By Robert Andre Emmanuel
The International Monetary Fund (IMF) said while Antigua and Barbuda’s economy has shown signs of recovery, the country’s high public debt burden will pose ongoing challenges.
Last week, a team from the IMF led by David Moore met with government officials to discuss the economic development on the island, which is regularly carried out as part of the IMF’s Article IV obligations.
The concluding statements made by the team represent a preliminary finding of the economic situation in Antigua and Barbuda with a report signed off by the IMF’s Executive Board expected to be issued later this year.
Meanwhile, according to the concluding statement, the IMF team said that led by strong construction activity and continued growth in tourist arrivals, the country has seen economic growth of 4.2 percent in 2023,
“In 2024, growth is projected to be temporarily higher… expected to accelerate to 5.8 percent, boosted by Antigua’s hosting of the UN’s Small Island Developing States Conference and co-hosting of the T20 Cricket World Cup.
However, just like inflation rising to 6 percent as of April 2024, from 3.3 percent at end-2023, the IMF said that the country’s high public debt remains a concern.
“The public debt to GDP ratio has declined from its pandemic high, from around 100 percent in 2020 to an estimated 76 percent in 2023, reflecting the economic recovery and an upward revision to nominal GDP from a rebasing of the national accounts statistics.
“However, cash constraints continue to bind, and domestic and external arrears are substantial; fiscal adjustment is needed to create space to clear arrears and prevent their reemergence,” they said.
The IMF argued that a comprehensive arrears clearance strategy, working closely with the island’s creditors and domestic suppliers, and completing an audit to assess the country’s debt obligations will be “essential for restoring debt sustainability.”
Meanwhile, they also highlighted areas for stronger oversight by the administration, including the regulation of credit unions and installing risk-based capital requirements to promote a level playing field across the financial sector.
Additionally, data collection was a notable concern with the IMF stating that ensuring sufficient resources for completing the Population and Housing Census, the Producer Price Index and the 2023 Labour Force Survey, and reporting on the financial operations of state-owned enterprises, would facilitate evidence-based policy making and transparency.
The government received praise for its 2024 budget with the IMF calling it “important progress towards stronger fiscal buffers.”
“Room remains to strengthen the fiscal position further, including through closer adherence to the cap on discretionary tax exemptions, and continuing the recent efforts to enhance expenditure commitment controls,” they said.
