BREAKING: IMF Executive Board Concludes 2021 Article IV Consultation with Antigua and Barbuda

11

On July 28, 2021, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Antigua and Barbuda.

Antigua and Barbuda has been hit hard by the global pandemic. The domestic lockdown and border closure in early 2020 prompted a collapse of tourism-related activities. The economy contracted by an estimated 17.3 percent in 2020. The government promptly took public health measures to limit the spread of the virus and introduced social programs to support the vulnerable. The pandemic was well contained in 2020, even after the reopening of borders in the summer, but the winter tourism season saw a temporary surge in COVID-19 cases. Infection rates have since stabilized with about one-third of the population fully vaccinated.

The economy is projected to contract by 1 percent in 2021 before a recovery takes hold in the second half of this year. A gradual pick-up in tourism activity is expected with the first cruise ship arrival in July and Antigua and Barbuda’s favorable travel risk ratings in key source markets. Downside risks to the outlook are significant, primarily from a more prolonged pandemic due to the spread of new COVID-19 variants and limited vaccine availability both at home and abroad.

The pandemic has intensified cash flow pressures, led to a further accumulation of domestic and external arrears, and sharply increased the public debt and gross financing needs. The government has embarked on an economic plan centered on a Medium-Term Fiscal Strategy which seeks to restore debt sustainability and gradually resolve outstanding domestic and external arrears; prioritize policies that tackle COVID-19 and improve healthcare delivery; protect the vulnerable; and create the conditions for durable growth and job creation.

Executive Board Assessment [2]

Executive Directors noted that Antigua and Barbuda was hit hard by the COVID-19 pandemic and commended the authorities for their swift containment measures and support for the vulnerable. A gradual recovery is envisaged, but downside risks are significant, including a prolonged pandemic, delays in fiscal reforms, and natural disasters. Directors stressed the need to continue supporting economic recovery, while stabilizing public finances and promoting competitiveness and sustainable growth.

Directors underscored the urgency of restoring debt sustainability. In this regard, they welcomed the authorities’ Medium-Term Fiscal Strategy, anchored on domestic revenue mobilization and rationalized spending. Achieving the fiscal targets will require additional measures, as well as efforts to secure long-term financing on favorable terms. Noting the continued accumulation in arrears, Directors encouraged the authorities to put in place a concrete clearance plan, continue to engage with creditors, and avoid new arrears. They noted the benefits of the potential SDR allocation in rebuilding reserves and helping to meet the financing gap if needed.

Directors welcomed planned reforms to improve public financial management, tax administration, and targeting of social programs. They recognized the initial steps taken to contain the wage bill and recommended that the authorities consider a long-term strategy to reform the public sector. Further steps are also essential to strengthen the governance and financial position of state-owned enterprises.

Directors welcomed ongoing initiatives to boost growth and job creation, diversify the economy, and improve the business environment. They emphasized the importance of upgrading public infrastructure, including to support digitalization. Directors looked forward to the completion of the National Adaptation Plan to build physical and financial resilience to climate change and natural disasters.

Directors called for efforts to safeguard financial stability in support of the economic recovery. Given the deteriorating asset quality and profitability of the financial system, they saw a need to closely monitor risks, particularly to credit unions. Interconnectedness between banks and non-banks also warrants a coordinated supervisory approach. Directors encouraged the authorities to formalize a national crisis management plan in collaboration with the ECCB, and to gradually reduce reliance on domestic bank financing to limit sovereign financial risks. They called for additional efforts to advance AML/CFT reforms, building on the progress already made.

Antigua and Barbuda: Selected Economic and Financial Indicators

Population (2019)

97,118

Adult literacy rate (2015)

99

GDP per capita (US$, 2019)

17,113

Human Development Index

78

Life expectancy at birth (years, 2019)

77

(2019, of 189 economies)
Mortality rate

6.6

(under 5, per 1,000 live births, 2019)

Projections

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

National income and prices

(Annual percentage change)

Real GDP

5.5

3.1

7.0

3.4

-17.3

-1.0

8.5

5.6

4.4

3.4

2.7

Nominal GDP

7.5

2.2

9.4

3.5

-16.4

1.0

10.6

7.7

6.5

5.4

4.8

Consumer prices (end of period)

-1.1

2.4

1.7

0.7

2.8

2.0

2.0

2.0

2.0

2.0

2.0

Consumer prices (period average)

-0.5

2.4

1.2

1.4

1.1

2.0

2.0

2.0

2.0

2.0

2.0

Money and credit
Net foreign assets

-4.5

10.9

6.2

-0.9

-4.6

0.0

2.4

2.6

3.0

2.6

1.7

Net domestic assets

2.8

-3.3

0.1

1.7

-0.6

1.0

6.0

1.0

-0.2

3.3

3.1

Of which:
Credit to the public sector

2.0

0.6

0.1

-0.5

4.1

-2.2

-0.1

-0.5

-0.8

-0.9

-0.5

Credit to the private sector

0.6

-1.0

1.0

2.2

1.0

0.8

1.2

0.3

1.7

3.5

3.1

Central government

(Percent of GDP)

Primary balance

2.4

-0.1

0.0

-1.2

-3.7

-1.3

-0.5

1.3

2.5

3.3

3.3

Overall balance

-0.1

-2.8

-2.5

-4.0

-6.3

-4.1

-3.5

-1.7

-0.4

0.5

0.7

Total revenue and grants

24.5

20.7

19.8

18.9

20.1

23.7

22.7

23.8

24.3

24.4

24.3

Total expenditure

24.7

23.6

22.3

23.0

26.4

27.8

26.1

25.6

24.7

23.9

23.6

External sector
Current account balance

-2.4

-7.8

-14.5

-6.7

-7.8

-12.3

-9.9

-8.1

-7.6

-7.5

-7.2

Trade balance

-27.4

-31.1

-36.1

-34.1

-25.1

-25.1

-31.5

-33.6

-34.8

-34.7

-34.7

Nonfactor service balance

35.7

32.7

30.1

36.5

21.1

17.4

28.5

32.2

33.8

33.7

33.8

Of which:
Gross tourism receipts

52.4

50.2

48.3

54.7

27.8

21.5

38.6

46.2

51.0

50.8

50.9

Overall balance

-0.4

-2.4

-0.5

-4.3

-7.0

-3.6

-3.0

-2.5

-0.7

-0.9

-0.9

External public sector debt

36.2

37.5

36.7

37.1

47.4

54.4

53.8

52.7

51.4

50.1

48.4

Savings-Investment balance

-2.4

-7.8

-14.5

-6.7

-7.8

-12.3

-9.9

-8.1

-7.6

-7.5

-7.2

Savings

9.7

15.2

23.0

25.7

16.0

15.2

21.9

23.5

25.2

25.2

25.3

Investment

12.2

23.1

37.5

32.5

23.9

27.5

31.8

31.6

32.8

32.7

32.5

Memorandum items
Net imputed international reserves

330

314

328

279

222

221

253

290

335

374

401

(US$ million)
(Months of prospective imports)

4.1

3.3

3.4

5.1

4.4

2.9

2.7

2.7

3.0

3.2

3.3

GDP at market prices (EC$ million)

3,879

3,964

4,334

4,487

3,752

3,791

4,194

4,518

4,812

5,073

5,316

Public debt stock (EC$ million) 1/, 2/

3,341

3,654

3,803

3,702

3,748

3,997

4,109

4,193

4,220

4,203

4,173

(Percent of GDP)

86.1

92.2

87.7

82.5

99.9

105.4

98.0

92.8

87.7

82.8

78.5

Sources: Country authorities, ECCB, UN Human Development Report, World Bank and IMF staff estimates and projections.
1/ Includes stock of principal and interest arrears, unpaid vouchers, and suppliers’ credits.
2/ Includes central government guarantees of state enterprises’ and statutory bodies’ debt.

 


[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .

Support Antigua Newsroom from as little as $5 – it only takes a minute. If you can, please consider supporting us with a regular amount each month. Thank you.

11 COMMENTS

  1. Where did IMF get their information our borders were locked down? Either world dictator traitor tyrant liar thief HT Gaston Browne lied to them or they got their facts wrong.

    All Bullshit Lying Politicians (ABLP) never closed our borders. All the planes stopped flying here. Our borders remained opened through all of this.

    And All Bullshit Lying Politicians (ABLP) have been stealing from us. Add the current situation and that’s why we are here. Our nation bigger than St. Kitts, Barbados and another island were all able to provide unemployment funds for at least a month. To no surprise not here in Antigua. Why? Look at All Bullshit Lying Politicians (ABLP).

    All political members who are in power and never represented the people of our nation need to be removed from office. Those who have committed murders and kidnappings and human trafficking need to be brought to justice. I don’t care which party they belong to. Enough of stealing from us and selling us out.

    No representation, no taxes.

    • You are such a dumb it is pointless explaining this article to you. This is the problem we have in this country, everybody is a pundit.

    • Boss not surprising that you don’t even recognize the report’s related press release, though its right in front of you. Pay attention, they have provided an opinion and no one has stopped them. This is just all further evidence that you argue for argument sake

  2. The important point to not from the review of our economic performance by the IMF, while the IMF is predicting a further downturn in economic performance by 1% Prime Minister Gaston Browne predicted a few weeks ago that our economy will grow by 10% next year. I hope the Prime Minister gave the IMF a serious tongue lashing for their ridiculous and unrealistic growth prediction.

    • Guy next year is 2022, they are predicting 8.5% real growth, and 10.% percent nominal growth. Keep telling you stop make an ar* of yourself. What Lovell doing to you that you thinking this is election year 2022?

      • Tenman, Go back and listen to what Gaston said. Great job stating what’s on the report though. The tape is readily available.

    • Charles hasn’t the IMF been wrong before with its prediction for Antigua and Barbuda under this government. Shall I state the year they did. And they had to come back on their prediction. The IMF does what it has to do. They are very conservative when making economic predictions. The ECCB is more progressive as they are closer to the reality of these economies. And ECLAC also has a more progressive outlook. Therefore, in my opinion, the IMF gives you a worst-case scenario and ECLAC give you the best-case scenario and ECCB is right in the middle. Together with the CDB. You have to note that Antigua has being growing every year by at least 5% since 2014 and were it not for Covid 2020 would have been a record year. When you have a project like PLH pumping hundreds of millions into your economy it will show economic growth. And coupled with the government borrowing for Capital investment, that is what the UPP should have done. They borrowed for recurrent expenditure. That doesn’t grow the economy. Economics 101.

  3. What social programs did the ABLP introduced during the pandemic? Somebody please tell me because all they have been doing since they got in power in 2014 concerning social programs is piggy back on the social programs the UPP administration implemented and executed before they were voted out of office in 2014.

    • it would be good if you go back to sleep. You missed an entire year. And let me make this clear. The UPP introduced social programs like; Senior Citizens Subsidy program, and People’s Benefit program. This two program had to be funded by the investments of the monies that they with-held from the sale of fuel from Venezuela to WIOC. 50% of these funds are to be repaid over a period of 25 years with an interest rate of 2%. No PDV Caribe Antigua who manages this was to invest these millions of dollars against a higher interest rate and use the difference to fund these programs. What do you think happened? These inept cannot count UPP people to include Harold Lovell who was the minister of Finance and had oversight over this company, lead the company to bankruptcy. What that meant is that the company on the books had a negative equity. Where it not for this government to go to Maduro and ask for a write off, of 250 million dollars. The next program they introduce was the school uniform and school meal. And here also they did not put measures in place as to how it would be funded. So, each year the government must find millions of taxpayers’ dollars to fund these programs. And especially in these hard covid times it is a wonder that the government can still find the money to do so. The government since Covid has introduced even more program. Many via the Social Transformation Department. Some are cash programs; others are food baskets. But no one has to go hungry in this country. Cause there is always a basket of food available, or some vouchers. What the UPP would want is that the government go and overburden itself with loans and gives people cash. But everyone knows that is unsustainable. You would only be able to do so for a couple of months. Which is what we have seen in St. Lucia. After three months Chastanet said the country is broke. I hate social programs. It makes beggars out of people. It is better to teach a man how to fish then to give him food every day. And like you, you do not sit down and stretch out your hand for a hand-out. You are a very entrepreneurial woman and do what it takes to make a living. That I admire from you. I have followed the many business adventures you have started. And I applaud you for that. Wish many more were like you.

Comments are closed.