Prime minister and minister for finance, corporate governance and public-private partnerships, Gaston Browne, on Thursday, January 28, 2021, presented the 2021 budget statement, amid the “overriding issue on everyone’s mind is COVID-19 – and its devastating effects”.
Part 2 outlines Citizenship by Investment (CIP), debt payments and restoring the economy.
By Caribbean News Global contributor
ST JOHNS, Antigua – The significant damage to Antigua and Barbuda’s economy by the global effects of COVID-19 underscored the importance and benefits of the Citizenship by Investment Programme (CIP), prime minister Browne, defined the following.
As tax revenues fell rapidly and swiftly, it was and continues to be that the CIP has helped to sustain our economy. In 2020, a total of 366 applications were received, representing a 22 percent decrease from the previous year. Nonetheless, the CIP generated $115.7 million in 2020. We have set a target to double the number of applicants in 2021, and every effort will be made to achieve it.
Management and payment of debt
The government of Antigua and Barbuda intends to honour debts fully, with the cooperation of all our creditors in structuring realistic repayment arrangements and schedules.
Our government has no intention of reneging on any of the national debt. We do intend to satisfy our obligations to all our creditors. That is why an important component of our Medium-Term Fiscal Strategy is the reduction of government’s external arrears and domestic arrears to State-owned-enterprises, contractors and suppliers. This will be done in a fair and transparent manner and will include a combination of cash payments, bonds, and land swaps.
Regarding the Paris Club debt, the government is pursuing a debt for climate swap initiative, whose implementation would allow arrears to these creditors to be cleared.
The ministry of finance has already begun to execute part of its domestic arrears clearance strategy, by facilitating setoffs of amounts owed against tax liabilities of contractors and suppliers. This will continue in 2021, while other elements of the strategy are rolled out. While the clearance of arrears is being executed, the government will avoid any future accumulation of arrears.
Restoring economic growth
The essence of our strategy is to build economic resilience through sustainable and inclusive growth. This will be achieved with a strong and diversified tourism sector.
We will also strive to increase the contribution of the agriculture sector and further develop several new and emerging service sectors, including:
- Health services, specifically renal and cardiac care;
- Health education;
- Tertiary education;
- Air transport;
- Digital business assets;
- ICT technologies;
- Green technology investments;
Tourism – An important engine of growth
Tourism and tourism-related construction will continue to provide the impetus to growth during the recovery. Therefore, we have conservatively projected activity in the sector, to return to the 2019 level of output by 2024.
Over the medium term, we expect robust growth in the sector averaging 6.0 percent, as new and refurbished properties enhance the quality and quantity of our hotel room stock, and tourist arrivals by air and cruise are buoyant once again.
As we await the return to full capacity of our tourism sector, the government will enhance the system for air travel to Antigua and Barbuda. A contract has been signed with an international company, to provide and install a state-of-the-art radar system at the airport. This $10.5 million project will be undertaken in the next three months and will greatly improve operations in our airspace.
Though our source markets have restricted travel in an effort to control the spread of COVID-19, we are not taking a wait and see attitude.
Through our “Your Place in the Sun” and “Business on the Beach” campaigns, as well as, the Nomad Digital Residency programme, we are offering enticing options to individuals who can travel safely, to reside and work in our country, while enjoying the recuperative sunshine and beauty of our twin islands.
There continues to be strong interest by developers to proceed with projects, some of which were already in the pipeline. The construction sector is expected to grow by an annual average of 9.0 percent over the next five years, moderating to annual average growth of 6.6 percent over the long term.
The list of projects that are expected to fuel activity in the sector and generate a significant number of jobs in 2021 include:
- The US$2.5 billion PLH Ocean Club on Barbuda; which is expected to spend US$130 million in 2021 and provide over 400 jobs;
- The US$45 million renovation and expansion project at the existing Rex Halcyon Hotel by Sunwing;
- A US$25 million Airport Marriott, with US$10 million to be spent in 2021;
- The US$100 million beach club at Fort James by Royal Caribbean Cruise Lines, with US$20 million to be spent in 2021;
- The US$20 million Dulcina Project in Barbuda, US$3M to be spent this year;
- The US$80 million Callaloo Cay Hotel Project at Morris Bay, with US$15 million to be spent in 2021.
In addition to these projects, work will continue on other properties, including, private luxury dwellings across Antigua. Among these are:
- The Baron Lorne Thyssen mansion at Laurie Bay, with a construction value of US$70 million. Some US$15 million will be spent on this project in 2021;
- Other luxury properties are being built at Pearns Point, Jumby Bay, Mill Reef Club, Galley Bay Heights, and Windward Beach;
- Work on the YIDA project is set to advance with a projected spend of US$100 million this year;
- Also, the US$30 million Bungalows project at Devils Bridge will start in 2021.
The government’s partnership with Global Ports Holding (GPH), produced investment in cruise infrastructure in 2020; despite the suspension of cruise business due to the pandemic, it is expected that some cruise operations will resume in 2021 and that Antigua and Barbuda could potentially attain up to 40 percent of the arrival numbers we enjoyed in 2019.
In preparation for the rebound of the cruise sector, GPH is poised to begin development of the US$25 million shopping centre on the St John’s waterfront.
This public-private partnership in cruise tourism has ensured that the people of Antigua and Barbuda retain ownership of the cruise port, while benefitting from the managerial and marketing expertise and upfront financial investment of GPH, as well as the receipt of annual rental income from the port facilities.
Although not included in our forecast, the Willoughby Bay project, which emanated from discussions by the Economic Recovery Committee (ERC), presents a novel opportunity to develop the southeast end of the island, while empowering Antiguans and Barbudans.
The proposed size and funding structure of the project allows for participation from locals and foreign investors. We continue to develop this project, with a view to begin the first phase in the second half of this year.
Several other private sector projects will be implemented in 2021:
- Work will start on a $25 million financial and commercial office and shopping complex on Friars Hill Road;
- We expect 30 percent of the project to be completed this year;
- Construction will commence on a new $30 million Enterprise Zone, in the vicinity of Deepwater Harbour;
- A shopping area and facilities to include: a marina, a boatyard, and amphitheatre;
- Another multi-million-dollar project that will be implemented this year is the state-of-the-art Doctors Hospital and Medical Centre at Woods, which is being spearheaded by Antigua’s own, Dr Joseph “Joey” John. This new hospital and medical centre will further enhance health care services on the island and position Antigua and Barbuda to be a leader in medical tourism within the region.
While the continuing effects of the COVID-19 pandemic will plague our economic recovery in the first two quarters of this year, there is light at the end of the tunnel. We are working to make that light cast away the darkness that enshrouded the economy in 2020.
WIOC – New investments in 2021
The West Indies Oil Company (WIOC) will continue to make investments in 2021. It will invest US$10 million in capital maintenance and upgrade activities, to ensure the company’s operations remain safe, efficient, and profitable. This will increase WIOC’s business investments to almost $200 million since the government secured majority ownership of this company. Additionally, work will commence this year on the $40 million business park project on Friars Hill Road.
The government promised that it would divest a portion of WIOC’s shares to individual citizens, providing an opportunity for our people to own a piece of this extremely profitable company. The company is working with the Eastern Caribbean Securities Exchange (ECSE), to structure and deliver this investment opportunity.
An initial 301,920 shares will be offered by June 2021. Based on the public response, an additional 142,080 shares will be offered. Antiguans and Barbudans are strongly encouraged to participate – either individually or as part of an investment club.
Since this administration’s creative financial engineering to acquire a majority stake in WIOC for Antiguans and Barbudans, we would have received dividend payments of $33.5 million up to 2020. In addition, WIOC has paid corporation taxes of $48 million between 2015 and 2020, resulting in an aggregate yield of $81.5 million, covering the full purchase price of US$30 million.
Agriculture – A bright light in the darkness of 2020
A bright light in the nation’s economic activity and one that illumes possibilities for the future is agriculture. Although affected by the impact of COVID-19, the agriculture, livestock and forestry sector returned growth of 1.1 percent in 2020, as compared to 0.5 percent in 2019.
This improved performance is mainly due to the quick and effective implementation of the government’s policies which included:
- Granting farmlands to 50 new farmers;
- Distribution of seedlings throughout the sector;
- Promotion of back yard farming;
- Improvement in infrastructure, and,
- Increasing the availability and access to water on farms.
This strongly suggests that there is potential for increased agricultural production in the future that would create jobs and income, as well as foreign exchange savings and provide our nation with a measure of food security and food sovereignty.
We should not let the lessons we learned from this crisis go to waste. With this in mind, we are finalising financing arrangements for the development of a US$20 million Agro-Industrial Park in Antigua and Barbuda. The Project will be comprised of several components including a broiler farm, slaughterhouse, feed production and feed mill, vegetable farm and training centre.
In real terms, manufacturing contributes about 2.5 percent, or $60 million to GDP annually. While size and production costs prevent this sector from being a much more significant contributor to GDP, it is still an important component of the economy as it is a source of employment and income for our people.
That is why, through various laws, including the Small Business Development Act, special incentives are provided, to encourage local manufacturers and other entrepreneurs to start and expand businesses. We announced some exciting projects in budget 2020 that were delayed due to the pandemic. However, implementation will be advanced in 2021.
These projects include the US$20 million Carib Beer plant and a US$5 million brewery project at Antigua Distillery. These will create construction and manufacturing jobs and increase the level of manufacturing exports.
Supporting private sector expansion
The Entrepreneurial Development Program (EDP) continues to provide low-cost funding and technical assistance to locally owned businesses. Since the start of the program in 2019, the government has provided more than $2 million in loans to local entrepreneurs. These loans come with highly favourable financing terms and a maximum interest rate of 3 percent.
In addition to favourable financing terms, government continues to provide duty-free concessions for equipment and other supplies directly related to the start-up of these enterprises.
In response to the job losses caused by the pandemic, the EDP will ensure, that micro-business loans can be made available to individuals directly affected by the pandemic to start their own businesses. These loans have been extended without the requirement for collateral.
The government is working with the CARICOM Development Fund (CDF) to restructure and revitalize the Antigua Barbuda Development Bank (ABDB) so it, too, can play a leading role in providing credit to small businesses in Antigua and Barbuda. The revamped and revitalised ABDB will also be an important source of credit for young entrepreneurs, who may otherwise have difficulty accessing financing from other sources.
Ultimately, ABDB will be positioned to take advantage of the credit guarantee arrangement offered by the Eastern Caribbean Partial Credit Guarantee Corporation, thereby opening further financing options for local businesses.
A number of our domestic banks have already signed up with this Corporation through which guarantees are provided to banks offering credit for business ventures that are viable, but the borrower has difficulty meeting the collateral requirements of the lender. The government has agreed to guarantee up to $50 million, to provide for business expansion and cash flow support for enterprises affected by the pandemic.
With the top three leading causes of death being cancer, heart disease, and diabetes; non-communicable diseases (NCDs) have become a major burden of morbidity and mortality for the healthcare sector in Antigua and Barbuda. This has signalled the need to augment the capacity of Antigua and Barbuda’s health care infrastructure, expand existing systems, and provide lifesaving services for NCDs locally.
The government will construct and operationalize a renal centre, a cardiac centre, and a medical diagnostic centre in Antigua, to meet the growing needs of the population. Investment in these centres will no doubt require adequate scale, commitment of human and financial resources, and ongoing training of our medical professionals to remain viable. However, it also provides an opportunity for qualified Antiguans and Barbudans to access high paying jobs and for us to export health services.
For example, having a renal centre with excess capacity, could provide a niche in our tourism product to cater for tourists with kidney failure. This is also critical to the transformation of the healthcare sector, is the delivery of universal health coverage. This is to be achieved through the introduction of National Health Insurance (NHI). Work on this initiative started in 2019 but was delayed as fighting COVID-19 became the pressing priority in 2020.
The government remains committed to creating the NHI and will provide our people with essential and world-class health services through a system that emphasizes shared cost, quality services, and reliable standard of care.
The government continues to demonstrate a strong commitment to improving every level and modality of education in Antigua and Barbuda. We are acutely aware that high levels of economic growth cannot occur without a concomitant expansion in human capital. One of the most effective means to achieve this is by investing in education and training.
The establishment of The University of the West Indies, Five Islands Campus is both an investment in the future of young people and an expansion of education as a vital export service. This is yet another avenue, that we will pursue aggressively over the medium term to diversify the economy.
The University of the West Indies, Five Islands Campus, will play a vital role in the diversification process, as it is being positioned to offer programmes in non-traditional, high growth sectors of the global economy. The Blue Economy is one such area being actively targeted by the government.
Recently, we signed a tripartite Memorandum of Understanding to establish a Centre of Excellence for Oceanography and the Blue Economy. This is a critical development since, as indicated by the Caribbean Development Bank, the ocean’s value-added will rise by US$3 trillion by 2030.
With Antigua and Barbuda’s exclusive economic zone being far larger than its landmass, our island nation must be prepared to benefit from this high growth sector.
Many of the industries comprising the Blue Economy are not new industries to Antigua and Barbuda. The task at hand is to use research and development to move up the value chain in existing areas such as coastal tourism, marine transport, and shipping, while scoping the potential of emerging areas, such as marine aquaculture, offshore energy, seabed mining, and biotechnology. The Centre of Excellence for Oceanography and the Blue Economy will help us to do just that.
Another intervention in education in 2021 will be modernising the Antigua and Barbuda Institute of Continuing Education (ABICE), to enhance the skills training options offered by that institution.
Special focus will be placed on the development of the creative industries in our schools and at the national level, with the establishment of a performing arts centre, as we seek to develop this sector into a significant export industry.
Further, we will continue to maintain and expand the school plant in Antigua and Barbuda by investing $8 million, to build a new science block and additional classrooms at the Sir Novelle Richards Academy.
We will also finalise a project with the Caribbean Development Bank that will provide US$15 million in funding, to expand and rehabilitate other schools, to include the Ottos Comprehensive School and the Antigua Girls High School. The project also comprises a component for training over 950 teachers.
Ensuring public safety
In 2020, the Royal Police Force of Antigua and Barbuda, was able to reduce crime by about 16 percent.
We are aware that some law enforcement officers have had to execute their duties under difficult conditions. To address this, we have begun work on several police stations, including police headquarters and the Parham Police Station. In 2021, we will complete work on these and begin work on All Saints and Bolans police stations.
We have also acquired new crime-fighting equipment, to ensure the safety of officers in the execution of their duties and continue to collaborate with regional and international agencies in the crime-fighting effort.
Related: Part 1
To be continued … The Housing Revolution and Development of Barbuda.