Antigua and Barbuda: 2022 Article IV Consultation-Press Release and Staff Report

Antigua and Barbuda’s economy is on a gradual recovery path, following a sharp contraction in 2020 due to the COVID-19 pandemic. Higher food and fuel prices are adding to inflation, eroding real incomes, and exacerbating fiscal and external imbalances. The economy is projected to grow by 6 percent in 2022 supported by tourism and construction activity, but output will return to pre-pandemic levels only by 2025 due to scarring effects of the pandemic. Inflation is expected to accelerate to 8½ percent in 2022, reflecting the pass-through of global prices to the domestic economy. Continued fiscal consolidation efforts and the growth recovery are bringing down the primary deficit and debt-to-GDP ratio, but gross financing needs are high and arrears continue to be accrued. The financial system has adequate capital and liquidity buffers, with stable NPLs so far, but private sector credit growth is weak. Further commodity price shocks, a sharper-than-expected slowdown in key trading partners, a resurgence of COVID, tighter global financial conditions, lower citizenship-byinvestment revenues, and the ever-present threat of natural disasters all represent material downside risks.