Another deficit budget, despite claim of unrivalled economic growth

Antigua Observer:  

Prime Minister and Minister for Finance Gaston Browne yesterday presented to the House of Representative his government’s Fiscal Estimates of Revenue and Expenditure for 2019. Commonly referred to simply as ‘The Budget’, Browne unveiled a package comprising expenditure of $914.9 million in recurrent spending and capital spending of $130 million – making a total well in excess of $1 billion in projected expenditure.

On the revenue side, the budget projects to rake in $932.2 million in recurrent intake and $34 million in grants, for a total revenue of$966.2 million — leaving an overall financing gap or deficit of $78.8 million. The Prime Minister, a career banker before entering elective politics about 20 years ago, explained what this meant and how the financing gap would be bridged.

“Additionally, total principal payments amount to $360.1 million. This, along with the $78.8 million overall deficit and the $10 million allocated to reduce arrears to local contractors and suppliers, bring the financing requirement for 2019 to $448.9 million. To satisfy this requirement, our Government will raise $274.8 million from Securities issued on the Regional Government Securities Market, and access loans and advances of $174.1 million,” he stated.

Despite presenting a deficit budget, not for the first time, the Prime Minister highlighted what he said was yet another period of robust economic growth for Antigua and Barbuda.

“Last year, 2018, our economy was the fastest growing in the entire CARICOM area, bar none. We recorded economic growth of 5.3 per cent. This is not the government’s calculation. It is the calculation of the UN Economic Commission for Latin America and the Caribbean (ECLAC), which puts Antigua and Barbuda at number one, with 5.3 per cent growth in 2018,” he added, saying his government had posted “five straight years of economic growth.”

His employment statistic will likely be questioned or debated by others less convinced, but Browne declared that “several thousand new jobs have been created between 2013 and 2018, and a further 2,000 jobs will be added in 2019.” Further, that “growth in per capita income increased from an average of $36,569 between 2009 and 2013, to $43,268 between 2014 and 2018,” – a reference to the last term of the previous UPP administration, compared with the first term of his current administration.

“In other words, your wealth has increased by an average of 20 per cent over the period,” he emphasized. On the subject of public debt, Browne said the nation’s debt to GDP ratio has been reduced from a high in 2009 of 102 percent, to 74 percent today. This ratio is projected to reduce further to 72 per cent in 2019.” He however warned that although “significant progress” has been made, “more needs to be done, because we are still confronted by a mountain of debt and fiscal challenges.”

Stayover and cruise tourist arrivals were at record levels, he asserted, as well as increases and expansions of the hospitality plant (hotels and restaurants), which had in turn fueled and 8-percent growth in construction, with attendant surges in indicators such as cement sales.

The Prime Minister noted that “economic growth is supported by a 32 percent increase in total imports from $1.36 billion in 2017 to $1.8 billion in 2018”, saying “this increase in trade further illustrates the buoyancy of our economy and the money in the pockets of our people.”

The Antigua and Barbuda Transport Board, the Airport Authority, West Indies Oil Company (WIOC) and Port Authority were all cited as turning significant profits that were making healthy contributions to government coffers. PM Browne cited an “IMF report” which he said “lists Antigua and Barbuda’s inflation rate in 2018 at 1.4 percent. In other words, we enjoy one of the lowest rates of inflation in the entire hemisphere.”

Occasionally conceding that the reality was not always as rosy as the figures might sometimes appear to suggest, Browne added that “despite economic growth of more than 5 percent in 2018, the government recorded a current account deficit of $36 million in 2018.

He went on: “It is important to point out that the 2018 deficit is less than the deficit of $106.3 million in 2017, but it is, nonetheless, unsustainable.” 

Acknowledging the assistance of friendly foreign states, he disclosed to loud applause that “The Government of Venezuela has agreed to write-off 50 percent of the debt owed to PDVSA for fuel imported under the Petro Caribe Initiative. This debt write-off amounts to $250 million.

The Prime Minister said that based on projections by the Eastern Caribbean Central Bank, 2019 is expected to produce further economic growth exceeding 5-percent, but his government was aiming to surpass even that and return a performance of at least 6-percent.