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Antigua And Barbuda Makes Strides On Fiscal Consolidation

by Phillip Morton, Investors

07 March 2013

An International Monetary Fund (IMF) mission to Antigua and Barbuda has reported significant progress by local authorities towards the territory's fiscal consolidation program despite challenging economic conditions and financial assistance to the Antigua and Barbuda Investment Bank.

Fiscal consolidation and debt restructuring has lowered the debt-to-gross domestic product (GDP) ratio from 102% in 2009 to 89% in 2012, despite a large economic contraction over that period. The IMF mission pointed out: "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 recovered to 1.6% in 2012, led by a recovery in tourism and construction."

"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% 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% of GDP and a central government overall surplus of 0.3% of GDP. This includes a substantial increase in capital expenditure over 2012 levels in order to rebuild critical infrastructure and bolster the recovery," the Mission reported.

The IMF welcomed progress that had been made by Antigua and Barbuda on improving tax compliance both within and outside the Government. The IMF recalled that this had been achieved through "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."

Concluding, the Mission stated: "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."

TAGS: compliance | tax | business | tax compliance | fiscal policy | law | international financial centres (IFC) | budget | offshore | legislation | Antigua and Barbuda | construction

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