IMF Executive Board Concludes 2021 Article IV Consultation with Antigua and Barbuda

IMF News, August 12, 2021

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IMF Executive Board Concludes 2021 Article IV Consultation with Antigua and Barbuda

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• Published: August 12, 2021

Pandemic impact and near-term outlook

• Economy contracted by an estimated 17.3 percent in 2020.
• Projected to contract by 1 percent in 2021 before recovery in the second half of 2021.
• Vaccination: about one-third of the population fully vaccinated.
• Tourism:
  • Collapse of tourism-related activities following domestic lockdown and border closure in early 2020.
  • Gradual pick-up in tourism activity expected with the first cruise ship arrival in July (2021) and favorable travel risk ratings in key source markets.
  • Downside risks to the outlook are significant, primarily from a more prolonged pandemic due to the spread of new COVID-19 variants and limited vaccine availability both at home and abroad.

Fiscal position, arrears, and public debt

• Pandemic intensified cash flow pressures and led to a further accumulation of domestic and external arrears.
• Public debt and gross financing needs sharply increased.
• Government adopted an economic plan centered on a Medium-Term Fiscal Strategy with objectives to:
  • restore debt sustainability;
  • gradually resolve outstanding domestic and external arrears;
  • prioritize policies that tackle COVID-19 and improve healthcare delivery;
  • protect the vulnerable;
  • create conditions for durable growth and job creation.
• Executive Directors stressed urgency of restoring debt sustainability and welcomed the Medium-Term Fiscal Strategy anchored on domestic revenue mobilization and rationalized spending.
• Directors noted that achieving fiscal targets will require additional measures and efforts to secure long-term financing on favorable terms.
• Directors encouraged putting in place a concrete arrears clearance plan, continuing creditor engagement, and avoiding new arrears.
• Noted potential benefits of an SDR allocation in rebuilding reserves and helping to meet the financing gap if needed.

Public financial management and structural reforms

• Directors welcomed planned reforms to improve public financial management, tax administration, and targeting of social programs.
• Initial steps taken to contain the wage bill were recognized; Directors recommended considering a long-term strategy to reform the public sector.
• Further steps essential to strengthen governance and financial position of state-owned enterprises.
• Directors welcomed initiatives to boost growth and job creation, diversify the economy, and improve the business environment.
• Emphasized importance of upgrading public infrastructure, including to support digitalization.
• Directors looked forward to completion of the National Adaptation Plan to build physical and financial resilience to climate change and natural disasters.

Financial sector stability and supervision

• Directors called for efforts to safeguard financial stability to support economic recovery.
• Given deteriorating asset quality and profitability, they saw a need to closely monitor risks, particularly to credit unions.
• Interconnectedness between banks and non-banks warrants a coordinated supervisory approach.
• Encouraged authorities to formalize a national crisis management plan in collaboration with the ECCB.
• Recommended gradually reducing reliance on domestic bank financing to limit sovereign financial risks.
• Called for additional efforts to advance AML/CFT reforms, building on progress already made.

Executive Board assessment — summary points

• Commended authorities for swift containment measures and support for the vulnerable.
• Envisaged a gradual recovery, but highlighted significant downside risks: prolonged pandemic, delays in fiscal reforms, and natural disasters.
• Stressed need to continue supporting economic recovery while stabilizing public finances and promoting competitiveness and sustainable growth.

Key economic and financial indicators (selected, as published)

• Population (2019): 97,118
• Adult literacy rate (2015): 99
• GDP per capita (US$, 2019): 17,113
• Human Development Index (2019, of 189 economies): 78
• Life expectancy at birth (years, 2019): 77
• Mortality rate (under 5, per 1,000 live births, 2019): 6.6

• Real GDP (annual percentage change): 2016: 5.5; 2017: 3.1; 2018: 7.0; 2019: 3.4; 2020: -17.3; 2021: -1.0; 2022: 8.5; 2023: 5.6; 2024: 4.4; 2025: 2.7; 2026: (value not provided)
• Nominal GDP (annual percentage change): 2016: 7.5; 2017: 2.2; 2018: 9.4; 2019: 3.5; 2020: -16.4; 2021: 1.0; 2022: 10.6; 2023: 7.7; 2024: 6.5; 2025: 5.4; 2026: 4.8
• Consumer prices (end of period): 2016: -1.1; 2017: 2.4; 2018: 1.7; 2019: 0.7; 2020: 2.8; 2021: 2.0
• Consumer prices (period average): 2016: -0.5; 2017: 1.2; 2018: 1.4; 2019: 1.1; 2020: 2.0

• Central government (Percent of GDP):
  • Primary balance: 2016: -1.2; 2017: -3.7; 2018: -1.3; 2019: 1.3; 2020: 2.5
  • Overall balance: 2016: -2.8; 2017: -2.5; 2018: -4.0; 2019: -6.3; 2020: -4.1; 2021: -3.5; 2022: -1.7; 2023: -0.4; 2024: 0.5
  • Total revenue and grants: 2016: 24.5; 2017: 20.7; 2018: 19.8; 2019: 18.9; 2020: 20.1; 2021: 23.7; 2022: 22.7; 2023: 23.8; 2024: 24.3; 2025: 24.4
  • Total expenditure: 2016: 24.7; 2017: 23.6; 2018: 22.3; 2019: 23.0; 2020: 26.4; 2021: 27.8; 2022: 26.1; 2023: 25.6; 2024: 23.9

• External sector:
  • Current account balance (percent of GDP): 2016: -2.4; 2017: -7.8; 2018: -14.5; 2019: -6.7; 2020: -12.3; 2021: -9.9; 2022: -8.1; 2023: -7.6; 2024: -7.5; 2025: -7.2
  • Trade balance (percent of GDP): 2016: -27.4; 2017: -31.1; 2018: -36.1; 2019: -34.1; 2020: -25.1; 2021: -31.5; 2022: -33.6; 2023: -34.8; 2024: -34.7
  • Nonfactor service balance (percent of GDP): 2016: 35.7; 2017: 32.7; 2018: 30.1; 2019: 36.5; 2020: 21.1; 2021: 17.4; 2022: 28.5; 2023: 32.2; 2024: 33.8; 2025: 33.7
  • Gross tourism receipts (percent of GDP): 2016: 52.4; 2017: 50.2; 2018: 48.3; 2019: 54.7; 2020: 21.5; 2021: 38.6; 2022: 46.2; 2023: 51.0; 2024: 50.8; 2025: 50.9

• External public sector debt (percent of GDP): 2016: 36.2; 2017: 37.5; 2018: 36.7; 2019: 37.1; 2020: 47.4; 2021: 54.4; 2022: 53.8; 2023: 52.7; 2024: 51.4; 2025: 50.1; 2026: 48.4

• Memorandum items:
  • Net imputed international reserves (US$ million): 2016: 330; 2017: 314; 2018: 328; 2019: 279; 2020: 222; 2021: 221; 2022: 253; 2023: 290; 2024: 335; 2025: 374; 2026: 401
  • Months of prospective imports: 2016: 5.1; 2017: 2.9; 2018: 3.2
  • GDP at market prices (EC$ million): 2016: 3,879; 2017: 3,964; 2018: 4,334; 2019: 4,487; 2020: 3,752; 2021: 3,791; 2022: 4,194; 2023: 4,518; 2024: 4,812; 2025: 5,073; 2026: 5,316
  • Public debt stock (EC$ million) 1/, 2/: 2016: 3,341; 2017: 3,654; 2018: 3,803; 2019: 3,702; 2020: 3,748; 2021: 3,997; 2022: 4,109; 2023: 4,193; 2024: 4,220; 2025: 4,203; 2026: 4,173
  • Public debt stock (percent of GDP): 2016: 86.1; 2017: 92.2; 2018: 87.7; 2019: 82.5; 2020: 99.9; 2021: 105.4; 2022: 98.0; 2023: 92.8; 2024: 82.8; 2025: 78.5

• Sources noted in the release: Country authorities, ECCB, UN Human Development Report, World Bank and IMF staff estimates and projections.
• Footnotes in the release:

1/ Includes stock of principal and interest arrears, unpaid vouchers, and suppliers' credits. 2/ Includes central government guarantees of state enterprises' and statutory bodies' debt.

Source: IMF press release — "IMF Executive Board Concludes 2021 Article IV Consultation with Antigua and Barbuda", August 12, 2021.

References

• https://www.imf.org/-/media/images/imf/bios/imfboard.jpg
• The Executive Board
• Antigua and Barbuda and the IMF
• IMF Policy Advice -- A Factsheet
• Press Releases
• PRESS CENTER
• http://www.IMF.org/external/np/sec/misc/qualifiers.htm
• https://www.imf.org/en/home