An International Monetary Fund (IMF) team has concluded its annual review of
the Antigua and Barbuda economy and it has forecast expansion in the economy,
but warns of ongoing challenges of the high public sector debt burden.
Led by David Moore, the team was in St. John’s from June 17–21, 2024, and met
with government officials and other stakeholders to discuss recent economic
developments, the economic outlook, and policy priorities. At the conclusion of the
visit, Moore issued the following statement:
“Antigua and Barbuda’s economy continues to recover. Real GDP growth is
estimated at 4.2 percent in 2023, returning the country to pre-pandemic real output
levels on the back of strong construction activity and continued growth in tourist
arrivals. In 2024, growth is projected to be temporarily higher. Growth in 2024 is
expected to accelerate to 5.8 percent, boosted by Antigua’s hosting of the UN’s
Small Island Developing States Conference and co-hosting of the T20 Cricket
World Cup. Inflation rose to 6.0 percent in April 2024, from 3.3 percent at end-
2023.”
“The high public debt burden poses ongoing challenges. The public debt to
GDP ratio has declined from its pandemic high, from around 100 percent in 2020
to an estimated 76 percent in 2023, reflecting the economic recovery and an
upward revision to nominal GDP from a rebasing of the national accounts
statistics. However, cash constraints continue to bind, and domestic and external
arrears are substantial. Fiscal adjustment is needed to create space to clear arrears
and prevent their reemergence. The timely completion of the authorities’ validation
of domestic arrears, development of a comprehensive arrears clearance strategy,
and close engagement with creditors and domestic suppliers, will be essential for
restoring debt sustainability.”
The 2024 budget represents important progress towards stronger fiscal
buffers. Given Antigua and Barbuda’s high debt and financing needs, and
susceptibility to external shocks, measures to improve the fiscal position are
critical to help reduce vulnerabilities. The 2024 budget includes a package of
revenue measures—in particular, increasing the standard ABST rate and
broadening its base, introducing excise taxes on alcohol, tobacco, and cannabis
products, and raising property taxes for high-end properties—that is expected to
improve the fiscal position by around ½ percent of GDP in 2024. Room remains to
strengthen the fiscal position further, including through closer adherence to the cap
on discretionary tax exemptions, and continuing the recent efforts to enhance
expenditure commitment controls.”
Credit market developments reflect the broader pickup in activity. Bank credit
to the private sector rebounded by 7 percent in 2023, after contracting in the
previous two years. Credit unions have expanded rapidly over several years, with
loan growth moderating to around 8 percent in the year through 2024Q1. Non-
performing loans for both banks and credit unions, as a share of total loans, are
modestly above the prudential level of 5 percent. Stronger oversight and regulation
of credit unions, including through risk-based capital requirements, would promote
a level playing field across the financial sector and support asset quality.”
Further work is needed to address persistent data gaps. The statistical
authorities have made efforts to update the national accounts and improve data
quality. Ensuring sufficient resources for completing the Population and Housing
Census, the Producer Price Index and the 2023 Labour Force Survey, and reporting
on the financial operations of state-owned enterprises, would facilitate evidence-
based policy making and transparency.”
“The IMF team thanks the authorities and other counterparts for their collaboration
and support, as well as for the valuable discussions.”
