Lovell Reports Big Fiscal Improvement

Details

Economy

Saturday, 01 December 2012 02:30

By caribarena news

Antigua St. John's - Announcing that Antigua & Barbuda continues on the road to economic recovery with a 44.6 percent increase in fiscal performance, Finance & Economy Minister Harold Lovell said on Friday that considering the signs ahead and the decisions of the past year, government expects the successes of 2012 to be carried forward considerably into 2013.

Presenting the third quarterly financial report covering the period January 1 to the end of September, 2012, the Minister said he would reserve major details in terms of the way forward until his budget presentation in early December. There he promised a comprehensive report on economic and fiscal performance for the year, and to present policies and programs for 2013.

Flanked by Deputy Financial Secretary Rasona Davis, Permanent Secretary Sean Cenac and Financial Secretary Whitfield Harris, Minister Lovell delivered a presentation that focused on government fiscal operations for the specified period under review.

“I can state that we expect the signs of economic recovery noted in the first half of 2012 to carry through to the end of the year so that Antigua & Barbuda for 2012 would realize economic growth,” Lovell said.

He noted that the performance was indicative of a tentative recovery of trading partners like the USA and the UK and validates the role of the country’s fiscal policies and stabilizing measures.

The Minister said an analysis of the country’s revenue performance shows total revenue and grants amounting to $466.2m, a $3.1m decline compared with last year. He explained that this was due to a lack of capital grants this year, compared with $25.8m received in 2011.

Further, he noted that current revenue increased by 4.7 percent for the period in question, and tax revenue was $31.3m or 7.7 percent greater than last year.

“Contributing to this increase in tax revenues is the increase in ABST which generated $159.6m, an increase of $15.6m over the same period of last year,” Lovell said.

Like the first half of 2012, Lovell reiterated that the revenue increase from ABST comes through increased economic activity and revenue reform initiatives.

Personal Income Tax (PIT) continues to perform better than in 2011 with revenue growth of 20.4 percent ($5.5m) due to the government’s recent move to include allowances and benefits.

Speaking on the critical matter of expenditure, Lovell announced quite happily that government has managed to spend $40.5m less than last year, from $553.2m to $512.7m for the period in review.

He said also that Primary Expenditure declined by $40.5m, while Primary Current Expenditure fell by about $19m.

“Primary Expenditure includes expenditure on wages and salaries, goods and services, pensions, other transfers, and capital projects. It excludes interest payments on Government Debt.

“On the other hand, Primary Current Expenditure excludes expenditure on capital projects as well as interest payments on Government Debt,” Lovell explained.



Moreover, the minister pointed out that overtime payments for public servants went down by over 64 percent through continued implementation of measures to curtail spending.

Pensions and Gratuities, on the other hand, recorded a $3.7m increase, reflecting the impact of attrition within the public sector, while wages and salaries generally increased by $6.6m during the period in review, due to the employment of new teachers and staff upgrades.

Expenditure on Goods and Services went up by $2m or 2.5 percent resulting from a 46 percent increase in expenditure on road maintenance.

On the matter of public debt, Lovell explained that total interest payments on central government debt stood, as of the close of the third quarter, at $54.3 million, while the country’s total interest obligations remained relatively flat.

“Our total interest payments on external and domestic debt amounted to $11.3 million and $43 million respectively … External interest payments declined by 63.1 percent compared with the same period in 2011, due to external debt rescheduling. And domestic interest payments increased by $19.4 million or 82.2% over the review period,” the Minister said.

The growth in domestic interest payments, Lovell explained, reflects Government’s increased activity on the Regional Government Securities Market (RGSM).

The debt stock, including central government and government guaranteed debt, is also reported to have declined by $27.2m from December 2011.

“Central government debt at end of September 2012 declined by $1.0m from December 2011. This indicates Government’s success at reconciling arrears with its creditors.

“Looking at our overall fiscal performance for the period January to September 2012, total revenue and grants fell slightly by 0.7 percent, while total expenditure was reduced by 7.3 percent,“ Lovell explained.

He added that since expenditure was reduced at a faster rate than the decline in revenue, the Government was able to realize an improvement in the overall fiscal balance.

“For the period under review, the primary balance improved by 129 percent from a deficit of $29.6 million in 2011 to a surplus of $7.8 million in 2012.

“When interest payments are taken into account, the result is an overall fiscal deficit of $46.5 million,” he said.

This reflects a 44.6 percent improvement compared to the overall deficit of $83.9 million for the period January to September 2011.

Financing for the overall deficit came through a portion of the disbursements under the IMF Stand-By Arrangement, according to the minister, and proceeds from Treasury Bills issued on the RGSM.

He added that the remaining funds from these disbursements were used to amortize central government debt and reduce arrears to domestic suppliers and contractors.

“I am pleased to report that the fiscal consolidation programme of our National Economic and Social Transformation (NEST) Plan continues to yield the desired results,” the Minister said proudly.

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This initiative was undertaken in 2009 with the intent of securing a reduction in fiscal deficits, while bringing public debt to more manageable levels.

“The Government has managed to reduce its fiscal deficit by more than 40 percent over the past nine months, and we expect this performance to continue through to the end of the year.

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