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Antigua Reins In Budget Deficit

by Phillip Morton, Investors Offshore.com

14 May 2013


The International Monetary Fund has praised the significant progress achieved by authorities in Antigua and Barbuda in implementing broad fiscal reforms and slashing the territory's sizable deficit.

The IMF reported that the fiscal out-turn for March 2013 was well above program targets, largely on account of strong revenue performance during the first quarter due to a large one-off reduction in tax arrears.

The IMF reported that with technical assistance, local authorities completed a tax expenditure study, and the formation of an institutional oversight and reporting framework for state-owned enterprises within the Ministry of Finance to constrain spending.

The IMF said that, with the recent passage of the Tax Administration and Procedures Act, by the end of the program in June, Antigua and Barbuda will have accomplished 24 out of the 28 fiscal, debt, civil service and public enterprise reforms targeted by the IMF program, "a noteworthy accomplishment," the IMF mission said, "that will help sustain positive fiscal and macroeconomic results going forward."

Under the IMF program, the territory's budget deficit has fallen from 18 percent of gross domestic product (GDP), and a debt-to-GDP ratio of 102 percent, to an average budgetary deficit of 1.7 percent of GDP during 2010-12, and debt-to-GDP ratio of 89 percent at the end of 2012.

The head of the IMF mission, Geoffrey Bannister stated: "The authorities’ reform commitment started to pay dividends in 2012 when the economy saw positive growth for the first time in three years. For 2013, we expect this positive trend to continue, with a further recovery in growth and a small overall fiscal surplus. Despite these successes, the road ahead will not be easy and it is important that the authorities maintain fiscal discipline to secure the hard-won gains of the past three years."

"The authorities have demonstrated 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. Although the [program] ends on June 6, 2013, the IMF will continue to maintain its close policy dialogue with the Government of Antigua and Barbuda in the context of the Fund’s Post-Program Monitoring Framework."

TAGS: Finance | tax | fiscal policy | gross domestic product (GDP) | international financial centres (IFC) | budget | International Monetary Fund (IMF) | offshore | Antigua and Barbuda | dividends

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