ST JOHN’S ,Antigua, Oct. 24, CMC – The International Monetary Fund (IMF), in the global report released on Wednesday, has reinforced previous recommendations for Antigua and Barbuda, warning that delays in implementing fiscal reforms could lead to increased economic risks.
The report also emphasized many of the same concerns about Antigua and Barbuda during its visit in June, particularly regarding debt management and revenue collection.
Public debt is very high, rising and risky,” said Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department, announcing that global public debt is expected to exceed EC$100 trillion this year.
The IMF also warned that delays in addressing fiscal challenges will make necessary adjustments more difficult in the future.
This global warning comes just months after the IMF urged the country to address its own fiscal challenges.
In June, the Fund mission team noted that while the country’s debt-to-GDP ratio had improved to 76% in 2023, down from 100% during the pandemic, “cash constraints continue to bind, and domestic and external arrears are substantial.”
The new report’s recommendations align closely with specific advice given to Antigua and Barbuda, including strengthening tax collection systems and broadening the tax base, better tracking of government spending and debt, and a focus on smart spending that helps the economy grow while getting debt under control.
“The likelihood of a soft landing has increased. Monetary policy has already started to ease in major economies, unemployment is low in many countries and therefore… most economies are well positioned to deal with fiscal adjustment,” Gaspar noted.
For emerging markets and developing economies like Antigua and Barbuda, the IMF particularly emphasized the importance of upgrading tax systems and enhancing revenue administration capacity, making tax collection more efficient and fairer by protecting important government services while cutting unnecessary spending, and being more open about government finances so people know where their money is going.
The report also highlighted the need for governments across the world to implement fiscal reforms, in order to reduce the economic risks to countries carrying high debt loads.
The IMF’s October 2024 report entitled ‘Fiscal Monitor: Putting a Lid on Public Debt’ was driven from the same database used for the October 2024 World Economic Outlook and Global Financial Stability Report also referred to as “IMF staff projections.”
The lending agency said the good news is that – now is actually a good time for countries to tackle these problems.
“With global inflation cooling down and many economies doing relatively well, countries have a better chance of fixing their finances without causing too much economic pain.”
The global report estimates that emerging market economies may need fiscal adjustments of 3.0 – 4.5 percent of GDP on average to stabilize or reduce debt with high probability.
However, it emphasizes that these adjustments should be designed to protect vulnerable households and maintain critical public investments.
Looking ahead, the IMF stresses that countries must avoid accumulating what they called “unidentified debt” – changes in debt levels not explained by standard factors like interest payments or exchange rates.
The IMF is set to host a more regional-specific economic outlook for Latin America and the Caribbean on Friday.
CMC/ab/kb/2024