Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

ANGUILLA

This outturn was largely driven by an increase in grant inflows, mainly associated with post hurricane Irma relief efforts. The central government’s recurrent operations resulted in a current account deficit of $7.4m compared with one of $4.7m in 2017, as current expenditure growth outpaced that of current revenues. A primary surplus (after grants) of $23.5m was recorded compared with one of $20.7m one year prior. Current revenue increased by 5.0 per cent to $200.2m (24.6 per cent of GDP) compared with a 1.0 per cent rise to $190.7m (25.1 per cent of GDP) one year prior. The expansion in current revenue was mainly influenced by a 37.6 per cent ($10.2m) increase in non-tax revenue, due to greater collections associated with fines, fees and permits. However, the increased receipts were partly mitigated by contractions in tax flows on domestic goods and services. In particular, accommodation tax receipts declined by 71.8 per cent ($14.1m), while stamp duties fell by 42.3 per cent ($6.7m) compared with receipts in 2017. This outturn was largely attributed to the downturn in visitor arrivals in the first quarter as most hotels were still recovering from the effects of Hurricane Irma. In addition, the sale of villas slowed relative to 2017. In a similar vein, the

tourism marketing levy receipts contracted by 58.0 per cent ($2.1m), consistent with the decline in visitor arrivals. By contrast, tax receipts for international trade and transactions grew by 28.3 per cent ($21.3m), with both the import duty and customs service charge receipts increasing by about 28.0 per cent relative to the prior year. Much of this outturn was associated with the high volumes of construction-related materials imported into the country as the private sector ramped up renovations in time for the fourth quarter tourism season. Earnings from taxes on income and profits also rose ($0.9m), consistent with the increase in the stabilisation levy, as more persons regained employment in the hospitality sector. Current expenditure increased by 6.3 per cent to $207.7m (25.5 per cent of GDP), compared with growth of 4.1 per cent to $195.4m (25.7 per cent of GDP) in 2017. This outturn was primarily attributable to expansions in outlays on interest payments, personal emoluments and transfers and subsidies. Interest payments increased by 28.8 per cent ($4.7m) to $21.1m, mainly attributable to a larger stock of external debt, owing to two new disbursements from the Caribbean Development Bank (CDB), as well as an interest rate resetting on CDB debt. Outlays

______________________________________________________________________________ 25 Eastern Caribbean Central Bank