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Antigua's Fiscal Programme On Track Despite Missed Targets

by Amanda Banks,, London

15 November 2012

An International Monetary Fund (IMF) mission monitoring the structural and financial reform program it approved for Antigua and Barbuda under a Stand By Arrangement (SBA) in 2010, has reported that although the fiscal balance target for September may have been missed, the authorities continue to demonstrate strong commitment to the policies and objectives of their Fiscal Consolidation Program.

The report notes that revenue performance in the first three quarters of 2012 was below target but well above the same period last year. Corrective measures to ensure that December targets are met were discussed with the authorities, and an agreement on 2013’s fiscal program was reached.

Expenditure in the first three quarters of the year was within program targets, and the 2013 fiscal program is expected to result in a central government primary surplus of 3% of gross domestic product (GDP) and a central government overall surplus of 0.3% of GDP. Inland Revenue and Customs reforms are also said to be progressing.

Several structural benchmarks, including a valuation/compliance audit on petroleum imports and increased compliance of state-owned enterprises with their tax obligations, have been completed.

The following are expected to follow by January 2013: enactment of the new Tax Administration Procedures Act (TAPA); activation of legislation authorizing the garnishment of overdue ABST (Antigua and Barbuda Sales Tax) and personal income taxes (as part of TAPA); tax compliance of 20 out of 23 statutory bodies; the presentation and passage of a New Customs Act; and the implementation of the harmonized customs code.

The mission met with several state-owned entities to assess their financial situation and discuss possible reforms in preparation for a technical assistance mission in January 2013.

The IMF, which stressed that, "carrying out the plan remains essential to achieving long-term economic growth and job creation," intends to return to Antigua and Barbuda in mid-February 2013.

Antigua and Barbuda sought IMF support following a 20% decline in tax revenue in 2009. The deficit widened from 6% of GDP in 2008 to about 19% in 2009. The government took action to consolidate the nation's finances, including by increasing petroleum product prices, and introducing significant public sector spending cuts and tax measures in the 2010 Budget, worth 4.5% of GDP. These tax measures included an expansion in the value-added tax base, and increases in import duties and excise taxes on alcohol and tobacco.

By 2011, the government had brought the budget deficit down to a more sustainable 1% of GDP, but introduced a number of stimulus measures, including tax concessions, in the 2011 Budget to support the territory's economic recovery.

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

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