THE International Monetary Fund (IMF) has concluded that Antigua and Barbuda’s economic framework is improving following its virtual visit with authorities between February 7-11.

The visit, which was led by Varapat Chensavasdijai, reviewed the country’s economic development and policy priorities. Antigua and Barbuda suffered a 20.2 per cent cut in its gross domestic product (GDP) in 2020 which was the sharpest reduction in GDP since the 2009 global financial crisis in which it recorded a 12 per cent decline.

In its report, the IMF noted that real GDP grew by an estimated 4.8 per cent in 2021 and project a seven per cent expansion in 2022 underpinned by a sustained recovery in tourism and construction activity. Two-thirds of the country’s GDP before the pandemic was in the services sector with industry making up 21 per cent. Antigua and Barbuda is one of the few countries which offers a citizenship by investment programme with the country’s passport providing visa free access to 150 countries.

“Two-thirds of the population have been fully vaccinated, which is among the highest rates in the Caribbean. However, a prolonged pandemic (eg, due to the emergence of new virus variants) and supply chain disruptions could put a drag on the recovery at the same time as wage and price pressures build,” the IMF report stated on the threats to the country’s fiscal recovery.

Despite the country’s debt to GDP ratio ballooning to 97.56 per cent in 2020 due to the decline in GDP, the country remains on track to improve its fiscal management through debt consolidation which is aimed at bringing the ratio down to 70 per cent by 2030. The 2022 budget envisions a net zero primary balance after narrowing the gap by two per cent to 1.8 per cent in 2021. The report noted that the country has to improve its tax compliance and implement reforms amid an uncertain revenue outlook and the need to contain spending amid rising international oil prices.

“The financial sector is showing signs of recovery. Banks are well-capitalised and liquid, but credit growth has been slow, particularly to the household sector. Loans under moratoria at banks and credit unions have declined significantly in 2021 and non-performing loan ratios have remained stable. Nonetheless, supervisors should closely monitor asset quality and ensure that loan loss provisioning is proportional to credit quality risks, especially at credit unions.,” the report added.

While the Caribbean nation remains highly susceptible to natural disasters and climate change as seen from its bouts with Hurricane Irma, the National Adaption plan is on track to be completed by year end as well as the ongoing initiatives to make the infrastructure more disaster resilient. The Blue Economy plan will identify new sustainable sectors and opportunities to diversify the economy and improve capacity building.

The post IMF Gives High Marks for A&B’s Economic Recovery appeared first on The St Kitts Nevis Observer.