An International Monetary Fund (IMF) mission led by Geoffrey Bannister visited Antigua and Barbuda during February 19-28, to undertake the combined eighth and ninth review of the program under the Stand-By Arrangement (SBA) approved by the Fund's Executive Board on June 7, 2010. The mission held meetings with Prime Minister Hon. Baldwin Spencer, Minister of Finance Hon. Harold Lovell, members of Cabinet, senior officials of the Ministry of Finance, the Financial Services Regulatory Commission (FSRC), the Office of National Drug and Money Laundering Control Policy (ONDCP), members of the Chamber of Commerce, and representatives of statutory bodies and the local business community. The mission also held discussions with the Governor and key staff of the Eastern Caribbean Central Bank (ECCB) and would like to thank the authorities and technical staff for their excellent cooperation.
At the conclusion of the visit, Mr. Bannister issued the following statement in St. John's:
"The authorities have made significant progress towards meeting the goals of their fiscal consolidation program, to restore debt sustainability and lay the foundations for sustainable growth, despite a challenging international economic environment and domestic financial sector problems. Fiscal consolidation and debt restructuring lowered the debt-to-GDP ratio from 102 percent in 2009 to 89 percent in 2012, in spite of a large economic contraction during this period. Reforms in revenue administration and public financial management have helped strengthen public finances. All of this provides a solid anchor for economic recovery and growth, which is already bearing fruit. Real GDP grew by 1.6 percent in 2012, led by a recovery in tourism and construction, the latter related to government initiatives. This welcome economic expansion is the first since 2008. We expect the economic recovery to continue in 2013.
"The focus of this mission was to assess the performance at the end of December, 2012 under the SBA; review the ongoing financial and structural reforms and progress with the resolution of Antigua and Barbuda Investment Bank; and confirm fiscal targets for 2013. Although the fiscal outturn in September 2012 was below program targets, performance in the final quarter of 2012 was strong and the performance criterion on the overall fiscal balance for end-December was met with a small margin. Tax revenue was 1.4 percent of 2012 GDP higher than in 2011, a commendable achievement that shows structural reforms in revenue administration are starting to produce results. The government also controlled expenditure effectively, keeping it well within program targets throughout the year. For 2013, the fiscal program is consistent with a central government primary surplus of 3 percent of GDP and a central government overall surplus of 0.3 percent of GDP. This includes a substantial increase in capital expenditure over 2012 levels in order to rebuild critical infrastructure and bolster the recovery.
"While notable progress has been made on the structural reform agenda, there have been some delays and a number of benchmarks remain to be completed in the next three months. Good progress continues to be made on public financial management, civil service and public enterprise reforms, with ongoing technical assistance. Progress has been made on improving tax compliance both within and outside the government. With regard to pending revenue administration benchmarks, the authorities took a decision to amend several pieces of legislation to address perceived weaknesses in the existing laws, and strengthen the capacity of the revenue agencies to administer them. Hence, while the HS 2007 Code was approved several months ago, it is not scheduled to take effect until April 2, 2013. In the case of the Customs Control and Administration Act, a number of minor amendments are considered necessary, and these should be passed during March, 2013. Passage of amendments to the Tax Administration and Procedures Act (TAPA) are also necessary, and the authorities are committed to taking the amendments to Parliament for approval before May 31, 2013.
"Regarding the financial sector, presentation to Parliament of stand-alone legislation to govern the Financial Services Regulatory Commission (FSRC) is expected by mid-May, 2013, and good progress has been made in improving compliance with standards for Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT). The authorities (in conjunction with the ECCB) are also pressing forward with the resolution of ABI Bank, on which the remaining financial sector benchmarks depend.
"Towards the end of its stay, the mission made a presentation to members of the Antigua and Barbuda Chamber of Commerce focusing on achievements under the government's program and had a fruitful discussion on economic prospects for 2013.
"The authorities continue to demonstrate strong commitment to the policies and objectives of their Fiscal Consolidation Program, and recognize the importance of strong macroeconomic, financial and structural policies in achieving the goals of their National Economic and Social Transformation plan.