Government revenues won’t meet April salary expenses

Prime Minister Gaston Browne (file photo)
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By Elesha George

[email protected]

Having not yet secured any significant grant or loan, and in the absence of sufficient tax revenue, the government will have to borrow monies in order to meet April’s payroll for its 13,000 employees.

“It is estimated that we may raise about 25 of the 80 million dollars that we were projected to raise for the month. That means the government will have to borrow even to pay salaries and wages,” said Prime Minister Gaston Browne over the weekend.

According to Lionel ‘Max’ Hurst, Chief of Staff in the Office of the Prime Minister, the government spends between 30 to 32 million dollars a month in pensions, salaries, wages and emoluments.

It receives on average, $60 million a month in revenue, 50 percent of which services the country’s debts,  and the other half pays wages and salaries.

The 24-hour lockdown, according to the Chief of Staff, has stopped at least 80 percent of businesses from operating, which means a massive decrease in tax contributions.  Taxes from the currently defunct tourism sector contributed to the majority of government’s earnings.

Imports from hotels had allowed the government to collect millions in Customs Duty, Revenue Recovery Charge (RRC) and Antigua & Barbuda Sales Tax (ABST). However, the temporary loss of that industry, compounded with the loss of other private sector jobs, means people are not spending on the things they used to.

Comptroller of Customs, Raju Boddu, shared that there has been a 40 percent drop in customs revenue for the month of April. Up until Friday, April 17, 2020, the department had only collected nine million dollars for the month.  It is a drastic decrease from the first three months of the year where customs collected a total of $95 million.

The Inland Revenue Department is also reporting a decline in collections. Commissioner Ralph Warner told Observer “The first quarter for 2020 was an excellent period for the IRD; we collected 113 million dollars January to March 2020 compared to 78 million for the same period January to March 2019.”

In April 2019, the department collected $39.6 million, however, Warner said they are projecting a decline in revenue of around $27 million for the same period this year.

The situation is far from ideal, and the prime minister has said that the government will have to consider how it will provide money to purchase medicine for the Medical Benefits Scheme (MBS) in the absence of taxes.

He believes too that the government will eventually be called upon by the Social Security Scheme to supplement the statutory body’s cashflow in order for payments to be made to pensioners.

The scheme has $685 million in its reserves, but the majority of it is fixed assets that cannot easily be converted to the amount of cash which is required to support its beneficiaries. 

As for the repayment of debts and providing a safety net for the economy, Antigua and Barbuda is depending on an effort from CARICOM. The bloc of members states is hoping to secure a grant from the International Monetary Fund (IMF). The Chief of Staff said that the bloc will present a démarche to the IMF as a single entity in hopes that the financial institution would “deposit a large sum” into the Caribbean Development Bank (CDB) which would then distribute it to each island based on need.

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