Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ANTIGUA AND BARBUDA

Redevelopment and Enhancement Project, the Government Affordable Housing Project, the reconstruction of public infrastructure and private homes on Barbuda and investments in the accommodation sector. The Consumer Price Index will likely remain subdued, as global oil prices are expected to moderate in 2019. According to the 2019 National Budget Address, the fiscal situation is expected to improve marginally. An overall fiscal deficit of $78.8m is estimated for 2019, lower than the provisional deficit of $101.5m obtained in 2018. Strengthening revenue through improved tax collection both at the border and inland revenue and the implementation of the Tax Administration and Procedures Act (TAPA) are expected to yield a bump in receipts. Furthermore, the announced reduction in fiscal concessions, if implemented, will augur well for revenue collections. Another positive development is that the notable surge in CIP applications since the reduction in the investment required for the National Development Fund, is expected to continue in 2019. On the expenditure side, current expenditure is likely to stabilize as the government honoured its salaries and wages obligation to public sector employees, which was the main reason for the escalation in that

category of expenditure in 2018. Capital expenditure will likely exceed the amount expended in 2018 as government expedites the road projects in Antigua and continues the rehabilitative works and airport infrastructure in Barbuda. In the external sector, the merchandise trade deficit is projected to widen due to higher import payments to support construction activity and tourism related activities. Gross travel receipts are expected to be stronger than that of 2018, contingent on the forecast for increased tourism activity. While the outlook for the Antigua and Barbuda economy is broadly positive, there are a number of downside risks that could hinder the realization of this forecast. Foremost is lower than anticipated global economic growth due to trade protectionist policies, heightened geopolitical tensions and the continued uncertainty of Brexit. Those developments could restrain the demand for touristic travel and reduce foreign direct investment inflows, thus having an adverse effect on the pace of economic activity in Antigua and Barbuda.

The country is also highly vulnerable to meteorological disasters, which can cause

______________________________________________________________________________ 43 Eastern Caribbean Central Bank