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Antiguan Fiscal Reform Bearing Fruit, IMF Reports

by Philip Morton, Investors

17 April 2013

The International Monetary Fund (IMF) has commended authorities in Antigua and Barbuda for continuing to make significant progress towards fiscal consolidation despite a persistently weak economy.

Reviewing progress in April towards goals set in return for a 36-month financial assistance loan, the IMF approved a further disbursement valued at approximately USD10m, to bring total funds allocated to the territory to USD76.2m to date.

In its previous review of the territory's progress in December 2012, the IMF reported that the islands had made significant inroads towards bringing down the territory debt-to-gross domestic product ratio from 102% in 2009 to 89% in 2012, despite an economic contraction over the period.

The IMF believes that the majority of the reforms that were required to ensure sustainable finances and a buoyant economy have been installed, and welcomed the Government's commitment in the Budget for 2013/14 to strengthen the business environment while bringing the territory's debt-to-GDP ratio down to 60% by 2020.

Summarizing recent progress, Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated: "Antigua and Barbuda’s economy is recovering gradually after three years of recession brought on by the international financial crisis. Tourism arrivals increased in 2012 and government programs provided an incentive for housing investment. However, significant risks to the macroeconomic outlook remain, including from a slowdown in advanced economies, higher import prices and natural disasters."

"The government continues to make progress in fiscal consolidation through expenditure restraint and improvements in revenue administration. All performance criteria for end-December 2012 were met, except for a minor breach of the continuous performance criterion on external arrears for which corrective action has been taken. The government maintains its successful efforts in debt restructuring to reduce the burden of debt service, although potential contingent liabilities in state-owned enterprises and the banking sector remain a concern."

"The authorities’ budget for 2013 is consistent with their goal of reducing the debt ratio to 60% of GDP by 2020. Continued implementation of structural reforms in revenue administration and public financial management will be essential to achieve the 2013 fiscal targets while providing space for productive public investment in human capital and infrastructure. Reducing concessions in customs and other tax expenditures will be an important part of this effort. The passage and implementation of best practice legislation in customs and tax administration will also ensure the sustainability of the fiscal consolidation effort going forward."

TAGS: environment | tax | investment | business | law | banking | financial services | international financial centres (IFC) | budget | legislation | Antigua and Barbuda | services

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