Introduction - Antigua and Barbuda
The country outline for Antigua and Barbuda is aimed to offer an overview of the Antigua and Barbuda's social and economic situation. It was prepared using inputs from the Caribbean Development Bank Annual Economic Report for the year 2003-2004, the CIA fact-book, World Bank Discussion Papers available online, and the 2004 Budget Speech. The complete list of references is available in the sections named Bibliography and Sources on-line.
I. Social Indicators
In 2000, 89% of the rural population had access to improved drinking water sources and 95% of the urban population had access to improved drinking water sources.[1] The estimated prevalence rate for 15-49 yr old population is 0.7%. There were 7.5 AIDS incidences per 100,000 population registered since 1998.
In terms of the environment, Antigua and Barbuda's sewage mechanism has begun to suffer to the point where it will have negative implications for public health and the country's natural environment. The coastal zone is also degrading and guarantees an adverse impact on tourism in the near to medium term if the appropriate measures are not taken.
Antigua and Barbuda will also need to strengthen education delivery as only 84.4% of its population achieved literacy in 2000.[2]
The first woman elected to the Lower House was sworn in during March 2004. Dr. Jacqui Quinn-Leandro, a media consultant and former News Director of the state owned radio and television service and a new-comer to politics, has made history in the Parliament.[3] In terms of corruption, a commission of inquiry was established to examine allegations of fraud in the handling of Antigua's Medical Benefits Scheme (MBS). The report of the Commission released in August 2002 recommended the Government pay at least 50 per cent of an estimated EC$ 120 million (US$44 million) owed to the Scheme. Three Government ministers and the MBS board of directors were dismissed as a result of alleged wrongdoing relating to the MBS, while one other minister tendered his resignation during the inquiry.[4]
II. Socio-economic Situation analysis
a. Overview of the recent economic performance
The Antigua and Barbuda economy grew by 3.2% in 2003, compared with 2.1% in 2002 as a result of improvements in the construction, government services, hotels and restaurants, and transportation sectors.[5] Recurrent revenue increased by 8.5% to EC $123.9 million in September 2003 from September 2002 largely as a result of taxes of income, property and imports.[6] From 2002 to 2003, stayover arrivals from the UK and US increased by 11.9% and 1.3% respectively.[7] Previously, Antigua and Barbuda registered weak tourist arrival numbers, which slowed the economy and constrained the government's fiscal situation. The current account deficit widened despite the increase in tourism earnings. For Antigua and Barbuda, economic growth in the medium term will continue to depend on income growth in their tourist markets, the US and UK.
Antigua and Barbuda's agricultural sector accounts for less than 3% of GDP.[8] Agricultural output increased by 2% in 2003 in spite of an extended dry period that resulted in decline in crop production.[9] Agricultural production is focused on the domestic market and is further constrained by a shortage in labor. The tourism and construction sectors compete with higher wages. Furthermore, local production has not been able to meet local demand all year round.
Antigua's increased reliance on tourism came as a result of the crippling of two vital sectors during the late 1990s: offshore gaming and offshore banking. Antigua's offshore gaming industry employed over 2,000 people and generated over US$7 million in license fees. As a result of severe legislative pressure from the United States, employment within the sector declined to less than 200 people in 2003. In response, Antigua and Barbuda presented arguments to the WTO panel that showed that the US government's legislation against transactions between US financial institutions and Antigua and Barbuda-based Internet gaming companies was in breach of the US government's obligations under the General Agreement on Trade in Services (GATS). The Disputes Panel at the WTO has recently recommended that the US government bring the offending revenue measures into conformity with US obligations under the GATS.[10] The Government of Antigua and Barbuda sees this as a large victory and hopes to recover this vital industry in the near to medium term. The Government of Antigua has also suffered from its increased regulatory supervision of the offshore financial sector amidst concerns of money laundering during the late 1990s. As a result, the number of offshore banks in Antigua fell from 57 in 1997 to 15 in 2003. The decline in the industry suggests a large problem with money laundering and corruption.
Since 1997, the Government of Antigua and Barbuda has accumulated a large level of debt and severe fiscal imbalance. Between 1997 and 2001, the Government pursued a bilateral external debt renegotiation strategy in order to reschedule and refinance several loans. Despite these efforts, a sizeable stock of debt remains in arrears. The current account deficit further widened to $113.2 in 2003 from $102.5 million in 2002.[11] The Minister of Finance and Economy announced that the largest share of the $563, 676, 063 recurrent expenditure will go towards servicing Public Debt. He calculated an astronomical national debt well in excess of 125% of the GDP and has allocated 16.59% or $93, 513, 286 towards this effort.[12]
The Government of Antigua and Barbuda will also need to improve its institutional capacity to improve its fiscal situation as well as to collect, record and analyze economic data. As a result of poor planning, the government has not implemented any suggestions made by IFIs to improve its fiscal situation and continues to accumulate arrears on external debt. Additionally, the Ministry of Finance has not been able to effectively monitor ongoing projects. In general, capital estimates include large number of projects that are not implemented, which makes it difficult to project spending based on the annual budget.
b. Development
Antigua receives extensive assistance from the EU. The Main Development Projects currently funded by the EU are:[13]
- Upgrading and Expansion of Antigua Hotel Training
- (7 ACP AB 008) ' 2 640 000
- The EC assisted with the construction of a hotel training centre, which has as particular aim to contribute to increased levels of income for the growing number of people employed in hotels, restaurants and hospitality enterprises as well as those private sector operations comprising the industry.
- Status: College building works are complete and the building has been furnished.
- Antigua 'Barbuda Strengthening of Technical and Vocational Education Project
- (8 ACP AB/7001/001) ' 4 300 000
- The project purpose is to improve capacity in technical and vocational training in conformity with the market and social demand.
- Status: The project commenced in 2003
- Air Traffic Control Radar
- (6 ACP AB 012) ' 690 000
- The EC contributed to the purchase of an Air Traffic Control Radar. This device was needed to improve the efficiency and safety of the air traffic control at the country's V C Bird International Airport.
- Status: Radar equipment has been installed and is being put into operation.
III. Key Challenges
- Economic diversification
- Financial Management, Public Indebtedness and Tax Reform
- Poverty reduction
- Environmental degradation
The Perspective of the Government of Antigua and Barbuda
On 24th March 2004, the United Progressive Party (UPP) led by Prime Minister Baldwin Spencer won the 23rd March poll. Under new leadership, the Government of Antigua named its budget 2004 the 'Agenda for Change'. The Ministry has been restructured with the addition of the Police, Police Training School, Fire Brigade, Establishment Division, Public Information and Broadcasting, Labour, Barbuda Administrative and General Services, Prison and National Office of Disaster Services. As reflected in the Medium Term Economic Strategy, the Government aims to create an effective and efficient economy through sustainable development by:
- Achieving an econommic growth rate of at least 2.5 per cent and a reduction of the recurrent deficit to 0.5 per cent
- Enhancing the country's planning culture
- Spurring public sector reform
- Strengthening efforts to expand offshore financial services sector and tax reform to facilitate revenue generation
- Enhancing safety and security, strengthening and diversifying the economy and improving social services are of special importance for the Government.
The Government remains convinced that the island's key source of economic growth is trained and educated human capital.
Antigua and Barbuda's indebtedness continues to grow as revenue declines and expenditure increases. The main challenge of Antigua and Barbuda is to address the overall fiscal situation and high levels of external debt. The Government has taken steps to do so through the National Strategic Development Plan and Public Sector Modernisation Programme.
