IMF Staff Concludes Virtual Visit to Antigua and Barbuda

IMF News, February 16, 2022

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Real GDP growth is estimated at 4.8 percent in 2021, following a sharp contraction of 20.2 percent in 2020.
A sustained recovery in tourism and construction activity is expected to underpin real output growth of 7 percent in 2022.
Two-thirds of the population have been fully vaccinated.
Risks: a prolonged pandemic (e.g., due to the emergence of new virus variants) and supply chain disruptions could put a drag on the recovery at the same time as wage and price pressures build.

The government’s objective: bring public debt-to-GDP to under 70 percent by 2030.
Fiscal consolidation resumed in 2021; the primary deficit narrowed to 1.8 percent of GDP (from 3.8 percent in 2020) reflecting domestic revenue mobilization, external grants, and the reprioritization of spending.
The 2022 budget envisages a zero primary balance, with an ambitious capital spending plan financed by higher revenues, grants and borrowing.
Policy measures recommended and priorities highlighted:
- Steadfast implementation of the government’s medium-term fiscal strategy.
- Streamline tax exemptions.
- Strengthen tax compliance.
- Fully implement tax and customs administration reforms.
- Assess the costs and benefits of the current energy pricing mechanisms given rising international oil prices.
- Contain spending on wages and transfers.
- Improve public financial management.
- Prioritize clearing arrears to suppliers and creditors while avoiding the accumulation of new arrears.
Note: The uncertain revenue outlook underscores the need for the measures above.

Financial sector performance has improved.
Banks are well-capitalized and liquid, but credit growth has been slow, particularly to the household sector.
Loans under moratoria at banks and credit unions have declined significantly in 2021 and nonperforming loan ratios have remained stable.
Recommendations for supervisors:
- Closely monitor asset quality as loan moratoria come to an end.
- Ensure that loan loss provisioning is proportional to credit quality risks, especially at credit unions.

Antigua and Barbuda is highly susceptible to climate change and natural disasters.
Structural challenges include high costs of reconstruction from Hurricane Irma and limited access to affordable home insurance against disasters.
The National Adaptation Plan to build climate resilience is expected to be completed by year-end.
Ongoing initiatives:
- Make homes and public infrastructure more disaster-resilient.
- Invest in renewable energy.
- The Blue Economy Plan identifies new sustainable sectors and opportunities to diversify the economy; capacity building and financing will be necessary to realize the plan’s objectives.

IMF team led by Mr. Varapat Chensavasdijai met virtually with the authorities during February 7–11, 2022.
The mission will not result in a Board discussion.
The views expressed are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

IMF Communications Department — Press Release No. 22/42