ANTIGUA AND BARBUDA Annex 1: Country Profile Population: 79, (23) GNI per capita: US$9,95 (24 est. Atlas methodology) 1. Profile. Antigua and Barbuda is a three-island economy (Redonda is the third) which accounts for about 25 percent of the combined Eastern Caribbean Currency Union GDP. Antigua, the largest island, has a dry climate and a large number of white sand beaches. The cultivation of sugar that started in the late 16 s was abandoned in 1969. Aside from tourism the island s most important industry Antigua and Barbuda s economy depends heavily on the service sector, particularly offshore services. The unemployment rate is estimated at 7 percent, poverty is estimated to be relatively low, with a headcount index of 12 percent, but social indicators do not reflect the high per capita income. Adult literacy attainment, for example, lags the other OECS countries. The 24 UNDP Human Development Report ranks Antigua 55 th, out of 174 countries. 2. Political Context. Independence: 1981 Next election: 29. In March 24, the United Progressive Party won a landslide victory in the general elections, ending the political dynasty of the Bird family, which had dominated the country s politics for more than half a century and run a populist, non-transparent regime, during which there was a severe erosion of governance and policy slippage. Antigua and Barbuda is currently not a borrowing member of the Bank due to creditworthiness issues and its high per capita income. It has, however, benefited from economic and sector work, and regional analytical work undertaken across the OECS sub-region and the wider Caribbean region. The new administration has recently made overtures to the donor community (including the World Bank) for assistance in the area of macroeconomic management. 3. Economic Developments and Prospects. Rapid private sector-led growth in the 198s, mainly tourism-sector driven, gave way to public sector-led growth, accompanied by deteriorating institutions and broad fiscal mismanagement. As in the other OECS countries, growth slowed down considerably in recent years due to a combination of exogenous shocks (natural disasters, the impact of the 9/11 events on tourism and tightened regulation of offshore activities) and policy slippages during the two Bird (father and son) administrations, including fiscal mismanagement and widespread governance issues. The public sector has been used as an employer of last resort, with the result that about 4 percent of the labor force is employed in the public sector and 6 percent of government revenues go to meet the wage bill, leaving little room for other expenditure. The large fiscal deficits that resulted were financed through arrears to both external creditors as well as domestic banks, suppliers and the social security system. Continued borrowing from select institutions, both domestic and external, was secured through earmarking tax revenues to pay debt service to creditors and through non-transparent loans (at end-23, almost 35 percent of revenues were estimated to be earmarked for debt service). Growth has strengthened since 23 due to a rebound in tourism, but fiscal imbalances remain very large and the debt stock is high. The public sector debt stock in 23 was estimated at 142 percent of GDP (external debt at 75 percent of GDP). Antigua and Barbuda s debt profile is somewhat different from the other OECS countries. Multilateral debt is negligible and there is no debt outstanding to the World Bank Group. Debt sustainability analysis by the IMF shows that under a passive scenario, with no adjustment, the public debt would rise to over 157 percent of GDP by 29. However, it is unlikely that Antigua and Barbuda would find the financing required by this scenario. A strong fiscal adjustment, as detailed in the attached table, would lead to the public sector debt ratio to GDP coming down to 86 percent of GDP by 29. However, this adjustment would require primary surpluses during 27-9 in the range of 1.5-3.5 percent of GDP and a comprehensive debt restructuring. The new administration that took office in March 24 has shown commitment to address the country s problems but the challenges are significant. Fiscal imbalances and the level of external debt (including arrears) are high. The Government announced an ambitious fiscal reform in the 25 budget, including the re-introduction of a personal income tax (introduced in April 25) and of a modern system of property taxes (to become effective in January 26), and measures to curtail the growth in expenditures, including a significant downsizing of the public sector, together with the establishment of an adequate safety net. Also, the authorities recently announced in June that a VAT will be introduced in 26. At the same time, new 72
fiscal initiatives were introduced to stimulate growth and for social objectives, thus limiting the near term improvement in the fiscal accounts. Since fiscal adjustment alone would not be sufficient to bring debt to a manageable level, after taking office in March 24 the Government initiated a dialogue with creditors with a view to regularizing relations (most loans have been in arrears for several years). A major step included an agreement with the Italian Government to clear US$196 million (one third of external debt) through a bullet payment of US$18.5 million. Also, the authorities have requested assistance from donors to hire financial advisors to facilitate the debt restructuring process. A Debt Coordinating Committee was formed in mid-25 with representatives from the public and private sectors to facilitate this process. Even with a large fiscal adjustment and robust growth performance, the economy will remain vulnerable and public debt high for many years to come. In particular, the combination of high debt, susceptibility to external (economic and natural) shocks and a tourism dependent economy point to an unusually high level of risk. 73
Annex A2: Country at a Glance Antigua and Barbuda at a glance 8/5/5 Antigua Latin Upper- POVERTY and SOCIAL and America middle- Barbuda & Carib. income 23 Population, mid-year (millions).8 534 335 GNI per capita (Atlas method, US$) 9,33 3,26 5,34 GNI (Atlas method, US$ billions).72 1,741 1,788 Development diamond* Life expectancy Average Annual Growth 199-23 Population (%) 1.6 1.6 1.3 Labor force (%).. 2.1 1.8 Most recent estimate (latest year available, 1997-3) Poverty (% of population below national poverty line) 12.... Urban population (% of total population) 38 77 76 Life expectancy at birth (years) 75 71 73 Infant mortality (per 1, live births) 12 28 19 Child malnutrition (% of children under 5)...... Access to an improved water source (% of population) 91 86 89 Illiteracy (% of population age 15+).. 11 9 Gross primary enrollment (% of school-age population).. 129 14 Male.. 131 14 Female.. 126 14 GNI per capita Access to improved water source Antigua and Barbuda Upper-middle-income group Gross primary enrollment KEY ECONOMIC RATIOS and LONG-TERM TRENDS GDP (US$ billions).15.46.73.76 Exports of goods and services/gdp 61.3 96.2 58.9 6.2 Economic ratios* Trade Current account balance/gdp -5.9.. -15.2-13.7 Interest payments/gdp 1.3 1.1 4. 3.8 Total debt/gdp 22.2 61.4 129.3 141.8 Domestic savings Investment 1983-93 1993-3 22 23 23-7 (average annual growth) GDP 5.9 3.2 2.2 4.9 4. GDP per capita 5.4 1.3.6 3.3 2.4 Exports of goods and services 9.7.3...... Indebtedness Antigua and Barbuda Upper-middle-income group STRUCTURE of the ECONOMY Agriculture 6.1 4.1 3.8 3.7 Industry 14.2 18.2 2.9 2.9 Manufacturing 4.9 2.4.... Services 79.6 77.7 75.3 75.4 Imports of goods and services 76.5 9.7 68.4 71.3 Growth of investment and GDP (%) 1 5-5 98 99 1 2 3-1 GDI GDP 1983-93 1993-3 22 23 (average annual growth) Agriculture 4.9 1.1.9 2.6 Industry 9.5 6.5 3.4 6.8 Manufacturing 1.1 3.2 2.8 5.8 Services 5. 2.9 1.7 5.9 Growth of exports and imports (%) 1 98 99 1 2 3-1 -2 Exports Imports * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will b i l 74
Annex A2: Country at a Glance Antigua and Barbuda PRICES and GOVERNMENT FINANCE Domestic prices (% change) Consumer prices.. 3.2 1.8 2.8 Implicit GDP deflator 6.1 2.2 -.1 -.4 Government finance (% of GDP, includes current grants) Current revenue.... 2.2 2.8 Current budget balance.... -6.9-3. Overall surplus/deficit.... -1.7-6.7 TRADE (US$ millions) Total exports (fob).. 62 37 42 Commodity 1.. 47 17.. Commodity 2........ Manufactures........ Total imports (cif).. 338 336 353 Food........ Fuel and energy........ Capital goods........ Inflation (%) 6 4 2-2 Export and import levels (US$ mill.) 45 4 35 3 25 2 15 1 5 98 99 1 2 3 GDP deflator CPI 97 98 99 1 2 3 Exports Imports BALANCE of PAYMENTS (US$ millions) Exports of goods and services 99 484 428 457 Imports of goods and services 118 488 25 221 Resource balance -19-3 223 236 Net income -1-23 -41-41 Net current transfers 11.. 6 13 Current account balance -9.. -111-14 Financing items (net).... 119 124 Changes in net reserves.. 11-8 -26 Memo: Reserves including gold (US$ millions).... 88 114 Conversion rate (DEC, local/us$) 2.7 2.7 2.7 2.7 EXTERNAL DEBT and RESOURCE FLOWS (US$ millions) Total debt outstanding and disbursed.... 521 569 IBRD.... IDA.... Total debt service.... 36.4 4.7 IBRD.... IDA.... Current account balance to GDP (%) -2 97 98 99 1 2 3-4 -6-8 -1-12 -14-16 Composition of 23 debt (US$ mill.) D: 9 F: 234 E: 279 World Bank program Commitments.... Disbursements.... Principal repayments.... Net flows.... Interest payments.... Net transfers.... A - IBRD B - IDA C D - Other multilateral E - Bilateral F - Private G S 75
Antigua and Barbuda Social Indicators Annex B5: Poverty and Social Indicators Latest single year Same region/income group Latin Upper- America middle- 197-75 198-85 1997-3 & Carib. income POPULATION Total population, mid-year (millions).1.1.1 534.2 334.9 Growth rate (% annual average for period) -.9.3 2.2 1.5 1.2 Urban population (% of population) 34.2 35. 37.8 76.6 75.8 Total fertility rate (births per woman) 2.6 2. 1.7 2.5 2.4 POVERTY (% of population) National headcount index.......... Urban headcount index.......... Rural headcount index.......... INCOME GNI per capita (US$).. 3,1 9,17 3,26 5,34 Consumer price index (1995=1).... 112.... Food price index (1995=1).......... INCOME/CONSUMPTION DISTRIBUTION Gini index.......... Lowest quintile (% of income or consumption).......... Highest quintile (% of income or consumption).......... SOCIAL INDICATORS Public expenditure Health (% of GDP).... 3.3 3.3 3.7 Education (% of GNI)...... 4.5 4.4 Social security and welfare (% of GDP).......... Net primary school enrollment rate (% of age group) Total...... 94 93 Male...... 94 93 Female...... 95 94 Access to an improved water source (% of population) Total.... 91 86 89 Urban.... 95 94 93 Rural.... 89 65 77 Immunization rate (% of children ages 12-23 months) Measles.. 69 99 91 94 DPT.. 99 99 88 9 Child malnutrition (% under 5 years).. 1...... Life expectancy at birth (years) Total 67 72 75 71 73 Male 65 7 73 68 7 Female 69 74 78 74 77 Mortality Infant (per 1, live births).... 11 28 19 Under 5 (per 1,).... 12 34 22 Adult (15-59) Male (per 1, population).... 183 222 197 Female (per 1, population).... 133 125 13 Maternal (per 1, live births).......... Births attended by skilled health staff (%).... 1.... CAS Annex B5. This table was produced from the CMU LDB system. 4/13/5 Note: or. means zero or less than half the unit shown. Net enrollment rate: break in series between 1997 and 1998 due to change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months who received vaccinations before one year of age. 76
Annex B6: Key Economic Indicators Antigua and Barbuda - Key Economic Indicators a Actual Estimate Projected Indicator 2 21 22 23 24 25 26 27 28 29 National accounts (as % of GDP) Gross domestic product b 1 1 1 1 1 1 1 1 1 1 Agriculture 3.9 3.9 3.8 3.7 3.7 3.7 3.6 3.5 3.4 3.5 Industry 2 23 21 21 21 21 21 2 2 2 Services 76 73 75 75 75 76 76 76 77 77 Memorandum items Gross domestic product 678 71 727 759 82 834 881 936 981 143 (US$ million at current prices) GNI per capita (US$, Atlas method) 867 88 877 933 995.......... Real annual growth rates (%, calculated from 199 prices) Gross domestic product at factor cost 3.3 1.5 2.2 4.9 4.1 2.5 4.1 4.6 3.2 4.9 Real annual per capita growth rates (%) Gross domestic product at factor cost 1.7 -.1.6 3.3 2.5.9 2.5 3. 1.6 3.3 Balance of Payments (US$ millions) Trade Balance -29-281 -299-311 -329-354 -384-45 -424-451 Merchandise Exports FOB 52 41 37 42 45 47 5 53 55 59 Merchandise Imports FOB 342 321 336 353 374 41 434 457 479 51 Tourist receipts 29 272 274 3 327 357 396 441 467 57 Net current transfers 9 9 6 13 9 9 1 1 1 11 Current account balance -65-65 -111-14 -16-116 -13-119 -121-118 Net private foreign direct investment 28 44 37 74 59 64 7 78 85 94 Change in reserves e 6-16 -8-26 11-2 -2-2 -2-2 Memorandum items Resource balance (% of GDP) 38.3 32.5 3.7 31.1 31.7 33.3 34.9 36.6 37. 37.8 (Continued) 77
Annex B6: Key Economic Indicators Antigua and Barbuda - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 2 21 22 23 24 25 26 27 28 29 Public finance (as % of GDP at market prices) e Total revenues and grants 21.7 19.2 21.5 21. 21.4 24.4 26.4 27.4 27.4 27.4 Total expenditures and net lending 26.7 3.3 32.2 27.7 26.8 35. 34.7 33. 32. 31. Central government overall balance -5. -11.1-1.7-6.7-5.4-1.6-8.3-5.6-4.6-3.6 Capital expenditure 2.1 4.7 5.1 4. 1.8 4......... Primary balance -.3-6.8-6.7-3. -1.9-4.6-1.6 1.4 2.4 3.4 Monetary indicators M2/GDP 75.8 75.8 78.7 91.3 91.3 91.2........ Growth of M2 (%) 5.7 4.8 6.3 21.1 5.7 3.9........ Consumer price index (% change, average) -.6 -.4 1.8 2.8 1.5 1.5 1.5 1.5 1.5 1.5 a. Projections for 25-9 are based on an adjustment scenario including regularizing the stock of total arrears in 25 through issuing long-term bonds. b. GDP at factor cost c. "GNFS" denotes "goods and nonfactor services." d. Includes net unrequited transfers excluding official capital grants. e. Includes use of IMF resources. f. Consolidated central government. g. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 78
Antigua and Barbuda - Key Exposure Indicators Annex B7: Key Exposure Indicators Actual Estimate Projected Indicator 2 21 22 23 24 25 26 27 28 29 Total debt outstanding and 85 878 94 176 91 698 768 817 86 893 disbursed (TDO) (US$m) a External Debt (US$) 449 471 521 569 375.......... Debt and debt service indicators (%) External public debt/gdp 66.2 66.3 71.7 75. 46.7.......... (of which: arrears)/gdp 12.6 13.9 17.4 21.6 18........... TDO/GDP 125.4 123.6 129.3 141.8 113.4 83.7 87.2 87.3 87.7 85.6 IBRD exposure indicators (%) IBRD TDO (US$m) d.................... IDA TDO (US$m) d.................... IFC (US$m) Loans.................... Equity and quasi-equity /c.................... MIGA.................... MIGA guarantees (US$m).................... a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net shortterm capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 79