IMF Executive Board Concludes 2012 Article IV Consultation with Antigua and Barbuda

Public Information Notice (PIN) No. 13/21
February 19, 2013

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

On October 31, 2012, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Antigua and Barbuda.1


Antigua and Barbuda is recovering gradually from a deep recession. A sharp contraction in tourism activity and foreign direct investment led to an economic contraction of over 20 percent in the last three years. For 2012, real gross domestic product (GDP) is expected to grow by 1 percent, based on a modest recovery in tourism, and construction activity related to government initiatives. Weak domestic demand has kept core inflation subdued, and a spike in headline inflation early in 2012, related to the lagged pass-through of high international fuel prices in 2011, has been reversed. Headline inflation is expected to end the year at around the long-term average of 3 percent. The external current account deficit shrank substantially during the crisis along with the contraction in domestic demand and tighter external financing, but with the recovery is expected to widen marginally, from 10¾ percent of GDP in 2011 to 11 ½ percent of GDP in 2012. Downside risks to the near-term outlook have intensified with heightened global uncertainty, and the materialization of fiscal contingent liabilities could further challenge the government’s fiscal consolidation program.

The banking system felt the effects of the economic contraction. Credit to the private sector has contracted, and the share of non-performing loans has risen. Profitability has weakened with declining credit quality and tighter liquidity at indigenous banks. Nevertheless, the overall banking system remains relatively well capitalized and liquid, providing adequate buffers. In July 2011 the Eastern Caribbean Central Bank intervened the Antigua and Barbuda Investment Bank (ABIB) and has held the bank in conservatorship pending resolution. However, progress on the resolution of ABIB and other financial sector measures has been slower than expected.

Fiscal consolidation has progressed despite a very difficult environment. Government revenues have fallen with the decline in economic activity, although they are expected to recover slightly in 2012 due to the authorities’ reforms in the Inland Revenue Department. In the face of the contraction in revenue, the authorities adjusted expenditure to reach their fiscal targets by maintaining primary current spending constant and sharply contracting capital spending. Significant fiscal savings also came from lower interest payments, as the authorities successfully pursued debt restructuring on the external front (mainly from the Paris Club) and from domestic creditors. Fiscal consolidation and debt relief led to a decline in the ratio of debt to GDP from over 100 percent in 2009 to around 90 percent in 2011,despite the large contraction in GDP. However, for 2012 the debt ratio is expected to rise again due to the impact of the resolution of ABIB by the government.

On June 7, 2010, the Executive Board of the IMF approved 36-month Stand-By Arrangement (see Press Release 10/232 of June 8, 2010) requested by the authorities.  The reform program was designed to catalyze financing from other international and regional financial institutions and created the framework for a successful debt renegotiation. The main objective of the authorities’ program has been to put the public debt firmly on a downward trajectory through fiscal consolidation, debt restructuring and comprehensive reforms in revenue administration and public financial management.

Executive Board Assessment

The Executive Directors welcomed that the Antigua and Barbuda economy is showing signs of recovery after three years of contraction, and commended the authorities’ strong commitment to their economic program. Noting the significant challenges still posed by the difficult global and domestic environment, Directors called for continued steadfast implementation of the program. Accelerating structural reforms, especially fiscal and financial sector reforms, will be essential to restore growth and ensure macroeconomic and financial stability.

Directors supported the authorities’ commitment to fiscal consolidation and efforts to reduce public debt, with some cautioning that consolidation should not come at the expense of the fragile economic recovery. To ensure fiscal sustainability and create a buffer against shocks, Directors stressed the importance of improved public financial management and expenditure rationalization, without constraining the much-needed capital spending. They stressed that reversing delays in the structural reform agenda, including broadening the tax base, especially by eliminating tax exemptions, would help enhance revenue. Directors also considered reform of the pension system and improved oversight of state-owned enterprises to be important priorities going forward.

Directors underscored the importance of continued efforts to improve financial sector stability. They called for timely resolution of Antigua and Barbuda Investment Bank and other financial sector measures, including operation of the asset management company. Directors stressed the need for stronger supervision of banks and non-bank financial institutions, including through consolidated supervision of financial conglomerates. They urged the authorities to move forward in tightening regulations on asset classification and loan loss provisioning, and introducing risk-based supervision, with more frequent onsite examinations of banks. Directors also stressed the importance of regional cooperation on developing a well-defined bank resolution framework. They encouraged the authorities to continue to improve the AML/CFT supervisory framework.

Directors emphasized that restoring growth must be a priority. Reforms to improve competitiveness, which has been eroded in recent years, and diversify the economy should focus on enhancing productivity, reforming the labor market, and improving the business climate.

Antigua and Barbuda: Selected Economic Indicators


    Prel. Proj.


2009 2010 2011 2012
  (Annual percentage change)

Output and prices






GDP at constant factor cost

1.5 -10.7 -8.5 -5.5 1.0

Nominal GDP at market prices

4.5 -10.6 -6.1 -1.7 5.0

Consumer prices (end of period)

0.7 2.4 2.9 4.0 3.0

External sector


Exports, f.o.b.

-2.9 -38.8 28.6 -4.1 5.4

Imports, f.o.b.

3.2 -21.2 -14.0 -5.9 8.1

Travel receipts (gross)

-1.1 -8.6 -2.4 4.8 5.8

Nominal effective exchange rate (e.o.p, depreciation -)

7.6 -5.5 8.2 4.6

Real effective exchange rate (e.o.p., depreciation -)

4.8 -5.9 7.1 4.0
  • (In percent of beginning of period broad money)

Money and Credit


Net foreign assets

-11.4 -5.7 1.3 -2.2 0.8

Net domestic assets

13.5 5.4 -1.2 2.8 1.6

Net credit to the public sector

5.3 10.7 -3.2 0.4 8.5

Credit to the private sector

7.4 -0.7 0.2 -3.7 0.1

Broad money

2.1 -0.3 0.0 -0.2 3.3
  (In percent of GDP)

Central government


Primary balance

-2.9 -11.0 1.8 -1.5 1.7

Overall balance

-5.7 -18.2 -0.3 -3.6 -1.3

Total revenue and grants

21.3 18.6 22.4 20.6 21.1

Total expenditure

27.0 36.8 22.7 24.3 22.4


5.7 18.2 0.3 3.6 12.0


-1.1 4.3 2.5 2.7 6.2


6.7 2.8 15.6 3.8 13.3

Change in arrears

2.8 9.4 -1.1 -1.1 -4.4

Valuation adjustments and write-offs

-2.8 1.6 -16.8 -1.8 -3.2

Financing gap

0.0 0.0 0.0 0.0

External sector


Current account balance

-27.2 -19.3 -14.3 -10.7 -11.4

Trade balance

-45.2 -40.7 -35.9 -34.3 -35.4

Nonfactor service balance

21.3 23.4 22.2 24.7 25.0

Of which


Gross tourism receipts

24.7 25.2 26.2 27.9 28.1

Overall balance

-3.0 -4.2 -1.2 -0.5 -2.3

External government debt (end of year)

31.2 35.7 38.7 39.4 38.4

Of which



12.6 15.2 8.8 7.7 0.0

Scheduled external debt service

5.0 4.6 10.6 8.5 1.7

Memorandum items:






Gross international reserves of the ECCB



(In millions of U.S. dollars)

759 801 926 1007 957

(In percent of ECCU broad money)

17 17 20 21 20

Nominal GDP at market prices (in millions of EC$)

3,657 3,271 3,071 3,019 3,170

Central government debt stock 1/


(In millions of EC$)

2,881 3,337 2,783 2,817 3,096

(In percent of GDP)

77 102 91 93 98

Sources: Antigua and Barbuda authorities; ECCB; and IMF staff estimates and projections.

1/ Includes central government guarantees of state-owned enterprises’ and statutory bodies’ debt. From 2012 onwards, the debt figures include the recapitalization bond of EC$340 million and debt renegotiation agreements that reduce debt by 3.2 percent of GDP.

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. 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:


Public Affairs    Media Relations
E-mail: E-mail:
Fax: 202-623-6220 Phone: 202-623-7100