Antigua passes IMF reviews

ST JOHN’S, Antigua, Thursday March 31, 2011 – The International Monetary Fund (IMF) has given the go ahead for Antigua and Barbuda to get another US$10.7 million after the country passed the second and third reviews of its economic performance under its 2010 Stand-By Arrangement (SBA).

The IMF Executive Board yesterday announced the approval, which means the twin-island nation has so far received about US$42.7 million of the US$128 million available under the 36-month SBA which was approved on June 7 last year. Antigua and Barbuda passed the first review back in October.

Following the latest decision to give the country a passing grade in its second and third reviews, the IMF’s First Deputy Managing Director and Acting Chair John Lipsky said the Antiguan economy is beginning to recover but said it still faces some challenges.

“Recent indicators point to moderate positive growth in 2011 based on some improvement in the tourism sector. However, private and foreign direct investment, remittance flows, and construction spending are still below pre-crisis level,” he said.

Addressing the country’s performance under the latest reviews, he noted that all the end-December quantitative targets under the Fund-supported programme were met, despite the continued weak economic performance in 2010 and revenue shortfalls relative to initial programme projections. 

Lipsky said the overall fiscal balance improved significantly as a result of expenditure restraint, interest savings from debt restructuring and, to some extent, enhanced revenue efforts. He said continued vigilance is necessary as risks remain high, including those related to increasing global food and fuel prices and the domestic banking sector.

The senior IMF official also gave the authorities kudos for their commitment to fiscal discipline. He said exercising continued restraint to current spending will be critical to meet the budget and programme targets. 

“To this end, further efforts should be made to raise tax revenues towards initially programmed levels. Maintaining debt sustainability, under severe financing constraints, will also require a sustained effort,” he said, adding that the restructuring of public external debt exceeded initial expectations as the authorities secured refinancing of external public debt with Paris Club creditors on non-concessional terms, and concluded bilateral negotiations with most of those creditors. 

Lipsky pointed out that there had also been comprehensive restructuring of domestic debt to statutory bodies and suppliers, with substantial cuts on the face value of the debts, and government was actively pursuing negotiations to resolve remaining arrears and complete the debt restructuring.

He added that advancing privatization of state-owned enterprises, including improving oversight and better assessment of their budget impact, would further strengthen the fiscal situation.

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