Press Release: Statement by IMF Staff at the Conclusion of the 2005 Article IV Consultation Discussions with Antigua and Barbuda
September 16, 2005
The following statement was issued today by an International Monetary Fund (IMF) staff mission in St. John's at the conclusion of the 2005 Article IV Consultation discussions1:
"An IMF staff mission visited Antigua and Barbuda from August 31-September 13, 2005 to conduct the 2005 Article IV Consultation discussions. The mission received excellent cooperation from the government and benefited from an open and constructive exchange of views with the Minister of Finance, the Cabinet and other senior government officials, as well as representatives from the private sector, trade unions, and the leader of the Opposition.
"Economic activity in Antigua and Barbuda in 2004 was strong with growth of over 5 percent driven by a sharp increase in the tourism sector, in part due to the English cricket tour. Partial data point to a moderation of growth in 2005 reflecting a leveling off of tourism but a continued high level of activity in the construction sector.
"Looking ahead, economic activity is expected to accelerate with the onset of construction activities ahead of the 2007 Cricket World Cup and continued growth of the larger industrial countries. The mission discussed with the authorities ways to raise the economy's medium-term growth prospects, in particular by strengthening the fiscal position, increasing the efficiency of public services, creating a conducive investment climate for the private sector, and reducing vulnerabilities to external shocks.
"Consistent with the 2005 budget statement, the authorities reiterated their determination to address the deep-rooted fiscal imbalances. Significant progress has been achieved in a number of areas that are likely to facilitate fiscal strengthening over many years. In particular, the reintroduction of the Personal Income Tax, the preparations for the introduction of the Antigua and Barbuda Sales Tax, and the recent decision to suspend the granting of discretionary tax concessions, are welcome steps that have gone a long way to creating a more modern, efficient, and equitable revenue system. There is scope for realizing greater gains in revenue collection by further strengthening tax administration. In this context the mission welcomes the recently announced Customs Renewal Programme, which could yield both a more effective customs administration and also facilitate private sector activity by reducing processing time.
"Despite this progress, preliminary data for the first half of 2005 indicate some weakening in fiscal outcomes. While revenues are performing strongly, expenditures have risen reflecting both the creation of two new Ministries and new social programs. The mission recommended that the coverage of social programs be limited to the most needy and vulnerable groups, ultimately through the creation of a formal social safety net.
"A priority area for entrenching the gains in fiscal consolidation is to strengthen expenditure control, rationalize expenditure commitments, and streamline the public sector. Public sector employment remains very high in comparison with economies throughout the world, including neighboring islands. To stimulate private sector activity and ensure fiscal sustainability, it is important that progress is made in enhancing the efficiency of the civil service and improving the quality of government services. Introduction of a formal Public Sector Investment Program should contribute to greater prioritization of capital expenditures.
"The mission welcomed the expanding dialogue with civil society, including through regular press conferences and town hall meetings. Greater public dissemination of economic data and analysis—as well as efforts to improve the quality and timeliness of the data—would facilitate a deeper and more informed debate on the economic challenges facing the country and options for their resolution.
"In the mission's assessment, the long term growth potential for Antigua and Barbuda is high. The realization of this potential will require a strong partnership between the public and private sectors and the wider civil society to work closely together to implement reforms that are needed to successfully integrate in a modernizing global economy. The IMF mission wishes the government and the people of Antigua and Barbuda every success."
1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with member countries, usually every year. A staff team visits the country, collects economic and financial information, and discusses with the country's authorities 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. The 2004 Article IV staff report is available on the IMF's web site (www.imf.org).