Press Release No. 10/406

Press Release: IMF Executive Board Completes First Review Under the Stand-By Arrangement with Antigua and Barbuda and Approves US$5.3 Million Disbursement

October 29, 2010

The Executive Board of the International Monetary Fund (IMF) has completed the first review of Antigua and Barbuda’s economic performance under a program supported by a 36-month Stand-By Arrangement (SBA). The completion of the review enables the immediate disbursement of an amount equivalent to SDR 3.375 million (about US$5.3 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 20.25 million (about US$31.8 million).

The SBA was approved on June 7, 2010 (see Press Release No. 10/232), for an amount equivalent to SDR 81 million (about US$127.3 million), or 600 percent of Antigua and Barbuda’s IMF quota.

The Executive Board also approved waivers of applicability for end-September performance criteria, as data on performance were not available at the time of the Executive Board meeting. The Executive Board also completed a financing assurances review.

Following the Executive Board’s discussion of Antigua and Barbuda on October 29, 2010, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, made the following statement:

“The Antiguan economy continues to be adversely affected by sustained weakness in tourism receipts, FDI inflows, and remittances, resulting in a sharper-than-expected contraction in economic activity this year, following a steep decline in 2009. Despite the weak economic situation and revenue underperformance, all end-June quantitative targets and structural benchmarks have been met. The authorities have preserved program targets on the basis of enhanced revenue efforts and expenditure restraint.

“Nevertheless, continued vigilance is needed as program risks related to weak growth and employment remain elevated. The measures already taken by the authorities have brought substantial progress toward the achievement of the targeted primary surplus of 3 percent of GDP following a primary deficit of 11½ percent last year. Progress on planned fiscal structural reforms is also critical to improving debt dynamics and strengthening the basis for growth. In the months ahead, the authorities expect to advance with plans for civil service reform, wage bill management, and the recruitment and training of new tax auditors to help enhance revenue growth. The comprehensive restructuring of the public debt is progressing broadly in line with expectations. The authorities have secured a refinancing of external public debt with the Paris Club on non-concessional terms. It is appropriate that other external bilateral and private creditors contribute to the burden sharing by providing comparable treatment to help ease financing pressures and place the public debt on a sustainable path. This would complement the domestic debt restructuring that is nearing completion.

“In the financial sector, the implementation of measures to contain the risks to the financial system by bolstering supervision, including through comprehensive bank examinations, is progressing. The authorities are also putting in place an effective regulatory framework for offshore financial services and nonbank financial institutions.”