Antigua and Barbuda Prepares 2025 Budget Amidst Slowing Growth

Antigua and Barbuda Prepares 2025 Budget

Amidst Slowing Growth

As Antigua and Barbuda’s 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, debt, fiscal and financing pressures and climate change adaptation while seeking to exploit opportunities in the Blue Economy, digitization and renewable energy.

Slowing economic growth

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, down from an anticipated 5.8% in 2024. 8.1% in 2023, 9.5% in 2022 and 8.2% in 2021 after the ravages of the Covid -19 pandemic led to a 19% 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.   

Debt and Fiscal Pressures
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?

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).

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

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

Primary Balance = Total Revenue−(Total Expenditures−Interest Payments).

If a government has the following:

• Total Revenue = $200 million
• Total Expenditure = $350 million
• Interest Payments = $50 million
• Primary Balance = – $100 million

A positive Primary Surplus value indicates that the government is generating enough revenue to cover its current spending (excluding interest) and can potentially use the surplus to pay down existing debt. A negative Primary Deficit value means the government must borrow or run arrears even for day-to-day operations and meet interest payments.

A major achievement has been the reduction in the Primary Deficit since 2021. I am of the view that it is critical that policymakers continue their drive to  broaden the tax base, enhance tax administration, and constrain tax expenditures to ensure a Primary Surplus and put Antigua & Barbuda on a more sustainable fiscal path.

Looking Ahead

Antigua and Barbuda’s 2025 Budget is not just an economic blueprint; it’s a navigation map for an uncertain world. The challenges are real, but so are the opportunities. This little island with a big heart has weathered storms—literal and figurative—before, and it’s poised to do so again, anchored in resilience and propelled by ambition. I hope for a budget that achieves a primary surplus while seeking to take advantage of the opportunities in the blue economy, digitization, and adaptation to climate change.

So, as the budget statement is unveiled, remember this: budgets may be about numbers, but the story they tell is about people. And Antigua and Barbuda’s people—resilient, resourceful, and endlessly optimistic—are its greatest asset.

Prof. C. Justin Robinson

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