Antigua & Barbuda approved to receive US$5.1 millon from IMF Executive Board

Antigua, St. John’s – Mr. Wendell Samuel, head of an International Monetary Fund (IMF) staff mission to Antigua and Barbuda, issued the following statement today at the conclusion of the mission:

“An IMF team visited St. Johns during September 1–9 to undertake the first review of the program under the Stand-By Arrangement (SBA) approved by the Fund’s Executive Board on June 7, 2010.

The focus of the mission was to assess the quantitative performance at end-June 2010 under the SBA and review the ongoing macroeconomic and structural policies. The structural reforms aim at strengthening the revenue collection agencies to improve budget performance and enhancing financial regulation and supervision to reduce macro-financial risks.

The mission held meetings with the Minister of Finance Hon. Harold Lovell, senior officials of the Ministry of Finance, and representatives from labor unions and from the local business community. The mission would like to thank the authorities and technical staff for their excellent cooperation.

“All end-June quantitative performance targets were met. A weaker-than-expected macroeconomic environment along with delayed implementation of programmed tax measures has constrained revenue growth. To offset this, the authorities have succeeded in restraining expenditure growth.

Another important pillar of the authorities’ program is a comprehensive restructuring of the public debt with both external and domestic creditors. The domestic debt restructuring is proceeding smoothly, and the authorities are looking forward to reaching a comprehensive agreement on external debt in scheduled negotiations with official creditors in the coming days.

“Overall, the structural reform agenda is progressing significantly. Several key structural benchmarks have been achieved, including: (i) the implementation of the regulations for the Finance Administration Act; (ii) the initiation of civil service reform through the World Bank supported public sector transformation program; and (iii) the amendment of legislation to help combat money laundering. The authorities are pressing ahead with the fiscal structural reforms, although there have been some delays related to capacity constraints in the implementing institutions. The recapitalization of the Bank of Antigua is progressing and is expected to be completed shortly.

“The mission and the authorities have agreed on an updated draft letter of intent that outlines policy responses to the challenge posed by lower-than-expected revenues, which still needs to be approved by the IMF’s management. Based on the performance of the economic program and planned actions going forward, the mission will recommend that the IMF Executive Board complete the First Review of the SBA, resulting in the disbursement of SDR 3.38 million (US$5.1 million). The Board is expected to discuss the review toward the end of October.

“The authorities remain firmly committed to the program’s policies and objectives, which aim at correcting long-standing macroeconomic imbalances that have resulted in the accumulation of decades of arrears. Looking ahead, the considerable risks to the program, including from the external environment, require vigilance and steadfast implementation of the authorities’ fiscal consolidation program. The public debt will remain high and the economy is vulnerable to a variety of external shocks. However, continued strong implementation of the program will lay the foundation for fiscal sustainability and financial stability, which are key to achieving long-term economic growth.”

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