WASHINGTON, CMC—The International Monetary Fund (IMF) says Antigua and Barbuda’s post-pandemic economic expansion is continuing. Actual economic output is estimated to have surpassed pre-pandemic levels in 2024, with growth estimated at 4.3 percent.
The Washington-based financial institution said its executive board has endorsed the country’s staff appraisal, noting that the recovery in nominal gross domestic product (GDP), along with improved fiscal balances, brought down the public debt from around 100 percent of GDP in 2020 to 67 percent in 2024.
“However, gross financing needs are projected to remain around 10 percent of GDP in the medium term. Substantial domestic and external arrears have limited financing options, albeit with domestic arrears uncertain in size.”
The IMF noted that the fiscal primary balance improved to 4.6 percent in 2024, aided by indirect tax increases, a broader economic recovery, and one-off factors. It said the 2025 budget envisages more substantial tax revenues and higher capital spending.
According to Eastern Caribbean Central Bank (ECCB) preliminary estimates, the current account deficit narrowed to seven percent of GDP in 2024, reflecting a higher service trade balance, mainly tourism receipts, and a smaller goods deficit due to a contraction in imports.
Foreign direct investment (FDI) inflows were resilient to tightening global financial conditions and continued to support ongoing hotel construction. Credit growth is recovering, with nonperforming loans contained.
In its assessment, the executive board noted that as the recovery matures, the IMF staff projects economic growth to moderate from three percent in 2025 to 2.5 percent over the medium term.
“After an increase in inflation in 2024, partly reflecting one-off factors, underlying price pressures are expected to dissipate. The external position in 2024 is assessed to be moderately weaker than the level implied by medium-term fundamentals and desirable policies.”
The IMF executive board said efforts to raise revenue and address debt and fiscal challenges bore fruit in 2024. However, further steps will be needed to restore debt sustainability, address the stock of outstanding arrears, and reduce gross financing needs in the medium term.
“Risks are currently tilted to the downside, although upside risks are also present. Downside risks emanate from elevated uncertainty about the global outlook, a deepening of geoeconomic fragmentation, commodity price volatility, climate-related vulnerabilities, and capacity constraints in the construction sector.
“Upside risks stem from stronger demand for tourism; improved air connectivity; new cruise port facilities; hosting special events; and the intensification of productivity-enhancing structural reforms, which could support higher medium- and long-term growth.”
The executive board said addressing external and domestic arrears is key to broadening financing options. While the fall in nominal debt in 2024 is welcome, outstanding arrears to domestic suppliers and the Paris Club remain obstacles to debt sustainability and constrain Antigua and Barbuda’s potential access to external and domestic financing.
“Given the additional vulnerabilities stemming from climate change and the resulting substantial adaption and resilience-building investment needs, efforts to address the current debt challenges, bolster government revenues, and improve public financial management are all the more critical.”
The IMF executive board welcomed recent improvements in tax revenue. However, further domestic revenue mobilization is needed in the medium term to ensure fiscal sustainability. It said Antigua and Barbuda’s tax revenues remain below the authorities’ budgetary resilience guideline targets and are low by peer country standards.
“The authorities’ 2024 Budget measures have started to close the gap, but more will be needed in the medium term. To mobilize revenue without recourse to a personal income tax or higher ABST (Antigua and Barbuda Sales Tax) rates, near-term priorities include tighter control of tax exemptions, transitioning to HS2022 classification in customs, and modernizing the framework for property taxation.
“Intensifying efforts to introduce a single window system at customs and to operationalize systems to allow e-filing, e-payment, and e-registration of taxes is warranted. Introducing a large taxpayer unit and modernized IT systems would strengthen tax administration.”
The executive board assessment said better targeted social assistance would enhance inclusion while curbing inefficiencies.
It said the current social protection framework is fragmented across sectors and ministries. Staff sees the scope of streamlining these social programs to reduce overlap and tailor social assistance to the most vulnerable households.
“In this vein, staff encourages the development of a centralized information system or unified database to maintain accurate records of all beneficiaries, track support received, and identify gaps or duplications in coverage.”
The IMF said that room remains to strengthen fiscal institutions and oversight, building on recent progress. It also welcomes the operationalization of the Fiscal Responsibility Oversight Committee.
However, to promote transparency and help build public understanding, staff encourages the publication of FROC reports once further experience has been gained.
“These goals would also be served by parliamentary endorsement of the Fiscal Resilience Guidelines and the medium-term fiscal framework. Statutory exemptions should be consistent with the Antigua and Barbuda Investment Authority Act, and the Antigua and Barbuda Investment Authority should monitor the approved projects.”
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