross Domestic Product (GDP) growth to decelerate to 3.5% in 2025<\/strong>, down from an anticipated 5.8% in 2024. 8.1% in 2023, 9.5% in 2022 and 8.2% in 2021 <\/strong>after the ravages of the Covid -19 pandemic led to a 19% <\/strong>decline in 2020. The Antigua and Barbuda economy has enjoyed a robust, if not spectacular, recovery after COVID-19. A significant issue in the budget is likely to be how to sustain and spur further economic growth, manage key metrics such as debt, and undertake key social and other investments in an environment of slowing growth.   <\/p>\n\n\n\n

Debt and Fiscal Pressures<\/strong>
A minimum Debt-to-GDP ratio of 60% has emerged as the globally accepted measure of debt sustainability and a significant plank for fiscal management. A major achievement for Antigua and Barbuda in recent years has been reducing this ratio to 66% in 2023 from a high of 131.4% in 2004. The likely slowing of GDP growth will make achieving the target of 60% more challenging while undertaking crucial investments in infrastructure, health, education and emerging growth opportunities. How policymakers address this balancing act will likely be a critical feature of the budget statement.  Will the movement towards a 60% Debt-to-GDP ratio slow, or will additional revenue-generating measures and\/or expenditure adjustments be introduced?<\/p>

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I believe that the major issue for Antigua & Barbuda in terms of fiscal management and debt sustainability is the history of consistently running Primary Deficits despite an impressive history of robust economic growth. This history points to structural imbalances in the relationship between tax structure, tax collections, and public expenditures (see table).<\/p>\n\n\n\n

Year<\/td>Debt to GDP %<\/td>Primary Balance to GDP %<\/td>Year<\/td>Debt to GDP %<\/td>Primary Balance to GDP %<\/td><\/tr>
2003<\/strong><\/td>128.13<\/td>-4.20<\/td>2013<\/strong><\/td>101.06<\/td>-1.60<\/td><\/tr>
2004<\/strong><\/td>131.40<\/td>-1.20<\/td>2014<\/strong><\/td>100.17<\/td>2.20<\/td><\/tr>
2005<\/strong><\/td>101.82<\/td>-1.50<\/td>2015<\/strong><\/td>86.92<\/td>-5.60<\/td><\/tr>
2006<\/strong><\/td>90.85<\/td>-4.30<\/td>2016<\/strong><\/td>82.61<\/td>5.00<\/td><\/tr>
2007<\/strong><\/td>80.65<\/td>-2.90<\/td>2017<\/strong><\/td>83.86<\/td>-0.10<\/td><\/tr>
2008<\/strong><\/td>79.71<\/td>-3.00<\/td>2018<\/strong><\/td>78.95<\/td>0.00<\/td><\/tr>
2009<\/strong><\/td>89.17<\/td>-18.20<\/td>2019<\/strong><\/td>76.8<\/td>-1.20<\/td><\/tr>
2010<\/strong><\/td>84.26<\/td>1.80<\/td>2020<\/strong><\/td>96.51<\/td>-3.70<\/td><\/tr>
2011<\/strong><\/td>92.59<\/td>-1.50<\/td>2021<\/strong><\/td>92.49<\/td>-2.30<\/td><\/tr>
2012<\/strong><\/td>87.68<\/td>1.10<\/td>2022<\/strong><\/td>75.0%<\/td>-1.70<\/td><\/tr>
 <\/strong><\/td> <\/td> <\/td>2023<\/strong><\/td>66.0%<\/td>-0.4<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The primary balance<\/strong> is a fiscal metric that reflects the difference between a government\u2019s total revenue (excluding borrowing) and its total expenditures, excluding interest payments on public debt. It is a crucial indicator of a government\u2019s fiscal health and ability to manage its finances sustainably.<\/p>

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Primary Balance = Total Revenue\u2212(Total Expenditures\u2212Interest Payments).<\/p>

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If a government has the following:<\/p>\n\n\n\n