Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ANTIGUA AND BARBUDA

Fiscal and Debt Developments

in 2018, up from $49.0m (1.2 per cent of GDP) in 2017. This development was largely driven by growth in current expenditure, which outstripped the gains in current revenue. Current expenditure rose by 4.9 per cent ($41.5m) to $882.7m in 2018, from 3.6 per cent growth recorded in 2017 and was 2.7 per cent above the 2018 National Budget estimates. As a percentage of GDP, current expenditure declined to 19.8 per cent from 20.6 per cent in 2017. The increase in current expenditure was mainly attributable to higher outlays on personal emoluments or the wage bill, which rose by 27.7 per cent ($90.6m) to $417.8m. A number of factors contributed to the notable escalation in the wage bill such as the granting of a 5.0 per cent salary increase, back-pay and retroactive payments carried forward from over a decade ago, and new hirings. Interest payments rose by 5.7 per cent ($5.8m) to $107.0m, following a decline of 2.4 per cent ($2.5m) in 2017. These increases in current expenditure were partly offset by reductions in expenditure on goods and services and transfers and subsidies. The amount spent on goods and services contracted by 6.5 per cent ($8.6m) to $123.1m. Likewise, spending on transfers and subsidies fell by 16.5 per cent ($46.3m) to $234.8m due to lower remittance to state owned enterprises.

Preliminary fiscal data for the year ended 2018 revealed a widening of the central government’s overall deficit.

A higher overall deficit of $101.5m (2.3 per cent of GDP) was recorded for the period from one of $96.8m (2.4 per cent of GDP) in 2017. The overall deficit was 18.8 per cent larger than the 2018 National Budget estimates, due to an underperformance of current revenue, lower than expected capital grants and an overshoot of current expenditure. The primary surplus, rose to $5.5m from $4.4m in 2017 but remained unchanged at 0.1 per cent of GDP.

The current account position deteriorated during the period under review, as a deficit of $67.4m (1.5 per cent of GDP) was recorded

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