By Caribbean News Global
ST JOHNS, Antigua – Prime minister Gaston Browne continues to exhibit leadership and persistence, building the ‘powerhouse of the Caribbean’ amidst COVID-19 social and economic contraction worldwide. His reliance on policy options and good governance, cost efficiency, and as a “caring government – one that always puts the interest of the people first”, has revealed, that “lay-offs and terminations my government will not take that action; except as last resort”.
In most CARICOM islands the opposite is unreal, hastened by the acceptance of external borrowing conditions, and increased debt, with the prospects of bankruptcy, carries limited options.
In a letter to the International Monetary Fund (IMF) and World Bank, board of directors, March 30, 2020, Browne noted that, “we are also beleaguered by an unexpected economic decline that has already stripped us of more than 20 percent of our GDP in some cases, and the certain prospect of further and prolonged deterioration. “In our present situation, the huge decline in revenues and the necessary draw-down on foreign reserves to meet the cost of imports of medicines, medical equipment, and food, will impose upon us the imperative of deferring current debt servicing.
Browne requested, “in the measures that the Bank and Fund are preparing for the meetings of their Governors in April and for consideration by G20 countries, proposals be included for small and vulnerable economies, including (a) suspension of per capita income as a criteria for concessional financing; (b) debt relief including suspension of debt payments, write-offs of aged debt particularly by the Paris Club; (c) budgetary support through a mix of grants and low-cost loans on a country by country basis.”
The Spring meetings followed the IMF financing to Saint Lucia, Dominica, Grenada, and Haiti. Besides, Saint Lucia, Dominica, and St Vincent and the Grenadines received additional funding from the World bank.
Antigua and Barbuda declined the IMF offering undoubtedly stating “ US$20 million can’t help us”, notwithstanding the expectant harsh conditionalities likely to have a further negative, direct impact on the people and country.
Prime minister and minister for finance Browne’s preference is to, “paddle his own canoe” pledged that lay-offs of public servants will not be a priority in his government’s efforts to restart the nation’s economy, in a COVID-19 era.
Antigua and Barbuda’s ambassador to the United States, Sir Ronald Sanders has warned that debt suspension to IDA countries, not enough, said: “Indeed, some of these countries need more than debt relief, they urgently require budgetary support – grants or very concessionary long-term, low-interest loans – to carry them for at least the next year or they will find it very difficult, not impossible, to recover from a severe economic downturn.”
Akinwumi Adesina president of the African Development Bank, in the article, “The pandemic is no time for fiscal distancing” said: “This, therefore, is a time for bold actions. We should temporarily defer the debt owed to multilateral development banks and international financial institutions. This can be done by re-profiling loans to create fiscal space for countries to deal with this crisis.
“That means that loan principals due to international financial institutions in 2020 could be deferred. I am calling for temporary forbearance, not forgiveness. What’s good for bilateral and commercial debt must be good for multilateral debt.
“That way, we will avoid moral hazards, and rating agencies will be less inclined to penalize any institution on the potential risk to their Preferred Creditor Status. The focus of the world should now be on helping everyone, as a risk to one is a risk to all. There is no coronavirus for developed countries and a coronavirus for developing and debt-stressed countries. We are all in this together.”
Last Sunday, during the observation of Labour Day, prime minister Browne outlined, that his government will continue to do all in its power, to retain the staffing of the public service at its present levels, for as long as it can, including by borrowing and the issuance of bonds. This action will increase our debt, and push-up the level of our debt to Gross Domestic Product (GDP) – something we would have wished not to do, particularly, over the last five years, we have worked diligently to reduce the debt to GDP ratio,” he said.
Financed minister Browne explained: “In January of this year, the government reduced the debt to GDP ratio from 104 percent when the Antigua and Barbuda Labour Party (ABLP) administration came into office, to 69.1 percent. This represents 35 percent decrease in five years while growing the economy by five percent per annum, Undoubtedly, said Browne, “In seeking to maintain employment in the public service and to deliver services, the country’s debts will certainly rise; and, in combination, with limited economic activity, the debt to GDP ratio will also rise.”
Previously, Lionel ‘Max’ Hurst, chief of staff in the office of the prime minister, said, the government spends between 30 to 32 million dollars a month in pensions, salaries, wages, and emoluments. On average, $60 million a month in revenue, 50 percent of which services the country’s debts, and the other half pays wages and salaries.
Comptroller of Customs, Raju Boddu, earlier summarised a 40 percent drop in customs revenue for April 17, 2020, the department had only collected nine million dollars for the month. It is a drastic decrease from the first three months of the year where customs collected a total of $95 million.
The Inland Revenue Department (IRD) is also reporting a decline in collections, said Commissioner Ralph Warner: “The first quarter for 2020 was an excellent period for the IRD. We collected EC$113 million, January – March 2020, compared to 78 million for the same period from January – March 2019.”
Despite the odds, prime minister Browne’s “respect, trust, and understanding of governance” gave the undertaking to public servants, in observance of “government’s contract, that his government will not lay-off personnel at this time and called on workers to perform at the highest possible level to help get the economy up and running and increase national productivity.”
His Excellency Sir Rodney Williams, KCMG Governor-General of Antigua and Barbuda speech from the Throne, January 16, 2020, advised: “While no-one can predict with certainty what any New Year will yield, continued growth in our economy has historically resulted in an improved Antigua and Barbuda which we all seek.”
Prime minister Browne’s 2020 budget statement articulated: ‘Growth and development for the benefit of all’ tells the story that encapsulates the objectives “we are purposefully and vigorously implementing,” two-fold, “a policy and a practice” building “a brighter future, is now ours to embrace.”