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

August 12, 2021

Washington, DC: On July 28, 2021, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Antigua and Barbuda.

Antigua and Barbuda has been hit hard by the global pandemic. The domestic lockdown and border closure in early 2020 prompted a collapse of tourism-related activities. The economy contracted by an estimated 17.3 percent in 2020. The government promptly took public health measures to limit the spread of the virus and introduced social programs to support the vulnerable. The pandemic was well contained in 2020, even after the reopening of borders in the summer, but the winter tourism season saw a temporary surge in COVID-19 cases. Infection rates have since stabilized with about one-third of the population fully vaccinated.

The economy is projected to contract by 1 percent in 2021 before a recovery takes hold in the second half of this year. A gradual pick-up in tourism activity is expected with the first cruise ship arrival in July and Antigua and Barbuda’s 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.

The pandemic has intensified cash flow pressures, led to a further accumulation of domestic and external arrears, and sharply increased the public debt and gross financing needs. The government has embarked on an economic plan centered on a Medium-Term Fiscal Strategy which seeks to restore debt sustainability and gradually resolve outstanding domestic and external arrears; prioritize policies that tackle COVID-19 and improve healthcare delivery; protect the vulnerable; and create the conditions for durable growth and job creation.

Executive Board Assessment [2]

Executive Directors noted that Antigua and Barbuda was hit hard by the COVID-19 pandemic and commended the authorities for their swift containment measures and support for the vulnerable. A gradual recovery is envisaged, but downside risks are significant, including a prolonged pandemic, delays in fiscal reforms, and natural disasters. Directors stressed the need to continue supporting economic recovery, while stabilizing public finances and promoting competitiveness and sustainable growth.

Directors underscored the urgency of restoring debt sustainability. In this regard, they welcomed the authorities’ Medium-Term Fiscal Strategy, anchored on domestic revenue mobilization and rationalized spending. Achieving the fiscal targets will require additional measures, as well as efforts to secure long-term financing on favorable terms. Noting the continued accumulation in arrears, Directors encouraged the authorities to put in place a concrete clearance plan, continue to engage with creditors, and avoid new arrears. They noted the benefits of the potential SDR allocation in rebuilding reserves and helping to meet the financing gap if needed.

Directors welcomed planned reforms to improve public financial management, tax administration, and targeting of social programs. They recognized the initial steps taken to contain the wage bill and recommended that the authorities consider a long-term strategy to reform the public sector. Further steps are also essential to strengthen the governance and financial position of state-owned enterprises.

Directors welcomed ongoing initiatives to boost growth and job creation, diversify the economy, and improve the business environment. They emphasized the importance of upgrading public infrastructure, including to support digitalization. Directors looked forward to the completion of the National Adaptation Plan to build physical and financial resilience to climate change and natural disasters.

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

Antigua and Barbuda: Selected Economic and Financial Indicators

Population (2019)

97,118

Adult literacy rate (2015)

99

GDP per capita (US$, 2019)

17,113

Human Development Index

78

Life expectancy at birth (years, 2019)

77

(2019, of 189 economies)

Mortality rate

6.6

(under 5, per 1,000 live births, 2019)

Projections

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

National income and prices

(Annual percentage change)

Real GDP

5.5

3.1

7.0

3.4

-17.3

-1.0

8.5

5.6

4.4

3.4

2.7

Nominal GDP

7.5

2.2

9.4

3.5

-16.4

1.0

10.6

7.7

6.5

5.4

4.8

Consumer prices (end of period)

-1.1

2.4

1.7

0.7

2.8

2.0

2.0

2.0

2.0

2.0

2.0

Consumer prices (period average)

-0.5

2.4

1.2

1.4

1.1

2.0

2.0

2.0

2.0

2.0

2.0

Money and credit

Net foreign assets

-4.5

10.9

6.2

-0.9

-4.6

0.0

2.4

2.6

3.0

2.6

1.7

Net domestic assets

2.8

-3.3

0.1

1.7

-0.6

1.0

6.0

1.0

-0.2

3.3

3.1

Of which:

Credit to the public sector

2.0

0.6

0.1

-0.5

4.1

-2.2

-0.1

-0.5

-0.8

-0.9

-0.5

Credit to the private sector

0.6

-1.0

1.0

2.2

1.0

0.8

1.2

0.3

1.7

3.5

3.1

Central government

(Percent of GDP)

Primary balance

2.4

-0.1

0.0

-1.2

-3.7

-1.3

-0.5

1.3

2.5

3.3

3.3

Overall balance

-0.1

-2.8

-2.5

-4.0

-6.3

-4.1

-3.5

-1.7

-0.4

0.5

0.7

Total revenue and grants

24.5

20.7

19.8

18.9

20.1

23.7

22.7

23.8

24.3

24.4

24.3

Total expenditure

24.7

23.6

22.3

23.0

26.4

27.8

26.1

25.6

24.7

23.9

23.6

External sector

Current account balance

-2.4

-7.8

-14.5

-6.7

-7.8

-12.3

-9.9

-8.1

-7.6

-7.5

-7.2

Trade balance

-27.4

-31.1

-36.1

-34.1

-25.1

-25.1

-31.5

-33.6

-34.8

-34.7

-34.7

Nonfactor service balance

35.7

32.7

30.1

36.5

21.1

17.4

28.5

32.2

33.8

33.7

33.8

Of which:

Gross tourism receipts

52.4

50.2

48.3

54.7

27.8

21.5

38.6

46.2

51.0

50.8

50.9

Overall balance

-0.4

-2.4

-0.5

-4.3

-7.0

-3.6

-3.0

-2.5

-0.7

-0.9

-0.9

External public sector debt

36.2

37.5

36.7

37.1

47.4

54.4

53.8

52.7

51.4

50.1

48.4

Savings-Investment balance

-2.4

-7.8

-14.5

-6.7

-7.8

-12.3

-9.9

-8.1

-7.6

-7.5

-7.2

Savings

9.7

15.2

23.0

25.7

16.0

15.2

21.9

23.5

25.2

25.2

25.3

Investment

12.2

23.1

37.5

32.5

23.9

27.5

31.8

31.6

32.8

32.7

32.5

Memorandum items

Net imputed international reserves

330

314

328

279

222

221

253

290

335

374

401

(US$ million)

(Months of prospective imports)

4.1

3.3

3.4

5.1

4.4

2.9

2.7

2.7

3.0

3.2

3.3

GDP at market prices (EC$ million)

3,879

3,964

4,334

4,487

3,752

3,791

4,194

4,518

4,812

5,073

5,316

Public debt stock (EC$ million) 1/, 2/

3,341

3,654

3,803

3,702

3,748

3,997

4,109

4,193

4,220

4,203

4,173

(Percent of GDP)

86.1

92.2

87.7

82.5

99.9

105.4

98.0

92.8

87.7

82.8

78.5

Sources: Country authorities, ECCB, UN Human Development Report, World Bank and IMF staff estimates and projections.

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.



[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://0-www-imf-org.library.svsu.edu/external/np/sec/misc/qualifiers.htm .

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