## 1atgea2026001-source-pdf

## Source details

**Canonical URL:** [1atgea2026001-source-pdf](https://www.imf.org/-/media/files/publications/cr/2026/english/1atgea2026001-source-pdf.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2026/english/1atgea2026001-source-pdf.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2026/english/1atgea2026001-source-pdf.pdf.json)

---

### Recent developments
- Economic growth:
  - 2023 growth rate revised to 3.9 percent.
  - 2024 real GDP growth: 2.5 percent.
  - Staff estimate for 2025 real GDP growth: 3 percent.
- Employment: employment increased in 2024 (social security contribution data), recovering to pre-pandemic levels.
- Inflation:
  - Average inflation eased from over 6 percent in 2024 to 1.4 percent in 2025.
  - The 12-month inflation rate turned negative in mid-2025.
- Debt and financing:
  - Debt-to-GDP eased from 101 percent in 2020 to an estimated 68 percent in 2025.
  - Central government GFNs projected at nearly 10 percent of GDP annually; central government GFNs projected to remain around 10 percent of GDP.
  - Authorities preparing a liability management operation (LMO) to refinance domestic debt, ease GFNs, reduce arrears, and fund resilience projects.
- Fiscal balances and revenue:
  - 2024 primary balance: 4 percent of GDP (improved by about 3½ percentage points of GDP vs. 2023).
  - 2025 primary balance estimated at 4.9 percent of GDP.
  - Estimated tax revenues in 2025: around just over 18 percent of GDP (about 1½ percentage points above 2024).
  - One-off effects include asset forfeiture receipts (nearly 2 percent of GDP) and tax arrears collection (around 1 percent of GDP).
  - 2026 Budget projects capital spending to increase to around 3½ percent of GDP (up some 2 percentage points from 2025 outturn).
  - Staff baseline implementation of the 2026 Budget estimated to imply a primary surplus of 1.6 percent of GDP (within fiscal resilience guidelines target range of 1½–2 percent of GDP).
- External sector:
  - 2024 current account deficit: 7½ percent of GDP (narrowed by more than 5 percentage points of GDP vs. 2023).
  - Estimated 2025 current account deficit: around 11½ percent of GDP.
  - Financing of the deficit: predominantly FDI and partly CIP capital transfers; small role for portfolio and other investment flows.
  - External position assessed as moderately weaker than implied by medium-term fundamentals and desirable policies.
- Financial sector:
  - Bank lending to the private sector slowed from 12½ percent (year to end-2024) to under 3 percent (year to end-2025).
  - Credit union lending growth moderated from 6 percent (2024Q4, year-on-year) to 5¼ percent (2025Q3, year-on-year).
  - Banks’ NPL ratios fell below 5 percent by end-2024; credit union NPLs 9.6 percent in 2025Q3.
  - One international bank registered in Antigua and Barbuda placed in administration in November 2025.
  - ECCU regional credit bureau launched in Antigua and Barbuda for banks and two credit unions.

### Outlook and risks
- Growth and inflation:
  - Staff projects real GDP growth of 2.8 percent in 2026.
  - Growth projected to converge to 2½ percent in the medium term.
  - Authorities project higher growth (2026 Budget assumes projected real GDP growth of 5 percent).
  - Inflation projected to stabilize around 2 percent by end-2026.
- Public debt trajectory and arrears:
  - Staff baseline envisages a gradual decline in the public debt-to-GDP ratio, consistent with meeting the ECCU regional debt target (60 percent of GDP by 2035).
  - Debt stock could increase further once arrears to domestic suppliers are validated and included in debt statistics.
- Key downside risks (tilted to the downside amid global uncertainty):
  - External: commodity price volatility (especially oil), slowdown in major trading partners and travel flow disruptions, financial market volatility, rising global long-term interest rates, and extreme weather events.
  - Domestic: fiscal underperformance, capacity constraints slowing investment implementation.
  - Upside risks: stronger tourism demand from increased air connectivity, new cruise terminal facilities, hosting CHOGM 2026, and productivity-enhancing reforms.

### Policy priorities
- Overarching objectives:
  - Restore debt sustainability and address fiscal and external imbalances.
  - Maintain financial stability and enhance resilience and medium-term growth.
- A. Debt and fiscal policy
  - Staff recommendations:
    - Complete validation of potential domestic arrears.
    - Develop a comprehensive arrears clearance strategy covering all creditors, including Paris Club and domestic creditors.
    - Continue building fiscal buffers consistent with the medium-term fiscal framework.
    - Strengthen cash management and expenditure controls to reduce new arrears.
    - Continue exploring options to extend the maturity of domestic debt to ease the financing burden.
  - Revenue-side priorities:
    - Restore ABST rate promptly (staff urged restoring ABST rate after announced temporary reduction).
    - Broaden the tax base, accelerate HS 2022 implementation, advance property tax reforms, and reduce tax exemptions.
    - Tax administration reforms: implement a new IT system; introduce e-filing and e-payment; establish a single-window system at customs; establish a large taxpayer unit.
    - Staff notes underlying fiscal position (excluding one-offs) not yet aligned with authorities’ objectives of tax revenue-to-GDP ratio of 20 percent and a primary surplus of 1½–2 percent of GDP.
  - Expenditure-side guidance:
    - Balance higher growth-enhancing capital spending with restraint in current spending.
    - Prioritize capital spending consistent with implementation capacity and fiscal sustainability.
- B. Financial sector
  - Bolster financial sector oversight and resilience at regional and national levels.
  - Improve financial intermediation while safeguarding financial stability.
  - Continue rollout and expansion of the ECCU regional credit bureau.
- C. Structural policies
  - Improve connectivity and competitiveness to boost trade and tourism.
  - Prioritize reforms to enhance business productivity and address skills gaps, emphasizing on-the-job programs.
  - Enhance diversification of import sources and tourism origin markets.
- D. Data and capacity
  - Validate and incorporate arrears in debt statistics.
  - Address statistical gaps that affect external position assessment and policy evaluation.

### Fiscal institutions, social assistance, and governance
- Social assistance, pensions, and SSF:
  - Social programs remain fragmented across some five ministries; a centralized beneficiary database is needed.
  - Forthcoming actuarial review of the Social Security Fund (SSF) pending and expected to be completed in early 2026.
  - Staff recommendations pending the actuarial review:
    - Keep policy options open to address potential future financing gaps.
    - Safeguard the SSF’s solvency and clarify legal status of government’s obligations to the SSF.
- Fiscal institutions and transparency:
  - Operationalization of the Fiscal Responsibility Oversight Committee (FROC); first FROC report tabled in Parliament in December 2025.
  - SOE oversight function added within the Ministry of Finance (MOF) but remains understaffed.
  - Capacity at the Supreme Audit Institution (SAI) appears strained.
  - Staff recommended regular publication of FROC reports, timely audited fiscal accounts, adequate resourcing of SOE oversight and the SAI, and periodic disclosure of key SOE financial data when capacity permits.

### Financial sector resilience and intermediation
- Regulatory and supervisory developments:
  - ECCB transitioning to Basel II/III standards, developing a deposit insurance scheme, and advancing harmonization of prudential standards for insurers and private pension funds.
  - Consideration of a more risk-based supervision approach for credit unions; staff encouraged strengthening provisioning and capital of credit unions.
- Intermediation and access to finance:
  - Bank credit to the private sector has declined substantially since the 2008–09 GFC.
  - Positive steps: launch of the regional credit bureau in Antigua and Barbuda (banks and two credit unions); Regional Partial Credit Guarantee Scheme operational in Antigua and Barbuda; initiatives to improve financial literacy among MSMEs.
  - Staff noted resolving government arrears to domestic suppliers could improve firms’ creditworthiness and recommended raising awareness and uptake of the regional partial credit guarantee scheme.
- AML/CFT and CIP:
  - National Oversight Committee on Financial Action coordinating implementation and capacity-building; National Risk Assessment launched in early 2025.
  - Agreement establishing an independent regulator for the CIP industry enacted into law in Antigua and Barbuda and other ECCU countries with CIPs.
- ECCB safeguards:
  - ECCB addressed most recommendations from previous safeguards assessment; remaining recommendation to further strengthen operational autonomy and align its Agreement Act with leading practices.
  - Next periodic safeguards assessment scheduled for early 2027.

### Structural bottlenecks: connectivity, trade facilitation, and skills
- Connectivity and trade:
  - Shipping connectivity weak; shipping costs roughly three times the global average.
  - Air connectivity significant determinant of tourist arrivals; estimated elasticities: approximately 0.6 (annual data) and around 0.2 (monthly data).
  - Ongoing infrastructure projects: Cruise Port terminal expansion, cargo port capacity upgrades, V.C. Bird International Airport upgrades, runway overhaul, and new Barbuda airport.
- Policy recommendations:
  - Cut red tape on port and customs procedures; implement a single electronic window system.
  - Improve and modernize port and digital infrastructure, and align customs regulations regionally within the currency union.
  - Prioritize investment sequencing with attention to fiscal and debt implications.
- Skills and productivity:
  - More than 60 percent of working-age adults in the 2018 Labor Force Survey reported prior skills training; on-the-job training associated with stronger income gains.
  - Estimated associations with income:
    - Any skills training associated with 10 percent higher income (median monthly income EC$2,400 in 2018 → ~EC$240 extra per month).
    - On-the-job training associated with 15 percent increase in income.
    - Institutional training associated with 9 percent increase in income.
  - Policy implications: target take-up of skills training (especially on-the-job), incentivize employer-aligned training, and improve labor market and skills-in-demand data.

### Data limitations and capacity development
- Key data gaps and timelines:
  - Population and Housing Census underway; results expected by end-2026.
  - Publication of revised 2023 and first-release 2024 national accounts delayed; 2024 GDP published in November 2025.
  - Publication of 2023 labor force survey results and implementation of the skills-in-demand survey postponed.
  - Statistical discrepancies remain between fiscal accounts and debt stock; external data subject to sizeable revisions.
  - Timeliness of consumer price statistics improved, though weights are outdated.
  - Transition of the Statistics Division to the National Bureau of Statistics expected to increase statistical capacity in the medium term.
- Capacity development (CD) priorities:
  - Strengthening statistical capacity, debt management, and tax administration and fiscal reporting.
  - Use of AI could facilitate data processing and government operations but requires digital infrastructure and human capital investment.

### Staff appraisal: macro outlook, debt sustainability, and risks
- Macroeconomic outlook:
  - Real GDP estimated to have grown by 3 percent in 2025.
  - Staff projects growth to moderate to 2.8 percent in 2026 and converge to 2½ percent over the medium term.
  - Inflation moderated in 2025 and is projected to stabilize at levels comparable to ECCU peers and the United States.
  - External position in 2025 assessed as moderately weaker than implied by fundamentals and desirable policies.
- Debt, arrears, and financing:
  - Addressing arrears comprehensively is critical to restoring debt sustainability and broadening financing options.
  - Outstanding arrears to the Paris Club and domestic creditors remain obstacles.
  - Gross financing needs projected to remain elevated, reflecting reliance on shorter-term financing instruments pending completion of the LMO.
  - Resolving debt challenges is especially important given vulnerability to natural disasters and substantial adaptation and resilience-building investment needs.
- Fiscal policy and revenue mobilization:
  - Core fiscal metrics (excluding one-offs) not yet aligned with government objectives of a tax-to-GDP ratio of 20 percent and a primary surplus of 1½ to 2 percent of GDP.
  - Policy priorities: broaden tax base, improve ABST collection efficiency, accelerate customs and property tax reforms, curtail exemptions, upgrade IT systems and establish a large taxpayer unit.
  - Restore ABST rate promptly to progress toward revenue objectives.

### Sovereign risk and debt sustainability analysis (selected numeric indicators)
- Public debt (percent of GDP): 68.3 (Actual 2025); projections: 66.4 (2026), 64.9 (2027), 63.6 (2028), 62.0 (2029), 60.1 (2030), 58.1 (2031), 56.6 (2032), 55.2 (2033), 53.8 (2034), 52.4 (2035).
- Change in public debt (percent of GDP): -1.0 (Actual 2025); projected series includes -1.9, -1.4, -1.3, -1.6, -1.8, -2.0, -1.5, -1.4, -1.4.
- Primary deficit (percent of GDP): -4.9 (Actual 2025); projected -1.6 (2026) and -1.0 (2027–2034).
- Gross financing needs (percent of GDP): 5.9 (Actual 2025); projected 10.7 (2026), 11.5 (2027), 12.1 (2028), 12.3 (2029), 12.1 (2030), 14.0 (2031), 12.8 (2032), 12.6 (2033), 12.5 (2034), 12.4 (2035).
- Debt service (percent of GDP): 10.8 (Actual 2025); projected 12.3 (2026), 12.5 (2027), 13.1 (2028), 13.3 (2029), 13.1 (2030), 15.0 (2031).
- As of end-2025:
  - Domestic arrears amount to approximately 6 percent of GDP.
  - External arrears to Paris Club creditors total around 7 percent of GDP.
- Baseline financing assumption for synthetic instrument closing financing gap: interest rate of 5.5 percent and maturity of 5 years.

### External sector assessment (selected indicators and findings)
- NIIP (2025, percent of GDP): -117.1.
- Gross Assets (percent of GDP): 72.6; Debt Assets: 51.4; Gross Liabilities: -189.7; Debt Liabilities: -69.5.
- Current account (percent of GDP): -7.5 (2024); -11.6 (2025 estimate).
- EBA-lite 2025 results (percent of GDP):
  - CA-Actual: -11.6
  - Cyclical contributions: (-) -0.3
  - Additional temporary/statistical factors: (-) -1.2
  - Adjusted CA: -10.1
  - CA Norm: -8.5
  - CA Gap: -1.7
- REER assessment: EBA-Lite Index-REER model suggests an overvaluation of 14 percent; staff-estimated elasticity implies REER overvaluation of 3.9 percent; REER gap figures: 3.9 and 13.9 (from CA and REER models, respectively).
- Net imputed international reserves (NIIR) in 2025: 351.6 (US$ million); in months of prospective imports: 2.9.

### Macro-financial linkages and vulnerabilities
- Financial sector size and exposures:
  - Banks’ assets: 110 percent of GDP; credit unions assets: 11 percent of GDP.
  - Lending to the government: 9.2 percent of assets or 153 percent of Tier 1 capital.
  - Banks’ net foreign assets rose 150 pps from end-2021 to end-2024, reaching 410 percent of Tier 1 capital.
- From-whom-to-whom findings (2024 vs pre-pandemic):
  - NFCs held net liabilities equivalent to 121 percent of GDP; GG net debt around 45 percent of GDP.
  - Economy’s external exposure nearly doubled: from 52 percent of GDP in 2019 to 101 percent of GDP in 2024.
- Scenario sensitivities:
  - Each 100-basis point decline in the U.S. Fed funds rate estimated to reduce banks’ pre-tax income by about EC$20 million (~5 percent of 2024 net earnings).
  - Each 100-basis point increase in government borrowing costs from domestic banks estimated to widen the fiscal deficit by approximately 0.11 pp of GDP.

### Selected medium-term projections (Table highlights)
- Real GDP (annual percent change): 2025: 3.0; 2026: 2.8; 2027–2031: 2.5 (each year).
- Nominal GDP (annual percent change): 2025: 5.1; 2026: 4.8; 2027–2031: 4.5 (each year for 2027–2031 as shown elsewhere).
- Consumer prices (period average): 2025: 1.4; 2026: 2.3; 2027–2031: 2.0 (each year).
- Central government primary balance (percent of GDP): 2025: 4.9; 2026: 1.6; 2027–2031: 1.0 (each year).
- Central government overall balance (percent of GDP): 2025: 3.1; 2026: -0.5; 2027–2031: about -1.0 to -0.9 (each year).
- Central government debt stock (percent of GDP, memorandum): 2025: 60.4; 2026: 58.2; 2027: 56.9; 2028: 55.6; 2029: 54.3; 2030: 53.0; 2031: 51.8.
- Central government debt including guarantees (percent of GDP): 2025: 68.3; 2026: 66.4; 2027: 64.9; 2028: 63.6; 2029: 62.0; 2030: 60.1; 2031: 58.1.
- Central government gross financing needs (percent of GDP): 2025: 5.5; 2026: 9.6; 2027: 9.9; 2028: 10.6; 2029: 10.5; 2030: 10.2; 2031: 12.0.

### Implementation context and authorities’ views
- Mission: discussions in St. John’s during January 19–30, 2026; mission team led by David Moore with staff and regional partners.
- Authorities:
  - Envisaged faster growth than staff but broadly agreed with staff’s risk assessment.
  - Cited recent revenue performance, strong tourism prospects (including CHOGM 2026), and ongoing investment projects as supporting higher growth.
  - Acknowledged risks from geopolitical tensions, incomplete arrears stocktake, and statistical gaps.
  - Viewed limited economic impact so far from U.S. travel policy changes; noted recent labor inflows support domestic activity.

### Recommendation on consultation cycle
- It is recommended that the next Article IV consultation with Antigua and Barbuda take place on the standard 12-month cycle.

*International Monetary Fund staff report, March 18, 2026.*

### 2026. Public debt is projected to decline gradually in the medium term, consistent with

### 2026. Public debt is projected to decline gradually in the medium term, consistent with

### Recent developments
- Economic growth:
  - 2023 growth rate revised to 3.9 percent.
  - 2024 real GDP growth: 2.5 percent.
  - Staff estimate for 2025 real GDP growth: 3 percent.
- Employment:
  - Employment increased in 2024 (social security contribution data), recovering to pre-pandemic levels.
- Inflation:
  - Average inflation eased from over 6 percent in 2024 to 1.4 percent in 2025.
  - The 12-month inflation rate turned negative in mid-2025.
- Debt and financing:
  - Debt-to-GDP eased from 101 percent in 2020 to an estimated 68 percent in 2025.
  - Central government GFNs projected at nearly 10 percent of GDP annually; central government GFNs projected to remain around 10 percent of GDP.
  - Authorities preparing a liability management operation (LMO) to refinance domestic debt, ease GFNs, reduce arrears, and fund resilience projects.
- Fiscal balances and revenue:
  - 2024 primary balance: 4 percent of GDP (improved by about 3½ percentage points of GDP vs. 2023).
  - 2025 primary balance estimated at 4.9 percent of GDP.
  - Estimated tax revenues in 2025: around just over 18 percent of GDP (about 1½ percentage points above 2024).
  - One-off effects include asset forfeiture receipts (nearly 2 percent of GDP) and tax arrears collection (around 1 percent of GDP).
  - 2026 Budget projects capital spending to increase to around 3½ percent of GDP (up some 2 percentage points from 2025 outturn).
  - Using staff baseline, implementation of the 2026 Budget estimated to imply a primary surplus of 1.6 percent of GDP (within fiscal resilience guidelines target range of 1½–2 percent of GDP).
- External sector:
  - 2024 current account deficit: 7½ percent of GDP (narrowed by more than 5 percentage points of GDP vs. 2023).
  - Estimated 2025 current account deficit: around 11½ percent of GDP.
  - Financing of the deficit: predominantly FDI and partly CIP capital transfers; small role for portfolio and other investment flows.
  - External position assessed as moderately weaker than implied by medium-term fundamentals and desirable policies.
- Financial sector:
  - Bank lending to the private sector slowed from 12½ percent (year to end-2024) to under 3 percent (year to end-2025).
  - Credit union lending growth moderated from 6 percent (2024Q4, year-on-year) to 5¼ percent (2025Q3, year-on-year).
  - Banks’ NPL ratios fell below 5 percent by end-2024; credit union NPLs 9.6 percent in 2025Q3.
  - One international bank registered in Antigua and Barbuda placed in administration in November 2025.
  - ECCU regional credit bureau launched in Antigua and Barbuda for banks and two credit unions.

### Outlook and risks
- Growth projections:
  - Staff projects real GDP growth of 2.8 percent in 2026.
  - Growth projected to converge to 2½ percent in the medium term (aligned with estimated potential growth).
  - Authorities project higher growth (2026 Budget assumes projected real GDP growth of 5 percent).
- Inflation projection:
  - Inflation projected to stabilize around 2 percent by end-2026.
- Public debt trajectory:
  - Staff baseline envisages a gradual decline in the public debt-to-GDP ratio, consistent with meeting the ECCU regional debt target (60 percent of GDP by 2035).
  - Debt stock could increase further once arrears to domestic suppliers are validated and included in debt statistics.
- Key downside risks (tilted to the downside amid global uncertainty):
  - External:
    - Commodity price volatility associated with the conflict in the Middle East—especially oil prices—could widen fiscal and external imbalances and induce inflationary pressure.
    - Slowdown in major trading partners and travel flow disruptions (including potential U.S. travel restrictions) could weaken tourism receipts.
    - Financial market volatility could weaken bank balance sheets and disrupt FDI and CIP inflows.
    - Rising global long-term interest rates could reduce access to financing and increase borrowing costs.
    - Extreme weather events could damage infrastructure and housing stock, reduce tourism activity, and increase fiscal rebuilding costs.
  - Domestic:
    - Fiscal underperformance could elevate financing costs, worsen arrears, and compromise growth.
    - Capacity constraints could slow implementation of planned investments and broader economic growth.
  - Upside risks:
    - Stronger tourism demand from increased air connectivity, new cruise terminal facilities, hosting CHOGM 2026, and diversification of tourism origin markets.
    - Productivity-enhancing reforms could support higher medium- and long-term growth.

### Policy priorities
- Overarching objectives:
  - Restore debt sustainability and address fiscal and external imbalances.
  - Maintain financial stability and enhance resilience and medium-term growth.
- A. Debt and fiscal policy (addressing persistent arrears and elevated financing needs)
  - Staff recommendations to restore debt sustainability:
    - Complete validation of potential domestic arrears.
    - Develop a comprehensive arrears clearance strategy covering all creditors, including Paris Club and domestic creditors.
    - Continue building fiscal buffers consistent with the medium-term fiscal framework.
    - Strengthen cash management and expenditure controls to reduce new arrears.
    - Continue exploring options to extend the maturity of domestic debt to ease the financing burden.
  - Revenue-side priorities:
    - Restore ABST rate promptly (staff urged restoring ABST rate after announced temporary reduction) to support progress toward revenue objective.
    - Broaden the tax base, accelerate HS 2022 implementation, advance property tax reforms, and reduce tax exemptions.
    - Tax administration reforms: implement a new IT system; introduce e-filing and e-payment; establish a single-window system at customs; establish a large taxpayer unit.
    - Staff notes underlying fiscal position (excluding one-offs) not yet aligned with authorities’ objectives of tax revenue-to-GDP ratio of 20 percent and a primary surplus of 1½–2 percent of GDP.
  - Expenditure-side guidance:
    - Balance higher growth-enhancing capital spending with restraint in current spending.
    - Prioritize capital spending that is consistent with implementation capacity and fiscal sustainability, while exercising restraint in current spending to preserve fiscal space and rebuild buffers.
- B. Financial sector
  - Regional and national-level steps to bolster financial sector oversight and resilience.
  - Improve financial intermediation while safeguarding financial stability to address barriers to inclusive growth.
  - Continue rollout and expansion of the ECCU regional credit bureau.
- C. Structural policies
  - Improve connectivity and competitiveness to boost trade, strengthen resilience, and support sustainable growth.
  - Prioritize reforms to enhance business productivity and address skills gaps by incentivizing employer-aligned training, with emphasis on on-the-job programs.
  - Enhance diversification of import sources and tourism origin markets to reduce vulnerabilities.
- D. Data and capacity
  - Validate and incorporate arrears in debt statistics to improve policy design.
  - Address statistical gaps that affect external position assessment and policy evaluation.

### Implementation context and authorities’ views
- Mission details:
  - Discussions took place in St. John’s during January 19–30, 2026.
  - Mission team: David Moore (head), Yibin Mu, Hou Wang, Natasha Gimpelson, Josefine Quast (WHD); accompanied by Kevin Woods (Eastern Caribbean Central Bank) and Justin Carter (Caribbean Development Bank).
  - Meetings with Prime Minister and Finance Minister Gaston Browne, Financial Secretary Rasona Davis-Crump, Financial Services Regulatory Commission, private sector, labor unions, and opposition party.
- Authorities’ assessment:
  - Envisaged faster growth than staff but broadly agreed with staff’s risk assessment.
  - Cited recent revenue performance, strong tourism prospects (including CHOGM 2026), and ongoing investment projects as supporting higher growth.
  - Acknowledged risks from geopolitical tensions, incomplete arrears stocktake, and statistical gaps.
  - Viewed limited economic impact so far from U.S. travel policy changes; noted recent labor inflows support domestic activity.

*International Monetary Fund staff report, March 18, 2026.*

### 16.      Staff reiterated the need to reform the social assistance framework. Social programs

### 16. Staff reiterated the need to reform the social assistance framework. Social programs

### Social assistance, pensions, and Social Security Fund (SSF)
- Social programs remain fragmented—currently spread across some five ministries—and a centralized beneficiary database is still needed.
- Despite recommendations in the 2025 Article IV consultation (Annex IV) to improve targeting, reduce administrative duplication, and strengthen service delivery, reforms have yet to move ahead.
- The forthcoming actuarial review of the Social Security Fund (SSF) will assess the pension system’s financial sustainability; the review is pending and expected to be completed in early 2026.
- Staff recommendations and cautions pending the actuarial review:
  - Keep policy options open to address potential future financing gaps.
  - Safeguard the SSF’s solvency, mitigate associated risks, and preserve the SSF’s capacity to adjust to changing demographic and economic conditions.
  - Clarify the legal status of government’s obligations to the SSF to support the SSF’s long-term viability.

### Fiscal institutions, oversight, and transparency
- Recent institutional steps:
  - Operationalization of the Fiscal Responsibility Oversight Committee (FROC).
  - Tabling of the first FROC report in Parliament in December 2025.
  - Addition of the oversight function for state-owned enterprises (SOEs) within the Ministry of Finance (MOF).
- Remaining capacity and transparency gaps:
  - The SOE oversight function remains understaffed.
  - Capacity at the Supreme Audit Institution (SAI) appears strained.
  - Key SOE financial data disclosure should be done periodically once capacity improves.
- Staff recommended:
  - Regular publication of FROC reports.
  - Timely completion and reporting of audited fiscal accounts.
  - Adequate resourcing of both the SOE oversight function and the SAI.
  - Periodic disclosure of key SOE financial data when capacity permits.

### Authorities’ views on fiscal stance, arrears, and social reforms
- On arrears and financing needs:
  - Authorities underscored the recent decline in nominal debt levels and progress on external arrears to non-Paris Club creditors.
  - Ongoing work to validate arrears with domestic suppliers.
  - Authorities expect completion of the LMO and aim to lower the high financing burden by extending debt maturities and lowering interest rates.
  - Recent Treasury expenditure controls seen as effective in limiting new arrears.
  - Plans to modernize the Treasury in line with CARTAC technical assistance, building on recent re-organization and efforts to strengthen staff training and recruitment.
- On fiscal outlook:
  - Authorities see a more favorable fiscal outlook than staff and expect higher growth to support higher revenues and a higher primary surplus than staff projected.
  - Recognize need to bring tax revenues closer to fiscal framework targets and to ECCU peers.
  - Plan to expand capital investment relative to the 2025 outturn, while prepared to adjust spending if revenues fall short.
  - Expect the temporary reduction in ABST to be brief and narrowly targeted.
- On social assistance and SSF:
  - Authorities acknowledge need to streamline social assistance and address social security sustainability.
  - Some counterparts noted the importance of a centralized beneficiary database to reduce costs, improve efficiency, and enhance targeting; implementation depends on coordination among stakeholders.
  - Authorities look forward to the SSF actuarial review findings.
- On fiscal oversight:
  - Authorities agreed on enhancing fiscal oversight and highlighted measures taken: operationalizing the FROC, tabling the first FROC report, and strengthening SOE monitoring.
  - Committed to regularly publishing FROC reports.
  - Consider existing fiscal resilience guidelines sufficiently strong but flexible.
  - Acknowledge case for strengthening resources for the SAI and SOE oversight function.

### Strengthening financial system resilience and intermediation
- Regional and national supervisory reforms:
  - At the regional level, the ECCB is transitioning to Basel II/III standards, developing a deposit insurance scheme, and advancing harmonization of prudential standards for insurers and private pension funds.
  - At the national level, a shift towards more risk-based supervision of credit unions is under consideration.
  - Staff encouraged strengthening provisioning and capital of credit unions and supported legislative reforms to strengthen the regulator’s mandates and supervisory and resolution powers.
- Financial intermediation and access to finance:
  - Business complaints: limited access to finance is a key obstacle.
  - Bank credit to the private sector has declined substantially as a share of GDP since the 2008–09 global financial crisis (GFC).
  - Banks cite a lack of bankable projects and invest a large share of assets abroad.
  - Positive steps:
    - Launch in Antigua and Barbuda of the regional credit bureau for banks, with planned inclusion of credit unions.
    - Regional Partial Credit Guarantee Scheme operational in Antigua and Barbuda.
    - Ongoing initiatives to improve financial literacy among micro, small, and medium enterprises.
  - Staff noted that addressing government arrears to domestic suppliers could improve firms’ financial positions and creditworthiness.
  - Staff recommended raising awareness and uptake of the regional partial credit guarantee scheme.
- AML/CFT and CIP frameworks:
  - National Oversight Committee on Financial Action (now including the ECCB) has coordinated workshops and working groups for implementation and capacity building.
  - A National Risk Assessment was launched in early 2025 and is expected to conclude in coming months.
  - Preparations underway to align AML/CFT framework with the 2025 updates to the FATF standards for the next regional mutual assessment.
  - An agreement establishing an independent regulator for the CIP industry has been enacted into law in Antigua and Barbuda and other ECCU countries with CIPs.
- ECCB safeguards:
  - ECCB has addressed most recommendations from the previous safeguards assessment.
  - Remaining recommendation: further strengthen the ECCB’s operational autonomy and align its Agreement Act with leading practices.
  - Next periodic safeguards assessment of the ECCB is scheduled for early 2027.

### Authorities’ views on financial sector reforms
- FSRC has drafted amendments to the national framework for credit unions and consulted on a more risk-based supervisory approach; draft legislation will be reviewed by the Ministry of Legal Affairs.
- Authorities support regional initiatives: deposit insurance scheme and harmonized insurance sector regulations.
- Authorities highlighted the launch of the regional credit bureau covering all credit institutions and the operational status of the Regional Partial Credit Guarantee Scheme.
- Ongoing work to strengthen AML/CFT framework and complete the National Risk Assessment; expectations that the new regional CIP regulator will ensure appropriate safeguards.

### Addressing structural bottlenecks to boost resilient growth
- Connectivity and competitiveness:
  - Staff analysis indicates shipping and air connectivity are binding constraints to expanding goods exports and boosting tourism flows (Annex VI).
  - These constraints amplified the negative distance effect on merchandise trade, resulting in under-trading with countries outside the region relative to fundamentals.
- National policy recommendations:
  - Cut red tape on port and customs procedures.
  - Improve and modernize port and digital infrastructure to increase port capacity and reduce shipping costs and external imbalances.
  - Align customs regulations at the regional level within the currency union to gain competitiveness.
  - Plan infrastructure investments with attention to fiscal and debt implications.
- Trade facilitation:
  - Implement a single electronic window system to facilitate trade processing, improve transparency, and reduce administrative costs.
  - Accompany trade reforms with efforts to promote financial inclusion.
- Skills and productivity:
  - Persistent skills shortages constrain productivity; targeting on-the-job training is particularly effective.
  - Recent institutional developments:
    - Expansion of the University of the West Indies (UWI) Five Islands Campus.
    - Amalgamation of several training institutes into the Antigua and Barbuda College of Advanced Studies (ABCAS).
  - Staff encouraged incentivizing take-up of skills training attuned to employers’ needs and increasing capacity in training institutions for hands-on courses.
  - Data needs: develop a skills-in-demand survey and more regular and timely labor force surveys to monitor progress and design evidence-based policies.

### Authorities’ views on connectivity and skills
- Connectivity:
  - Progress in expanding cargo and cruise port capacity in St. John’s; cargo port equipment upgrades improved processing times.
  - Cruise port dredging and construction of the “fifth berth” enabled more frequent cruise arrivals; further dredging planned.
  - Ongoing upgrades to V.C. Bird International Airport terminal and efforts to expand open skies partnerships to attract direct flights.
  - Eastern Caribbean’s loss of FAA Category 1 aviation status noted as a constraint on connectivity to the U.S.; authorities look forward to regional steps to restore status.
- Skills:
  - Authorities expect institutional reforms (UWI expansion, ABCAS) to make training more efficient.
  - Cooperation with the corporate sector to expand internships and align courses with employer needs.
  - Authorities acknowledge data gaps on labor demand and the value of closing them.

### Data issues and capacity development
- Data limitations and timeline points:
  - Capacity constraints impede data availability; shortcomings affect surveillance with timeliness and reliability concerns.
  - Population and Housing Census is underway, with results expected to be finalized by end-2026.
  - Publication of the revised 2023 and first-release 2024 national accounts data was delayed; 2024 GDP was published in November 2025.
  - Publication of 2023 labor force survey results and implementation of the skills-in-demand survey have been postponed due to capacity constraints.
  - Statistical discrepancies remain between fiscal accounts and debt stock.
  - External data statistics are published with significant delay and remain subject to sizeable revisions.
  - Timeliness of consumer price statistics has improved, though weights are outdated.
  - Electronic immigration card system successfully implemented.
  - Transition of the Statistics Division to the National Bureau of Statistics is progressing and should increase statistical capacity in the medium term.
- Capacity development (CD) priorities and AI:
  - CD remains integral to Fund engagement alongside bilateral and regional surveillance.
  - Past FAD and CARTAC advice used heavily for tax policy and administration, debt management and SOE oversight, and statistics.
  - Key CD priorities: strengthening statistical capacity, debt management, and tax administration and fiscal reporting.
  - Use of AI could facilitate data processing and government operations but would require enhancements in digital infrastructure and investment in human capital to match Latin American and Caribbean peers in AI preparedness (Figure 5).
- Authorities’ views on data and CD:
  - Authorities concur with the importance of addressing data challenges and improving data quality.
  - Active work on the Housing and Population Census; expect to publish the 2023 Labor Force Survey later in 2026.
  - Acknowledge capacity constraints and data gaps including GDP by expenditure and labor market data; requested further CD support.
  - Note lack of survey responses from businesses and households contributes to data gaps.

### Staff appraisal: macro outlook, risks, and policy priorities
- Recent performance and projections:
  - Real GDP grew by an estimated 3 percent in 2025, supported by strong construction activity despite flat tourist arrivals.
  - Staff projects growth to moderate to 2.8 percent in 2026 and to converge to 2½ percent over the medium term.
  - Inflation moderated substantially in 2025 and is projected to stabilize at levels comparable to ECCU peers and the United States.
  - The external position in 2025 is assessed as moderately weaker than implied by medium-term fundamentals and desirable policies.
- Debt, arrears, and financing:
  - Addressing arrears comprehensively is critical to restoring debt sustainability and broadening financing options.
  - Decline in public debt-to-GDP ratio since the pandemic is welcome, but outstanding arrears to the Paris Club and to domestic creditors remain obstacles.
  - Gross financing needs are projected to remain elevated, reflecting reliance on shorter-term financing instruments pending completion of the LMO.
  - Resolving debt challenges is especially important given vulnerability to natural disasters and substantial adaptation and resilience-building investment needs.
- Fiscal policy and revenue mobilization:
  - Further revenue mobilization is critical to strengthen fiscal buffers, reduce debt and financing pressures, and help meet fiscal framework targets.
  - Core fiscal metrics (excluding one-off effects) have yet to fully align with government objectives of a tax-to-GDP ratio of 20 percent and primary surplus of 1½ to 2 percent of GDP.
  - Tax collections lag regional peers; further revenue mobilization needed through:
    - Continued efforts to broaden the tax base.
    - Improve ABST collection efficiency.
    - Accelerate reforms in customs and property taxes.
    - Curtail exemptions.
  - The recently announced temporary reduction of the ABST rate will reduce revenues; promptly restoring the ABST rate is needed for progress toward the authorities’ revenue objective.
  - To improve tax administration: advance IT system upgrades and implement the planned large taxpayer unit to enhance compliance and operational efficiency.
  - On spending: preserve fiscal space for growth-enhancing capital spending consistent with implementation capacity, accompanied by restraint in current expenditures to preserve fiscal discipline, limit financing needs, and rebuild buffers.
- Risks and upside potential:
  - Risks tilted to the downside: prolonged global uncertainty and trade tensions; heightened financial and commodity market volatility—especially if higher oil prices are sustained; climate-related vulnerabilities; potential fiscal underperformance amid capacity constraints.
  - Upside potential: improved sea and air connectivity, hosting of special events, and faster implementation of productivity-enhancing structural reforms.

*Source: IMF staff report excerpt.*

### 41.      Reforms to better target social assistance programs are a pressing need, while options

### Reforms to better target social assistance programs are a pressing need, while options for pension system reform should be kept open.

### Social assistance and pensions
- Streamline fragmented social assistance programs and establish a centralized beneficiary database to improve targeting, reduce administrative duplication, and strengthen service delivery.
- Advancing these reforms will require stronger cooperation among relevant stakeholders.
- For the Social Security Fund, based on the findings of the forthcoming actuarial review, policy options should be kept open for addressing potential funding gaps, and safeguarding the system’s solvency and resilience to evolving demographics.

### Fiscal institutions and oversight
- Build on recent efforts to strengthen fiscal institutions to boost accountability, transparency, and policy credibility, while mitigating fiscal risks.
- The tabling in Parliament of the first FROC report and the MOF’s restored SOE oversight function are welcome steps.
- Staff encourages:
  - regular publication of FROC reports,
  - timely publication of audited fiscal accounts,
  - sufficient resourcing of oversight bodies—including the SAI and SOE oversight function,
  - disclosure of key SOE financial data as capacity improves.

### Financial sector oversight, resilience, and intermediation
- Strengthening the financial sector’s oversight, resilience, and intermediation requires both regional and national actions to promote inclusive growth while safeguarding stability.
- Regional progress noted:
  - ECCB’s advances in prudential regulation and supervision,
  - progress toward a deposit insurance scheme,
  - efforts to harmonize insurance regulation.
- National priorities:
  - Continue the shift to risk-based supervision of credit unions and bolster their provisioning and capital position.
  - Launch of a regional credit bureau in Antigua and Barbuda will help reduce information asymmetries and expand credit access.
  - Resolve government arrears to domestic suppliers to improve firms’ financial health and creditworthiness.
  - Increase awareness and use of the regional partial credit guarantee scheme and continue financial literacy initiatives to reduce perceived credit risk and improve borrower readiness.

### Connectivity and competitiveness
- Improving connectivity is critical to expanding trade, boosting tourism, and enhancing competitiveness.
- Near-term priorities: cut red tape on port and customs procedures, streamline clearance processes, and strengthen digital systems.
- Medium-term priorities: targeted investments to modernize port and aviation infrastructure and expand capacity, prioritized and sequenced to safeguard fiscal and debt sustainability.
- Over time, improved connectivity could mitigate risks from concentrated sources of imports and tourism, build resilience against shocks in key external markets, and create new economic opportunities.

### Skills and labor market
- Addressing skills shortages is important for boosting business activity and relaxing capacity constraints.
- Continue cooperation between training institutions and businesses to align training course design with employers’ needs.
- Foster individuals’ awareness of career prospects and training opportunities to increase take-up of skills training.
- Educate businesses on the value of offering on-the-job training to increase internship opportunities.
- Regular labor force surveys and skills-in-demand survey are key to designing a more systematic approach to addressing skills shortages.

### Data quality and statistical capacity
- Improving data quality remains a pressing need to support evidence-based policymaking.
- Critical gaps include unavailable GDP by expenditure data, long lags in publishing national accounts, outdated CPI weights, delayed labor force surveys, and lack of skills-in-demand survey.
- These shortcomings somewhat hamper surveillance and domestic policymaking.
- Address capacity constraints, including staffing, and encourage the public and business sector to raise survey participation to help close these gaps.

*Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1atgea2026001-source-pdf.pdf*

### 47.      It is recommended that the next Article IV consultation with Antigua and Barbuda take

### 47. It is recommended that the next Article IV consultation with Antigua and Barbuda take place on the standard 12-month cycle.

### Recommendation
- It is recommended that the next Article IV consultation with Antigua and Barbuda take place on the standard 12-month cycle.

### Macroeconomic outlook and projections
- Real GDP (annual percent change):
  - 2021: 8.2
  - 2022: 8.5
  - 2023: 3.9
  - 2024: 2.5
  - 2025: 3.0
  - 2026: 2.8
  - 2027–2031: 2.5 (each year)
- Nominal GDP (annual percent change): 2021: 13.5; 2022: 15.9; 2023: 10.6; 2024: 5.3; 2025: 5.1; 2026: 4.8; 2027–2031: 4.5 (each year)
- Consumer prices (end of period): 2021: 1.2; 2022: 9.2; 2023: 3.3; 2024: 5.4; 2025: 3.1; 2026–2031: 2.0 (each year)
- Consumer prices (period average): 2021: 1.6; 2022: 7.5; 2023: 5.1; 2024: 6.2; 2025: 1.4; 2026: 2.3; 2027–2031: 2.0 (each year)

### Fiscal sector: balances, revenue, expenditure, and debt
- Central government primary balance (percent of GDP):
  - 2021: -2.3
  - 2022: -0.3
  - 2023: 0.5
  - 2024: 4.0
  - 2025: 4.9
  - 2026: 1.6
  - 2027–2031: 1.0 (each year)
- Central government overall balance (percent of GDP):
  - 2021: -4.5
  - 2022: -2.9
  - 2023: -1.7
  - 2024: 1.6
  - 2025: 3.1
  - 2026: -0.5
  - 2027–2031: about -1.0 to -0.9 (each year)
- Total revenue and grants (percent of GDP): 2024: 21.9; 2025: 22.4; 2026: 21.8; 2027–2031: 21.0, 21.0, 20.8, 20.8, 20.7
- Total expenditure (percent of GDP): 2024: 20.2; 2025: 19.3; 2026: 22.3; 2027–2031: 22.1, 21.9, 21.8, 21.7, 21.6
- Central government debt stock (percent of GDP, memorandum):
  - 2021: 79.4
  - 2022: 70.4
  - 2023: 63.9
  - 2024: 61.3
  - 2025: 60.4
  - 2026: 58.2
  - 2027: 56.9
  - 2028: 55.6
  - 2029: 54.3
  - 2030: 53.0
  - 2031: 51.8
- Central government debt including guarantees (percent of GDP):
  - 2021: 93.0
  - 2022: 82.4
  - 2023: 74.5
  - 2024: 69.3
  - 2025: 68.3
  - 2026: 66.4
  - 2027: 64.9
  - 2028: 63.6
  - 2029: 62.0
  - 2030: 60.1
  - 2031: 58.1

### Central government debt composition (stock, Outstanding debt including arrears; Millions of U.S. dollars)
- Total Central Government Debt (selected years shown as stock / percent of GDP):
  - 2023: 1,312.7 (85.7 / 63.9)
  - 2024: 1,325.4 (88.5 / 61.3)
  - 2025: 1,373.2 (88.5 / 60.4)
- Central Government Domestic Debt (2023/2024/2025 stock, percent of GDP):
  - 704.2 / 725.8 / 747.6 (46.0 / 48.5 / 48.2 percent of total debt)
- Central Government External Debt (2023/2024/2025 stock, percent of GDP):
  - 608.4 / 599.6 / 625.7 (39.7 / 40.0 / 40.3 percent of total debt)
- Total Public Sector Debt (2023/2024/2025 stock, percent of GDP):
  - 1,531.0 (100.0 / 74.5), 1,497.4 (100.0 / 69.3), 1,552.0 (100.0 / 68.3)

### Central government gross financing needs and financing gaps
- Total Gross Financing Needs (Millions of Eastern Caribbean dollars):
  - 2021: 729
  - 2022: 589
  - 2023: 660
  - 2024: 396
  - 2025: 337
  - 2026: 614
  - 2027: 666
  - 2028: 748
  - 2029: 775
  - 2030: 784
  - 2031: 962
- Total Gross Financing Needs (percent of GDP): 2021: 16.9; 2022: 11.8; 2023: 11.9; 2024: 6.8; 2025: 5.5; 2026: 9.6; 2027: 9.9; 2028: 10.6; 2029: 10.5; 2030: 10.2; 2031: 12.0
- Financing gap / Financing discrepancy (Millions of Eastern Caribbean dollars):
  - 2021: -56 (Financing gap)
  - 2022: 88 (Discrepancy)
  - 2023: 173 (Discrepancy)
  - 2024: 17 (Discrepancy)
  - 2025: -140 (Discrepancy)
  - 2026: 190 (Financing gaps for 2026 and beyond)
  - 2027: 226
  - 2028: 296
  - 2029: 364
  - 2030: 409
  - 2031: 519
- Note: Financing gaps for 2026 and beyond are assumed to be filled by unidentified long-term financing sources; discrepancy for 2025 and before.

### Central government operations (selected levels, Millions of Eastern Caribbean Dollars)
- Total Revenue and Grants:
  - 2021: 816
  - 2022: 900
  - 2023: 926
  - 2024: 1,277
  - 2025: 1,375
  - 2026: 1,404
- Total Expenditure:
  - 2021: 1,012
  - 2022: 1,043
  - 2023: 1,018
  - 2024: 1,181
  - 2025: 1,182
  - 2026: 1,435
- Total primary expenditure (selected): 2024: 1,043; 2025: 1,077; 2026: 1,301
- Interest payments (total, selected years): 2021: 97; 2022: 129; 2023: 117; 2024: 138; 2025: 97; 2026: 135
- Central government debt stock (EC$ millions, selected): 2021: 3,433; 2022: 3,529; 2023: 3,544; 2024: 3,579; 2025: 3,708; 2026: 3,746

### External sector: trade, services, current account, reserves
- Current account (US$ million, selected):
  - 2021: -281.6
  - 2022: -280.1
  - 2023: -265.1
  - 2024: -161.2
  - 2025: -264.7
  - 2026: -260.6
  - 2027: -256.4
  - 2028: -255.7
  - 2029: -257.2
  - 2030: -261.9
  - 2031: -266.5
- Current account (percent of GDP, memorandum):
  - 2021: -17.6
  - 2022: -15.1
  - 2023: -12.9
  - 2024: -7.5
  - 2025: -11.6
  - 2026: -10.9
  - 2027: -10.3
  - 2028: -9.8
  - 2029: -9.5
  - 2030: -9.2
  - 2031: -9.0
- Trade balance (US$ million):
  - 2021: -474.7
  - 2022: -642.3
  - 2023: -666.0
  - 2024: -643.2
  - 2025: -722.3
  - 2026: -748.8
- Gross tourist receipts (US$ million; nonfactor service component / memorandum percent of GDP):
  - Level: 2021: 488.9; 2022: 828.3; 2023: 910.0; 2024: 1,035.5; 2025: 1,022.6; 2026: 1,065.8; 2027: 1,124.3; 2028: 1,199.5; 2029: 1,268.4; 2030: 1,326.8; 2031: 1,403.2
  - Percent of GDP: 2021: 30.5; 2022: 44.6; 2023: 44.3; 2024: 47.9; 2025: 45.0; 2026: 44.7; 2027: 45.1; 2028: 46.1; 2029: 46.6; 2030: 46.7; 2031: 47.2
- Exports and imports (f.o.b., US$ million):
  - Exports: 2021: 50.6; 2022: 82.7; 2023: 84.4; 2024: 93.4; 2025: 98.7; 2026: 96.2
  - Imports: 2021: 525.2; 2022: 725.0; 2023: 750.5; 2024: 736.6; 2025: 821.0; 2026: 845.0
- Net imputed international reserves (US$ million, memorandum):
  - 2021: 323.8
  - 2022: 346.1
  - 2023: 319.0
  - 2024: 318.1
  - 2025: 351.6
  - 2026: 396.6
  - 2027: 440.6
  - 2028: 456.2
  - 2029: 463.3
  - 2030: 497.3
  - 2031: 539.8
- Net imputed international reserves (in months of prospective imports): 2021: 3.2; 2022: 3.3; 2023: 3.0; 2024: 2.7; 2025: 2.9; 2026: 3.2; 2027: 3.3; 2028: 3.3; 2029: 3.2; 2030: 3.3; 2031: 3.4

### Balance of payments financing and external flows
- Capital and Financial Account (US$ million):
  - 2021: 225.7
  - 2022: 274.2
  - 2023: 312.5
  - 2024: 159.7
  - 2025: 264.7
  - 2026: 260.6
- Financial Account, overall sign (US$ million): 2021: -187.4; 2022: -248.7; 2023: -285.4; 2024: -130.3; 2025: -214.1; 2026: -216.1
- Official flows (part of financial account, US$ million): 2021: -55.3; 2022: -32.7; 2023: -4.1; 2024: 21.3; 2025: -50.2; 2026: -59.3
- Public sector loans (net, US$ million): 2021: -52.9; 2022: -17.5; 2023: 5.5; 2024: 24.3; 2025: -23.9; 2026: -59.3
- Public sector corporations (disbursements vs amortization, US$ million):
  - Disbursements (2021–2031 selected): 2021: 141.2; 2022: 93.4; 2023: 93.7; 2024: 72.8; 2025: 118.7; 2026: 163.7
  - Amortization (2021–2031 selected): 2021: 88.4; 2022: 75.9; 2023: 99.2; 2024: 97.1; 2025: 94.8; 2026: 104.4
- Foreign direct investment (net, US$ million and percent of GDP, memorandum):
  - Levels (US$ million): 2021: -296.4; 2022: -288.5; 2023: -274.7; 2024: -245.8; 2025: -282.0; 2026: -230.1
  - Percent of GDP: 2021: 18.5; 2022: 15.5; 2023: 13.4; 2024: 11.4; 2025: 12.4; 2026: 9.7

### Monetary sector and liquidity
- Monetary liabilities (M2, Million of Eastern Caribbean Dollars):
  - 2021: 4,014
  - 2022: 4,198
  - 2023: 4,338
  - 2024: 4,539
  - 2025: 4,808
  - 2026: 5,110
  - 2027: 5,343
  - 2028: 5,583
  - 2029: 5,835
  - 2030: 6,099
  - 2031: 6,375
- Broad money 12-month percentage change (percent): 2021: 13.9; 2022: 4.6; 2023: 3.3; 2024: 4.6; 2025: 5.9; 2026: 6.3; 2027–2031: 4.6, 4.5, 4.5, 4.5, 4.5
- Credit to private sector (12-month percent change): 2021: -4.1; 2022: -2.1; 2023: 7.0; 2024: 11.6; 2025: 2.8; 2026: 5.5; 2027–2031: 5.0 (each year)
- Net foreign assets (Millions of Eastern Caribbean Dollars): 2021: 2,231; 2022: 2,363; 2023: 2,371; 2024: 2,531; 2025: 2,834; 2026: 2,956; 2027: 3,075; 2028: 3,117; 2029: 3,136; 2030: 3,228; 2031: 3,343

### Financial sector performance and soundness indicators
- Banking system: Capital adequacy and asset quality (selected)
  - Capital adequacy ratio (CAR):
    - Dec 2019: 39.4
    - Dec 2020: 34.6
    - Dec 2021: 32.8
    - Dec 2022: 26.7
    - Dec 2023: 25.8
    - Mar 2024: 25.3
    - Jun 2024: 18.1
    - Sep 2024: 18.1
    - Dec 2024: 18.7
    - Mar 2025: 18.9
    - Jun 2025: 19.5
    - Sep 2025: 20.3
    - Dec 2025: 21.2
  - Tier-1 CAR (same dates): 31.9, 28.6, 27.9, 21.3, 19.9, 18.9, 12.1, 12.0, 14.7, 13.7, 13.4, 15.0, 16.8
  - Nonperforming loans (NPLs) to total gross loans (percent):
    - Dec 2019: 5.3
    - Dec 2020: 7.4
    - Dec 2021: 7.8
    - Dec 2022: 6.9
    - Dec 2023: 6.1
    - Mar–Dec 2024 and Mar–Dec 2025: ranged 6.0 down to 3.4; Dec 2025: 3.4
  - Total provisions to NPLs (percent): ranged from 58.7 (Dec 2019) to 132.7 (Sep 2025)
  - Net NPLs to capital (percent): Dec 2019: 17.3; Dec 2020: 18.4; Dec 2021: 17.6; Dec 2022: 7.2; Dec 2023: 5.0; Mar–Dec 2025: negative values through -3.7 (Dec 2025)
  - Return on assets (ROA): Dec 2019: 1.4; Dec 2020: 0.4; Dec 2021: 0.7; Dec 2022: 0.8; Dec 2023: 1.8; Mar–Dec 2025: ~1.4
- Credit unions (selected indicators):
  - Institutional Capital/Total Assets: Dec 2020: 11.2; Dec 2021: 10.3; Dec 2022: 10.4; Dec 2023: 10.5; Dec 2024: 10.4; Mar–Sep 2025: ~10.2–10.5
  - Non performing loans/Total Loans: Dec 2020: 8.5; Dec 2021: 5.6; Dec 2022: 6.7; Dec 2023: 7.2; Dec 2024: 6.9; Mar–Sep 2025: 6.4–10.2

### Structural and development indicators (memorial data)
- Population (2025): 104,993
- GDP per capita (US$, 2025): 21,650
- Life expectancy at birth (years, 2022): 79.2
- Mortality rate (under 5, per 1,000 live births, 2022): 10
- Adult literacy rate (2015): 99
- Mean years of schooling (2022): 10.5
- Human Development Index rank (2024, of 193 economies): 53

*Source: IMF staff estimates and projections, Antigua and Barbuda authorities, ECCB, UN Human Development Report, and World Bank (figures as presented in the source content).*

### Annex I. Sovereign Risk and Debt Sustainability Analysis

### Annex I. Sovereign Risk and Debt Sustainability Analysis

### Debt dynamics and baseline projections
- Public debt-to-GDP ratio has declined from a recent peak of 101 percent in 2020 to an estimated around 68 percent in 2025.
- In staff’s baseline, public debt is projected to fall below 60 percent by 2031, consistent with the ECCU regional debt target (below 60 percent by 2035).
- Debt stock is likely to be revised upward once the authorities complete validation of domestic arrears to suppliers.
- Gross financing needs remain high (over 10 percent of GDP) driven by amortization obligations and medium-term financing gaps.
- Debt dynamics could deteriorate if economic growth slows below potential, fiscal performance falters, financing conditions worsen, or natural disaster risks materialize.

### Arrears, coverage, and contingent liabilities
- As of end-2025:
  - Domestic arrears amount to approximately 6 percent of GDP.
  - External arrears to Paris Club creditors total around 7 percent of GDP.
- The baseline likely underestimates the true debt burden because unvalidated domestic arrears to suppliers are not fully accounted for; the contingent liability shock in Annex I Figure 2 illustrates a plausible magnitude.
- Authorities are validating potential domestic arrears identified during a May 2024 CARTAC technical assistance mission.
- Authorities are developing a strategy for arrears clearance; for domestic arrears this may include offsetting arrears with creditors’ unpaid tax obligations.
- No comprehensive strategy for addressing Paris Club arrears has been elaborated; pending further engagement, the scenario assumes Paris Club arrears remain unpaid and continue to accumulate.
- The stock of arrears to the Paris Club is assumed to grow by 3 percent per year after 2025 (the entire restructured amounts fall due as per the country’s 2010 agreement with Paris Club creditors).

### Baseline financing assumptions and historical financing gaps
- The baseline assumes a synthetic instrument covers the financing gap throughout the projection horizon with:
  - Interest rate of 5.5 percent.
  - Maturity of 5 years.
- Banks are not assumed to absorb the financing gap fully due to already sizable sovereign exposure relative to Tier 1 Capital.
- Over 2022–25, staff projected ex ante financing gaps averaging close to EC$230 million annually, or roughly 4 percent of GDP:
  - EC$220 million for 2022.
  - EC$227 million for 2023.
  - EC$309 million for 2024.
  - EC$228 million for 2025.
- Ex post financing gaps:
  - In 2022–23, financing gaps were closed but not all financing was fully identified; documented arrears increased in those years. Undocumented domestic supplier arrears may have also increased and remain under validation.
  - In 2024–25, financing gaps were closed by a combination of improved fiscal outturns (including a one-off receipt from a large asset forfeiture in 2024) and higher than projected issuance of securities including from the regional debt market (RGSM).

### Adaptation and resilience investment needs
- Staff estimates adaptation and resilience building costs to be high over the long term:
  - Estimated costs amount to around 1.6 percent of GDP annually, including 1.5 percent of GDP in coastal protection.
- These estimates are based on the 2019 ECCU SIP and are in line with staff estimates of approximately 1.8 percent of GDP annually for adaptation costs related to sea-level rise (2025 Article IV consultation, Annex VII).

### Stress-test and sustainability assessment findings
- Mechanical signals (Fanchart and GFN methodologies) suggest moderate risk, but actual risks are assessed as high because:
  - Gross financing needs do not fully capture financing implications associated with repayment of arrears.
  - A synthetic instrument with no identified source is used to close financing gaps.
- Overall risk of sovereign stress is assessed to be high, reflecting vulnerabilities in the near-, medium-, and long-term horizons. (Near-term assessment not undertaken because of the presence of arrears.)
- Public debt is deemed to be unsustainable due to:
  - Large outstanding stock of arrears not projected to be cleared under the baseline within the current projection horizon.
  - High gross financing needs.
- If financing needs are not fully met, new arrears are likely to accumulate over the medium term.

### Key baseline numeric indicators (as presented)
- Public debt (percent of GDP): 68.3 (Actual 2025); projections: 66.4 (2026), 64.9 (2027), 63.6 (2028), 62.0 (2029), 60.1 (2030), 58.1 (2031), 56.6 (2032), 55.2 (2033), 53.8 (2034), 52.4 (2035).
- Change in public debt (percent of GDP): -1.0 (Actual 2025); projected series includes -1.9, -1.4, -1.3, -1.6, -1.8, -2.0, -1.5, -1.4, -1.4 (selected years shown).
- Contribution of identified flows (percent of GDP): -6.4 (Actual 2025); projection examples: -2.3, -1.5, -1.5, -1.5, -1.4, -1.4, -1.3, -1.3.
- Primary deficit (percent of GDP): -4.9 (Actual 2025); projected -1.6 (2026) and -1.0 (2027–2034).
- Noninterest revenues (percent of GDP): 22.4 (Actual 2025); projected 21.8 (2026), 21.0 (2027), 21.0 (2028), 20.8 (2029), 20.8 (2030), 20.7 (2031), 20.6 (2032), 20.5 (2033), 20.3 (2034), 20.3 (2035).
- Noninterest expenditures (percent of GDP): 17.5 (Actual 2025); projected 20.2 (2026), 20.0 (2027), 20.0 (2028), 19.8 (2029), 19.8 (2030), 19.7 (2031), 19.6 (2032), 19.5 (2033), 19.3 (2034), 19.3 (2035).
- Automatic debt dynamics contributions (percent of GDP): -1.6 (Actual 2025); projected -0.7, -0.5, -0.5, -0.5, -0.4, -0.4, -0.4, -0.3, -0.3, -0.3.
- Real GDP growth (percent): 3.0 (Actual 2025); projected 2.8 (2026), 2.5 (2027–2035 in projections shown).
- Inflation (GDP deflator; percent): 2.0 (Actual 2025); projections 2.0 repeatedly.
- Nominal GDP growth (percent): 5.1 (Actual 2025); projected 4.8 (2026), 4.6 (2027), 4.5 (2028–2035).
- Effective interest rate (percent): 2.9 (Actual 2025); projected 3.7 (2026–2029), 3.8 (2030), 3.9 (2031–2032), 4.0 (2033–2035).
- Gross financing needs (percent of GDP): 5.9 (Actual 2025); projected 10.7 (2026), 11.5 (2027), 12.1 (2028), 12.3 (2029), 12.1 (2030), 14.0 (2031), 12.8 (2032), 12.6 (2033), 12.5 (2034), 12.4 (2035).
- Debt service (percent of GDP): 10.8 (Actual 2025); projected 12.3 (2026), 12.5 (2027), 13.1 (2028), 13.3 (2029), 13.1 (2030), 15.0 (2031), 13.8 (2032), 13.6 (2033), 13.5 (2034), 13.4 (2035).
- Local currency debt service (percent of GDP): 9.1 (Actual 2025); projected 10.2 (2026), 10.1 (2027), 10.4 (2028), 10.6 (2029), 10.3 (2030), 12.1 (2031), 11.6 (2032), 11.8 (2033), 11.8 (2034), 11.8 (2035).
- Foreign currency debt service (percent of GDP): 1.6 (Actual 2025); projected 2.1 (2026), 2.4 (2027), 2.7 (2028), 2.7 (2029), 2.8 (2030), 2.9 (2031), 2.2 (2032), 1.8 (2033), 1.7 (2034), 1.6 (2035).

### Policy implications and recommended elements for restoring sustainability
- Restoring debt sustainability will require:
  - A mix of fiscal measures.
  - A comprehensive arrears clearance plan in the context of improved cash and debt management.
  - Structural fiscal reforms.
- Clarifying and identifying financing sources for the projected financing gaps (rather than relying on a synthetic instrument with no identified source).
- Completing validation of domestic supplier arrears to properly reflect the debt stock and inform an arrears clearance strategy.
- Engaging with Paris Club creditors to elaborate a strategy for addressing Paris Club arrears.

*Source: Fund staff.*

### Annex II. External Sector Assessment

### Annex II. External Sector Assessment

### Overall assessment
- Based on preliminary data and EBA-lite model results, the external position of Antigua and Barbuda in 2025 is assessed as moderately weaker than implied by fundamentals and desirable policies.
- The assessment is subject to considerable data-related uncertainties, including sizable errors and omissions and historical revisions.

### Potential policy responses
- Near-term policies should facilitate further fiscal adjustment and rebuilding buffers.
- Further revenue-side fiscal consolidation will be key to restoring debt sustainability and raising the saving-investment balance (noting Antigua and Barbuda is part of the Eastern Caribbean Currency Union (ECCU)).
- Structural reforms recommended to improve competitiveness, the external position, and long-term growth prospects:
  - Enhance flight and shipping connectivity.
  - Reduce energy and freight costs.
  - Mitigate labor force skills mismatches and retention.
  - Strengthen natural disaster resilience.

### Foreign assets and liabilities: position and trajectory
- Background:
  - Pre-pandemic (2013-19) net IIP averaged around -70 percent of GDP.
  - Net IIP fell sharply in 2020 and has since recovered slowly, remaining below pre-pandemic levels.
  - For 2025, the net IIP is estimated at -117 percent of GDP.
  - Asset composition: mainly other investment assets and reserve assets.
  - Liability composition: mainly FDI and other investment liabilities.
  - FDI inflows have remained resilient in recent years, partly driven by a large mega resort project.
- Assessment:
  - The net IIP has been financed by FDI (mainly hotel and resort projects) without giving rise to external stability concerns despite tighter global financial conditions and higher global uncertainty in the past year.
  - Public debt remains unsustainable due to the large stock of outstanding arrears, to Paris Club as well as domestic creditors (Annex I).
- Key 2025 figures (percent of GDP):
  - NIIP: -117.1
  - Gross Assets: 72.6
  - Debt Assets: 51.4
  - Gross Liabilities: -189.7
  - Debt Liabilities: -69.5
- Data gaps noted include tourist expenditure surveys for cruise and yacht tourists, discrepancies between fuel imports for the domestic economy versus those for re-export, and FDI inflows stemming from citizenship-by-investment (CIP).

### Current account
- Background:
  - CA balance deteriorated from -6½ percent of GDP in 2019 to -18 percent in 2021, then improved as tourism recovered.
  - Preliminary data for 2024 indicate a CA balance of around -7.5 percent of GDP—a narrowing of more than 5 percentage points of GDP from 2023—owing to a contraction in fuel imports and strong tourism.
  - The CA balance is estimated to widen to around -11.6 percent of GDP in 2025—corresponding to a cyclically adjusted CA balance of -10.1 percent of GDP after accounting for cyclical contributions—reflecting temporary impacts from resilient and higher-than-expected FDI inflows and a rebound in imports.
  - The service trade balance is projected to align more closely with historical averages over the short and medium term.
- Assessment:
  - The EBA-lite CA model estimates a multilaterally consistent cyclically adjusted CA norm of -8.5 percent of GDP and a CA gap of -1.7 percent of GDP in 2025.
  - Staff expects the CA balance to improve gradually over the medium term as FDI inflows normalize and import growth tapers.
  - Staff assesses the external position to be moderately weaker than implied by fundamentals and desirable policies.

- EBA-lite Model Results, 2025 (in percent of GDP):
  - CA-Actual: -11.6
  - Cyclical contributions (from model): (-) -0.3
  - Additional temporary/statistical factors: (-) -1.2
    - Note: FDI in 2025 exceeded pre-pandemic projections by 3.3 of GDP on the back of multi-year FDI projects. This is estimated to increase the CA deficit by 1.2 percent.
  - Adjusted CA: -10.1
  - CA Norm (from model): -8.5
  - Adjusted CA Norm: -8.5
  - CA Gap: -1.7

### Real exchange rate (REER)
- Background:
  - REER has largely tracked movements in the U.S. dollar index given the currency peg.
  - Following an appreciation trend post-pandemic (reflecting higher inflation in Antigua and Barbuda compared to trading partners), the REER depreciated during 2025, mirroring the depreciation of the USD.
  - The gap between Antigua and Barbuda and its ECCU peers’ REERs remains, partially driven by the inflation differential.
  - Persistently higher prices, especially in hotels/restaurants, may lead to some deterioration in price competitiveness in the tourism sector compared to ECCU peers.
  - Reducing input costs—particularly energy and freight costs—through efforts to cut red tape and advance digitalization would improve competitiveness.
- Assessment:
  - The EBA-Lite Index-REER model suggests an overvaluation of 14 percent but lacks sufficient granularity to capture Antigua and Barbuda’s currency determinants.
  - Based on the staff-estimated elasticity of CA to REER of -0.4, the REER is assessed to be overvalued by 3.9 percent.
  - REER gap figures reported:
    - REER Gap (in percent): 3.9 and 13.9 (from CA and REER models, respectively).

### Capital and financial accounts
- Background:
  - Antigua and Barbuda attracted large FDI inflows supporting tourism development.
  - Average inward FDI between 2021 and 2025 averaged an estimated 14 percent of GDP, partly reflecting a multi-year mega project in Barbuda.
  - Among non-FDI flows, portfolio investment and other investment have mostly seen net outflows over the last decade, partly offset by capital account inflows largely driven by CIP inflows.
- Assessment:
  - Financial account inflows comprise mainly equity financing, especially FDI.
  - Households lack direct access to U.S. securities markets, limiting the impact of global financial conditions on net capital inflows.
  - Risks:
    - A deepening in geoeconomic fragmentation and regional conflicts could result in lower FDI inflows.
    - CIP inflows, although rising, remain relatively small compared to other ECCU countries and are potentially volatile and subject to downside risks.

### Reserves level
- Background:
  - Net imputed international reserves (NIIR) have been broadly stable since the pandemic.
  - NIIR in 2024 was flat in dollar terms but declined marginally as a share of imports as tourism recovery and resilient FDI inflows led to increased imports.
  - NIIR is estimated to have increased modestly in 2025.
- Assessment:
  - The estimated NIIR in 2025 corresponds to 2.9 months of prospective imports and 21 percent of broad money.
  - These metrics are broadly in line with ECCB benchmarks of 3 months of imports and 20 percent of broad money.
  - Data gaps for short-term debt and other liabilities preclude reserve adequacy assessments based on the IMF’s ARA EM metric.

*Source: Annex II. External Sector Assessment.*

### Annex I). They have engaged with the Paris

### Annex V. Macro-Financial Linkages in Antigua and Barbuda: A Preliminary Assessment

### Macro-Financial Landscape: structure, exposures, and interlinkages
- Financial sector size and composition
  - Deposit-taking institutions overall: banks dominate (assets: 110 percent of GDP); credit unions (CUs) assets: 11 percent of GDP.
  - Banks are well capitalized and liquid.
  - Nonperforming loans (NPLs) rose above the 5 percent regulatory threshold during the pandemic and eased back below it in 2024.
  - NPLs for credit unions: 6.4 percent in Q12025.
  - Bank credit to the private sector declined from over 70 percent of GDP in 2011 to around 38 percent in 2022–24.
- Sovereign and external exposures of banks
  - Lending to the government: 9.2 percent of assets or 153 percent of Tier 1 capital.
  - ECCU averages (excluding Antigua and Barbuda): 7.3 percent of assets and 118 percent of Tier 1 capital.
  - Banks’ net foreign assets rose 150 percentage points (pps) from end-2021 to end-2024, reaching 410 percent of Tier 1 capital (ECCU average: 388 percent).
- From-whom-to-whom balance sheet analysis (BSA) findings (2024 vs pre-pandemic)
  - NFCs held net liabilities equivalent to 121 percent of GDP; GG net debt around 45 percent of GDP.
  - Primary financiers of liabilities: ROW (101 percent of GDP), households (HH: 35 percent of GDP), and banks (17 percent of GDP).
  - Government net liabilities declined from 53 to 45 percent of GDP between 2019 and 2024.
  - NFCs’ net liabilities increased from 69 to 121 percent of GDP (largely reflecting FDI inflows, mainly equity).
- Gross exposures and cross-sector shifts (2019 to 2024)
  - Economy’s external exposure nearly doubled: from 52 percent of GDP in 2019 to 101 percent of GDP in 2024.
  - NFCs’ gross liabilities to the ROW rose 44 pps to 130 percent of GDP.
  - Government gross liabilities to the ROW declined by 6 pps to 40 percent of GDP.
  - Banks’ foreign assets fell by 4 pps to 43 percent of GDP in 2024 (reflecting GDP expansion and rebasing), while the share of banks’ foreign assets in total assets rose by 10 pps to 30 percent.
  - Relative to Tier-1 capital, banks’ foreign assets jumped by 150 pps to 478 percent.
  - 2024 IIP data: most NFC foreign liabilities—around 110 percent of GDP—are equity FDI; NFCs’ debt liabilities comprise about 20 percent of GDP.

### Drivers of financial linkages and structural constraints
- Historical shocks and policy responses
  - Successive crises—including 2017 Hurricane Irma and the COVID-19 pandemic—increased public financing needs and sovereign exposure.
  - Banks adopted a de-risking stance, channeling excess liquidity into foreign assets due to limited low-risk domestic opportunities and high domestic funding costs.
- Implications of bancapital flows abroad
  - Movement into foreign assets increases sensitivity to global financial conditions; declines in external returns could weaken bank profitability.
  - NFCs’ recourse to external debt financing—though limited in debt terms—could indicate weaknesses in domestic financial intermediation.
- Data limitations affecting analysis
  - May 2024 CARTAC TA mission identified previously unrecognized government arrears to domestic suppliers; arrears are being validated and remain excluded from the DSA and this analysis.
  - Data on offshore banks (international banks registered in Antigua and Barbuda not taking domestic deposits) are missing from ECCB and IMF STA databases; any exposures of these banks to residents are excluded.

### Risk assessment: scenario analysis and transmission channels
- Monetary policy loosening scenario
  - Banks’ net foreign assets make up roughly one-third of total assets and have driven earnings amid high U.S. interest rates.
  - Each 100-basis point decline in the U.S. Fed funds rate is estimated to reduce banks’ pre-tax income by about EC$20 million, or about 5 percent of their 2024 net earnings.
  - This channel underscores sensitivity to interest rate risk and foreign asset exposures.
- Increased sovereign borrowing costs scenario
  - Domestic banks hold about 10 percent of total public debt in 2024.
  - Regional government securities market accounts for 19 percent of total public debt.
  - Each 100-basis point increase in government borrowing costs from domestic banks is estimated to widen the fiscal deficit by approximately 0.11 pp of GDP; the fiscal impact would be larger if higher bank rates transmit to the regional securities market.
- Key transmission channels identified in scenarios
  - Profitability channel: changes in global interest rates affect banks’ earnings via net foreign assets.
  - Fiscal-financial feedback: higher bank pricing for sovereign lending can widen fiscal deficits and amplify sovereign-bank linkages.
  - External-to-domestic spillovers: concentrated external exposures increase vulnerability to global shocks and can impair domestic intermediation.

### Authorities’ actions, ongoing reforms, and recommended priorities
- Fiscal and public debt management
  - Engagements with Paris Club creditors are ongoing.
  - Efforts to strengthen cash management and expenditure controls at the Treasury aim to help prevent new arrears.
- Climate finance, disaster insurance, and contingency planning
  - Explore avenues for increasing climate financing and disaster insurance and undertake contingency planning.
  - National Adaptation Plan (NAP) published in late 2025 includes discussion of financing strategies, potential sources, different streams of finance, and key stakeholders.
  - Donor support: Significant funding through the Green Climate Fund has been secured to improve early warning systems.
- Financial sector supervision and integrity
  - Adopt a more risk-based supervisory framework for credit unions; planned regional regulatory standards to strengthen oversight of asset quality and credit forbearance and to level the playing field with banks.
    - Ongoing: FSRC advancing a risk-based supervisory framework for credit unions, including drafting legislation and consulting with the sector; submission of draft legislation to the government is pending.
  - Enhance AML/CFT and CIP frameworks by improving risk-based AML/CFT supervision and mitigating risks to the integrity and sustainability of CIP.
    - Ongoing: National Oversight Committee on Financial Action reviewing the AML/CFT framework in light of the 2025 FATF updates; a National Risk Assessment is in progress.
    - Legislation to establish a new regional CIP regulator was approved by Antigua and Barbuda (and other ECCU countries with CIPs) in late 2025.
- Regional initiatives and financial intermediation
  - Operationalize the ECCU regional credit bureau to accelerate access to finance while preserving lending standards.
    - Partial progress: ECCU regional credit bureau launched for banks and two credit unions, with expansion to the other credit unions planned.
  - Advance ECCB-led climate risk initiatives and implement a regional partial credit guarantee scheme to support financial intermediation.
    - Progress on climate risk initiative and partial credit guarantee scheme remains limited.
- Structural policies, connectivity, and labor market priorities
  - Tourism connectivity: continue to increase flight connectivity and cruise ship homeporting to facilitate tourism.
    - Ongoing: Air connections increased over 2025 from multiple international origins; VC Bird International Airport started a major runway overhaul in 2025; a new homeporting terminal is underway and expected to increase cruise ship calls.
  - Labor market and vocational training: strengthen active labor market policies and expand vocational education opportunities.
    - Ongoing: Amalgamation of the training institutes is in progress; Skills Demand Survey continues to be postponed; no progress in improving The New Work Experience Programme and the One Stop Employment Centre.

*Prepared by Yibin Mu; analysis based on IMF BSA Matrix Tool and IMF staff estimates; references include BSA tool documentation and IMF Policy Paper (2015).*

### 1. Caribbean economies—including Antigua and Barbuda—face heightened exposure to

### 1atgea2026001-source-pdf - 1. Caribbean economies—including Antigua and Barbuda—face heightened exposure to external shocks that threaten traditional growth drivers such as trade

### Trade patterns and gravity-model findings
- Methodology
  - Uses a gravity-model framework estimated on global bilateral goods trade data from the BACI (CEPII) database to explain relative trade patterns, identify underlying drivers, and predict trade levels.
- Key findings for Antigua and Barbuda
  - ‘Missing’ goods exports to countries outside the Caribbean amounted to nearly $US 84 million in recent years, equivalent to 5 percent of GDP.
  - Trade with non-ECCU CARICOM countries significantly exceeded predictions after 2017, reflecting re-export activities.
  - Trade with Europe swung from above- to below-prediction volumes.
  - Trade with Latin America has been slightly above predictions overall, though volumes with the largest Latin American economies (LA7) remain slightly below expected levels.
  - Trade with the US has increased but remained significantly below predicted levels, constrained by structural barriers such as the limited number of shipping routes.

### Shipping connectivity and freight costs
- Findings
  - Antigua and Barbuda is weakly connected to global maritime trade networks, leading to shipping costs roughly three times the global average.
  - Even among ECCU peers, Antigua and Barbuda has comparatively high shipping costs.
  - High shipping costs impede the competitiveness of goods exports and raise the cost of imports.
- Ongoing and recent infrastructure projects noted as alleviating constraints
  - Expansion of the Cruise Port terminal and cargo port capacity.
  - Refurbishment of the old V.C. Bird International Airport terminal and runway overhaul.
  - New Barbuda airport.

### Air connectivity and tourism
- Empirical results
  - Air connectivity (measured by flight capacity) is a highly significant determinant of bilateral tourist arrivals after controlling for bilateral and macro variables.
  - Estimated elasticities: approximately 0.6 using annual data; around 0.2 using monthly data.
  - Interpretation provided in the source: "In other words, a 10 percent increase in flight capacity is associated with roughly a 2 percent increase in tourist arrivals in the short term, which can become a 6 percent increase over the course of a year as adjustments take place."
- Strategic observations for Antigua and Barbuda
  - V.C. Bird International Airport is one of the best connected airports in the Eastern Caribbean and acts as a key gateway linking the Caribbean with North America and Europe.
  - Strengthening its position as a regional hub could facilitate more efficient intra-Caribbean travel.
  - Continued efforts to broaden open skies agreements would be beneficial.
  - Improved connectivity could support homeporting initiatives to benefit the cruise sector.
- Econometric note on identification
  - A shift-share (Bartik-style) instrumental variable approach is used to isolate ‘push’ from ‘pull’ factors in flight capacity and tourist arrivals estimation.

### Financial connectivity and trade/tourism links
- Findings
  - Global estimates find bilateral banking relationships positively affecting trade flows, with an elasticity of around 0.5 for both goods trade and tourism.
  - Estimated elasticities are notably smaller for the Caribbean, reflecting a large share of tourism expenditures being pre-paid through partner-country intermediaries before reaching destination economies.
- Potential benefits of increased financial connectivity
  - Enhance access to formal trade finance for exporters.
  - Reduce transaction costs for tourism-related payments.
  - Improve payment efficiency.

### Connectivity, concentration, and resilience
- Structural vulnerability
  - Antigua and Barbuda relies on heavily concentrated sources for goods trade, tourism income, and banking relationships.
  - High import reliance is structural, but concentration increases vulnerability to external shocks.
- Role of connectivity improvements
  - Could support diversification of source markets.
  - Could mitigate concentration-related risks and enhance resilience to external shocks.

### Skills training and productivity (Annex VII)
- Background and data
  - Analysis uses the 2018 Labor Force Survey covering almost 2,000 working adults to study skills training take-up and the relationship between training types and productivity (proxied by income).
- Take-up patterns
  - More than 60 percent of working-age adults surveyed report having previously taken skills training courses, with an almost equal split between institutional and on-the-job training.
  - Men are relatively more likely to take skills training than women.
  - Sectoral heterogeneity:
    - Construction: almost 80 percent report some type of skills training; construction is most reliant on on-the-job training.
    - Education and health, and manufacturing: similar shares with skills training; education and health skewed towards institutional training.
    - Trade, utilities and transport: less than 60 percent report skills training in addition to formal education.
  - Training and formal education:
    - Those with higher education levels are more likely to take further skills training, particularly institutional training.
    - Those with at most secondary education are less likely to have any type of skills training; among those who do, on-the-job training is most prevalent.
- Estimated associations with income (cross-sectional OLS; evidence described as suggestive, not causal)
  - Having any skills training is associated with 10 percent higher income.
    - With the median monthly income of EC$2,400 in 2018, this represents additional income of about EC$240 per month.
  - By training type:
    - On-the-job training associated with a 15 percent increase in income.
    - Institutional training associated with a 9 percent increase in income.
  - Regression covariates and significance:
    - Education levels (Secondary, Post-secondary/non-tertiary, University) show positive and statistically significant associations with log monthly income (coefficients reported in the source).
    - Monthly hours worked, gender, and age cohorts also show statistically significant associations with income in the regressions.
- Policy implications suggested
  - Target take-up of skills training, especially among individuals with low formal education.
  - Focus on incentivizing on-the-job training given its stronger correlation with higher incomes.
  - Design policies to encourage employees to invest time and resources in training and to incentivize firms to provide on-the-job training.
  - Promote closer cooperation between businesses and training institutions to align institutional training with private-sector needs.
  - Improve statistical data (skills-in-demand survey, more regular and timely labor force surveys) to support evidence-based policy design.

### Summary policy recommendations (drawn from analysis across annexes)
- Reduce physical connectivity constraints:
  - Continue port and airport capacity projects (Cruise Port terminal and cargo port expansion; V.C. Bird International Airport refurbishment and runway overhaul; new Barbuda airport).
  - Expand shipping routes to reduce shipping costs and boost goods export competitiveness.
- Enhance air connectivity:
  - Strengthen V.C. Bird International Airport’s hub role.
  - Broaden open skies agreements.
  - Support homeporting initiatives for cruise-sector benefits.
- Improve financial connectivity:
  - Facilitate increased bilateral banking relationships to support trade finance and payment efficiency.
- Address skills shortages to raise productivity:
  - Promote on-the-job training through incentives for employers and employees.
  - Better align institutional training with private-sector needs.
  - Improve labor market data for targeted interventions.

*Prepared by Josefine Quast, Qingyu Tao, and Hou Wang; Annex VII prepared by Natasha Gimpelson.*

### 1.      General elections will be held in late April. Parliament was dissolved on

### 1.      General elections will be held in late April. Parliament was dissolved on

### Elections
- General elections will be held in late April.
- Parliament was dissolved on April 1.
- Parliamentary elections have been scheduled for April 30.

### External spillovers from the war in the Middle East
- The war in the Middle East is expected to have negative spillovers for Antigua and Barbuda.
- Despite its geographical distance from the conflict, Antigua and Barbuda faces potential spillovers from higher global energy and food prices, weaker external demand, and disruptions to global value chains.

*Source: 1atgea2026001-source-pdf*

### 3.      Staff has revised the baseline macroeconomic projections for Antigua and

### 3.      Staff has revised the baseline macroeconomic projections for Antigua and Barbuda

### Baseline revisions and global assumptions
- Revisions aligned with the global assumptions for the April 2026 World Economic Outlook (WEO).
- WEO reference forecasts assume that energy and food prices rise in 2026, and that the war is relatively short-lived with production and exports from the Middle East normalizing by mid-2026.
- For Antigua and Barbuda, real GDP growth for 2026 and 2027 has been revised slightly downward compared with the staff report baseline.
- Higher global energy prices are projected to contribute to imported inflation; retail fuel price increases have been mitigated by automatic adjustments to fuel consumption taxes.
- The revised baseline envisages higher import costs leading to a widening in the current account deficit by about 1 percentage point of GDP in 2026 and 2027.
- The fiscal impact in the revised baseline is limited, with lower consumption tax receipts broadly offset by higher import duties.

### Downside risks and channels
- Risks are tilted further to the downside, reflecting the possibility that the war becomes more protracted than assumed.
- If higher oil and commodity prices are sustained:
  - Imported fuel, food, and transportation costs would rise further.
  - The external current account balance could weaken further.
  - Inflationary pressures could intensify.
- Weaker global growth and heightened uncertainty could dampen tourism demand, adversely affecting near-term growth and construction activity.
- Weaker economic activity could erode fiscal performance, add to public debt vulnerabilities, and increase financing pressures (noting that higher inflation could partially mitigate revenue impacts).

### Near-term policy measures implemented by authorities
- Temporary tax reductions to alleviate cost-of-living pressures:
  - Antigua and Barbuda Sales Tax (ABST) rate reduced to zero on food and school supplies for two days in April; a second two-day reduction announced for August.
- Fuel price stabilization through reductions in fuel consumption taxes, which are set automatically under a price-stabilization formula in response to higher prices for imported fuel.
- Measures described as narrowly targeted and expected to have only a small fiscal impact, since many affected items were already zero-rated.

### Policy guidance and recommendations
- Heightened external risks warrant continued close monitoring and the implementation of prudent and agile policies in a context of constrained fiscal space.
- If the oil price shock worsens, policy responses should be:
  - Temporary.
  - To the extent feasible, targeted to vulnerable households.
  - Accompanied by strengthened administrative capacity and social registries, consistent with staff report recommendations.

### Key projections and changes (summary for 2026–27)
- Real GDP:
  - 2026 Latest: 2.6
  - 2026 Change: -0.2
  - 2027 Latest: 2.4
  - 2027 Change: -0.1
- Consumer prices (period average):
  - 2026 Latest: 2.6
  - 2026 Change: +0.3
  - 2027 Latest: 2.1
  - 2027 Change: +0.1
- Current account balance (percent of GDP):
  - 2026 Latest: -11.8
  - 2026 Change: -0.9
  - 2027 Latest: -11.3
  - 2027 Change: -1.0
- Primary fiscal balance (percent of GDP):
  - 2026 Latest: 1.4
  - 2026 Change: -0.2
  - 2027 Latest: 0.9
  - 2027 Change: -0.1

### Selected medium-term indicators and fiscal/financial context (selected lines from Table 1)
- Real GDP (annual percent change): 2026: 2.6; 2027: 2.4; 2028–2031: 2.5, 2.5, 2.5, 2.5
- Consumer prices (period average): 2026: 2.6; 2027: 2.1; 2028–2031: 2.0, 2.0, 2.0, 2.0
- Broad money (M2) (annual percent change): 2026: 6.4; 2027: 4.5; 2028–2031: 4.5, 4.5, 4.5, 4.5
- Primary balance (percent of GDP): 2026: 1.4; 2027: 0.9; 2028–2031: 1.0, 1.0, 1.0, 1.0
- Overall balance (percent of GDP): 2026: -0.6; 2027: -1.1; 2028–2031: -1.0, -1.0, -1.0, -0.9
- Total revenue and grants (percent of GDP): 2026: 21.6; 2027: 21.0
- Total expenditure (percent of GDP): 2026: 22.3; 2027: 22.2
- Current account balance (percent of GDP): 2026: -11.8; 2027: -11.3; 2028–2031: -10.8, -10.4, -9.9, -9.4
- Gross tourism receipts (percent of GDP): 2026: 44.7; 2027: 45.1; 2028–2031: 46.1, 46.6, 46.7, 47.2
- External public sector debt (percent of GDP): 2026: 34.2; 2027: 36.1; 2028–2031: 37.5, 36.8, 38.7, 38.9
- Net imputed international reserves (US$ million): 2026: 378; 2027: 399; 2028–2031: 436, 465, 496, 526
- Public debt stock (EC$ million): 2026: 4,280; 2027: 4,387; (percent of GDP) 2026: 66.5; 2027: 65.2

*Source: IMF staff projections.*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1atgea2026001-source-pdf.pdf_