The International Monetary Fund (IMF) says the economy of Antigua and Barbuda is recovering but output remains “well below” pre-pandemic levels.
The Washington-based financial institution said labor market disruptions, loss of tourism capital stock and school closures during the pandemic may contribute to “long-term scarring effects.”
Following a decline of 20 percent in 2020, real gross domestic product (GDP) is estimated to have expanded by 5.3 percent in 2021, buoyed by tourism – which remained robust despite some real exchange rate appreciation – and construction activity. Real GDP is projected to grow at 6 and 5½ percent in 2022 and 2023, respectively.
The IMF said risks to the outlook are on the downside. It said output is expected to return gradually to its pre-pandemic level by 2025 supported by strong tourism recovery and foreign direct investment in the hospitality sector and public sector projects.
“However, commodity price shocks can dampen domestic demand and entrench inflation. A growth slowdown in main tourism source markets and/or renewed COVID-19 outbreaks and travel restrictions could stall the tourism recovery and deepen scarring effects,” the IMF said after a team led by Varapat Chensavasdijai, visited St. John’s, September 20 to October 3, to hold a 2022 Article IV consultation, adding that more frequent and intensive natural disasters, due to climate change, pose an “ever-present risk.”
“A further appreciation of the US dollar would weaken competitiveness through the currency peg. Tighter financial conditions may put additional strain on public finances and lead to further domestic arrears accumulation.”
Despite arrears resolution during 2021, the IMF said arrears to domestic and external creditors stood at 19 percent of GDP. Public debt peaked at 102 percent of GDP and is projected to decline to 91 percent of GDP in 2022.
The lending agency has urged the Antigua and Barbuda government to continue to prioritize spending on social safety nets to protect the vulnerable against rising living costs.
It also encouraged authorities to expedite efforts to centralize and digitize information and payment systems for social transfer programs, to improve their coverage and targeting.
It said coordination amongst government agencies implementing social transfer programs should be enhanced in line with the objectives of the Social Protection Act.
“A comprehensive social safety net program, including cash transfers to lower-income households, could then be used to replace the temporary gas voucher program, which needs to be monitored to avoid abuses,” the IMF said.
It also recommended that excise duties be introduced on alcohol and tobacco products.
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 says the economy of Antigua is recovering but output remains “well below” pre-pandemic levels.){kind=link}