By Colin Sampson
The news is not good. No way can this news be anything else but bad. The bad news comes via the IMF. The International Monetary Fund makes a business out of dealing with news about the economies of the world; and when the IMF talks, people listen.
Recently the IMF spoke in and about Antigua & Barbuda, and the official statement pointed out a couple of weak spots in the fiscal affairs of our tiny two-island state. To cut to the chase: What the IMF report revealed about the local economy in 2014 as per trends in government spending during that year; the drop in tourism arrivals for the latter half of 2014 and into 2015; and the weak growth forecast (2.1% of GDP for 2015 as compared to 2.4 % for 2014); all paint the picture of a stagnating economy and low government revenues – except for the CIP, the savior of the economy.
Hopefully that brief assessment does reasonable justice to the matter at hand, which is to try and pin down the reality of the situation facing the nation, chart how the nation got here, and plot a course out of the fiscal mess the nation is in.
It should not surprise anybody if the economy performed better in the first half of 2014 while government spending was on the rise, than in the second half when spending on goods and services declined. The decline in tourist arrivals recorded for the second half of 2014 and continuing into 2015 so far must hurt the economy in general and government revenues in particular. FDI becomes even more critical than it already is – but newforeign funded investment projects are slow to get off the ground.
The UPP line is that economic growth was poised to take off up until mid-2014; but sadly as soon as political power slipped from their party’s safe hands suddenly everything went to hell in a hand-basket, and it’s all the ABLP’s fault. UPP mouths also take pride in pointing out that several of the proposed new investment projects actually took their first baby steps when their party ran things, so the credit is really theirs.
The economic facts of life as sketched out by the IMF support the picture painted by Finance Minister Browne: of a mad scramble to assemble financial resources from all corners to meet an astounding level of unpaiddue commitments; while at the same time pushing those foreign funded projects on as speedily as possible; and also experiencing declining revenues except from the CIP air-supply line.
Things took a dive, alright – and the drop in tourism arrivals should raise eyebrows. This is not something that happens abruptly, like drawing a line: It cannot be that everything about tourism was fine right up until June 12, then suddenly a change occurred. The factors behind the poor prospects for what equates to the 2014-15 winter season must lie in the marketing of the product, the product itself, and the market conditions existing at this time. Connect this to the economy as a whole and it is easy to see why the IMF is forecasting relatively weak growth at 2.1% of GDP.
The ABLP administration intends to buck the apparent trends, and is banking on a robust level of actual on-the-ground cash investment to show up later this year. That, plus a healthy inflow from Antigua & Barbuda’s very competitive CIP program, should start to re-inflate the local economy quite nicely. The troubling picture of tourism in a slump hangs like a dark cloud over the industry though. Splashy new resorts opening in a few years time may add a glow to the future – but what about this year … next year? No dodging the issue: The Antigua & Barbuda tourism product, and how and to whom we market it, demands some serious review in the here and now.
Hopefully this is what Tourism Minister Asot Michael and his teams of technocrats are up to right now. Now the IMF has made it official that the main driver of the economy is in crisis (call a spade a spade) the entire tourism fraternity ought to be in crisis mode trying to find out exactly what Antigua & Barbuda is doing wrong, why, to whom, and what we need to do to make it better.
In the meanwhile it’s time the ballyhooed “2000 homes in a few years” economic stimulus program got off the ground in a meaningful way. Last we heard quite a lot of money was on hand to finance the venture, and if the economy needed some street-level money circulation that time is now. This is no time for the administration to take a dive on winning the battle for the economy.