By Elesha George
As the country prepares itself to rebound from an unprecedented contraction in the economy, Prime Minister Gaston Browne remarked that “the economic wounds are very, very deep”.
According to Browne, debt-to-GDP increased from 57 percent to 90 percent and said the government no longer has the same leverage to borrow funds as it did at the start of this pandemic.
“The real challenge for us will be post-Covid; based on the economic wounds that have been inflicted by Covid, we will have to rely on every ounce of creativity or innovativeness in order to recover as quickly as possible and obviously to restore normalcy,” he told Observer.
With no stimulus package being offered, no deal for money from the International Monetary Fund (IMF) and limited borrowing options, the government’s plan appears to be to hold steady for as long as the people of this country can manage.
While the situation of each individual is different, the coronavirus pandemic’s impact on the overall economy speaks volumes in numbers for Antigua and Barbuda.
For example, the number of goods and services produced in the twin island state fell near 20 percent in 2020, as the tourism market came to an abrupt interruption, consumers cut back on spending, and 11,000 fewer persons contributed in taxes in the last year alone.
According to the Eastern Caribbean Central Bank (ECCB), Antigua and Barbuda’s GDP at market price (after the cost of creation is removed) fell by 16.97 percent in 2020, compared to growth of 3.25 per cent the year before and an outstanding 6.95 per cent growth in 2018 – the highest growth witnessed among ECCU countries that year, and since the current government was elected into office in late 2014.
Visitor arrivals alone saw a reduction of more than one million people coming to the country.
The government highlighted, in its 2021 Budget, that the decline in visitor numbers, combined with shutdowns, implementation of curfews and social distancing measures, resulted in a 63.6 percent contraction of the hotel and restaurant sector.
In addition, Browne said the government’s borrowing capacity a year ago had reduced sharply, adding that its borrowing options have become significantly limited.
Even so, borrowing from the IMF remains on the back burner, particularly because the prime minister insists that accepting the institution’s current terms of assistance would be “like committing suicide”.
He mentioned that the IMF was asking the government to pay back US $120 million over a four-to-seven-year period. “
“That’s just going to strain our debt service and create a fundamental problem to the extent that we are likely to default on the loan and then we will have to retrench thousands of workers. So, we continue to hold discussions with the IMF about coming up with new instruments and if we can get an instrument that works for us, then of course we’ll take the money from the IMF – it’s cheap money,” he remarked.
Reducing consumer taxes, he said, is also not an option that his government can entertain at this time.