Antigua meets latest IMF targets but...
ST JOHN’S, Antigua, Monday March 7, 2011 – Antigua and Barbuda has passed its third review under its Stand-by Arrangement (SBA) with the International Monetary Fund (IMF) but the lending institution is not completely pleased with the government’s revenue intake.
Following a review conducted last week, an IMF staff mission issued a statement in which it said that all the end-December quantitative performance targets appear to have been met.
However, according to head of the mission Chris Walker, “although enhanced administrative measures began to yield increased tax receipts toward the end of the year, government revenue continued to be lower than expected at the time of the SBA approval”.
That was a concern that was also noted following the end-September review.
“Despite the strong performance in 2010, the fiscal situation continues to be constrained. Revenue performance remains weak and further reductions in the public debt are needed. Under these circumstances it is important that the government continue to prioritize spending on the poorest and most vulnerable,” Walker added.
Despite continuing lower-than-optimum revenue yields, the IMF said the Government has continued to put the brakes on expenditure, while taking concrete steps to improve revenue collection by reforming operations at the Customs Division and Inland Revenue Department.
“These reform efforts will continue in 2011 with the invaluable support of the Caribbean Regional Technical Assistance Centre. We expect to make further strides in expenditure management as we implement the Public Financial Management action plan with financial and technical assistance from the European Union and CARTAC,” said Finance Minister Harold Lovell.
Walker also noted that the authorities have continued to restrain primary expenditure growth and a significant reduction in interest payments was achieved through the restructuring of debts to both domestic and external creditors.
Lovell gave more details about that development. He said that at the end of 2009, public sector debt was $3.2 billion, but as a result of the debt restructuring efforts associated with the Fiscal Consolidation Programme, the debt stock has declined to $2.8 billion or about 94 percent of GDP.
The Finance Minister also indicated that the government has used more than $95 million of the $110.4 million received from the IMF and the Caribbean Development Bank last year to make payments to local contractors, merchants and businesses.
Walker said that from what has been happening so far, the Antigua and Barbuda authorities remain firmly committed to the program’s policies and objectives, and recognize the benefits of strong macroeconomic policies in achieving the goals of their National Economic and Social Transformation (NEST) plan.
“The mission and the authorities have agreed on a draft letter of intent that incorporates the policies presented in the 2011 Budget to continue the Government’s fiscal consolidation programme, and outlines new structural benchmarks for 2011,” he said.
“These include the development and enactment of new audit legislation, the development of revised public service legislation, the introduction of a more efficient customs classification system, and the implementation of measures to enhance oversight of state-owned enterprises, among others.”
The IMF Board is expected to discuss the second and third reviews on March 30th.
Lovell said the government expected a favourable outcome to those deliberations and was looking forward to receiving the third disbursement under the SBA after that meeting.
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