Press Release No. 13/157

Press Release: Statement by an IMF Mission to Antigua and Barbuda

May 8, 2013

An International Monetary Fund (IMF) mission led by Geoffrey Bannister visited Antigua and Barbuda during April 29–May 3, to undertake the tenth and final review under the Stand-By Arrangement (SBA) approved by the Fund’s Executive Board on June 7, 2010. The mission held meetings with Minister of Finance Hon. Harold Lovell, senior officials of the Ministry of Finance, the Antigua and Barbuda Investment Authority, members of the Citizenship by Investment Advisory Committee, and representatives of statutory bodies and the local business community. The mission also held a videoconference with the Governor and key staff of the Eastern Caribbean Central Bank.

At the conclusion of the mission, Mr. Bannister issued the following statement in St. John’s:

“The final review of the SBA has determined that the Government of Antigua and Barbuda has made excellent progress toward achieving its goal of restoring debt sustainability and macroeconomic stability. Specifically, the focus of this mission was to assess the quantitative performance at end-March 2013 under the SBA; review the ongoing financial and structural reforms; review progress on the resolution of ABI Bank (ABIB); and confirm fiscal targets for 2013. On the fiscal side, the fiscal outturn for March 2013 was well above program targets, surpassing the performance criterion on the overall fiscal balance and the indicative target for the primary balance by a wide margin. This was partly as a result of strong revenue performance in the first quarter, in line with program targets—due to a large one-off reduction of tax arrears—and partly to continued expenditure restraint. The first quarter results put the economy on a good footing to achieve the annual fiscal targets for 2013: a central government primary surplus of 3 percent of GDP and an overall surplus of 0.3 percent of GDP.

“Notable progress has also been made on structural reforms, with five important benchmarks completed in March-April. A new Customs Control and Management Act (CCMA), consistent with international best practice, was presented to Parliament on April 5, and the Harmonized System 2007 customs code for classifying imports was implemented on April 2. Technical assistance in March also facilitated the completion of a tax expenditure study and the establishment of an institutional oversight and reporting framework for state-owned enterprises within the Ministry of Finance. In addition, the authorities adopted a system to improve commitment control for capital expenditure projects. Of the remaining fiscal reforms under the program, we expect that two important benchmarks linked to the presentation to Parliament and passage of the Tax Administration and Procedures Act (TAPA) will also be completed before June. We expect that 24 out of the 28 fiscal, debt, civil service and public enterprise reforms under the program will have been achieved by the end of the program in June, a noteworthy accomplishment that will help sustain positive fiscal and macroeconomic results going forward.

“Some progress has also been made on financial sector issues. Stand-alone legislation to govern the Financial Services Regulatory Commission (FSRC) is on track for presentation to Parliament by mid-May 2013, and efforts continue towards improving compliance with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) standards. The resolution of ABIB is entering its final stages, with associated financial sector benchmarks expected to be finished by end-May, and the entire process projected to be completed shortly thereafter. We encourage the authorities to continue to work to conclude this process as quickly as possible, as it has already been delayed a number of times.

“As this is the final review under the SBA, it is an opportune time to reflect on the performance of the authorities’ program over the past three years. The Government of Antigua and Barbuda has come a long way. From an overall fiscal deficit of 18 percent of GDP in 2009, and a debt-to-GDP ratio of 102 percent, the authorities’ program of fiscal consolidation and structural reforms, together with debt relief from external and domestic creditors, resulted in an average overall deficit of 1.7 percent of GDP from 2010-12 and brought the debt-to-GDP ratio down to 89 percent at end-2012. These results were achieved during a period of significant economic contraction, in the face of a difficult external economic environment and domestic financial challenges. The authorities’ reform commitment started to pay dividends in 2012 when the economy saw positive growth for the first time in three years. For 2013, we expect this positive trend to continue, with a further recovery in growth and a small overall fiscal surplus. Despite these successes, the road ahead will not be easy and it is important that the authorities maintain fiscal discipline to secure the hard-won gains of the past three years.

“At the end of the mission, a presentation was made to students from the Antigua State College as part of the IMF’s ongoing outreach initiative in Antigua and Barbuda.

“The authorities have demonstrated strong commitment to the policies and objectives of their Fiscal Consolidation Program, and recognize the importance of strong macroeconomic, financial and structural policies in achieving the goals of their National Economic and Social Transformation plan. Although the SBA ends on June 6, 2013, the IMF will continue to maintain its close policy dialogue with the Government of Antigua and Barbuda in the context of the Fund’s Post-Program Monitoring Framework.

“The mission would like to thank the authorities and technical staff for their open discussions and excellent cooperation during this review and over the course of the IMF supported program.”