IMF TEAM TELLS OF ANGUILLA’S NEEDS FOR ACTION

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By admin August 15, 2011 11:23

IMF TEAM TELLS OF ANGUILLA’S NEEDS FOR ACTION

The findings of the recent International Monetary Fund (IMF) mission to Anguilla, headed by Hunter Monroe, Senior Economist in the Western Hemisphere Department, have given the island’s Government much needed information for consideration and action.

 


L-R: Governor Alistair Harrison, Mr. Hunter Monroe, Chief Minister Hubert Hughes and Hon. Edison Baird
L-R: Governor Alistair Harrison, Mr. Hunter Monroe, Chief Minister Hubert Hughes and Hon. Edison Baird

The team visited Anguilla from July 19-22, 2011 for the IMF’s first formal bilateral dialogue at the invitation of Chief Minister and Minister of Finance, Hubert Hughes, as a follow-up on the annual Eastern Caribbean Currency Union Common Policies discussions. Speaking at a press conference on Friday, July 29, Mr. Monroe said the talks with the local authorities focused on enhancing growth prospects, improving the fiscal outlook, and addressing financial sector vulnerabilities.

The main body of the statement, issued by the team from the Washington-based organisation, is as follows:
“Anguilla’s small size magnified the boom-bust cycle associated with the global crisis, as it benefited from two major tourism projects which later ran into difficulties. Both projects appear to be getting back on track, and the high-end tourism remains resilient despite high unemployment in source countries. However, the growth outlook is cautious, given low capital spending and the recent closure of a boutique hotel and a call center. In addition, there is a need to improve access to the island by air and sea.


Anguillian Officials with IMF Team
Anguillian Officials with IMF Team

“A rebalancing of fiscal policy is needed to create an environment more conducive to private sector growth and job creation. The government is expected to achieve an overall surplus in 2011 taking advantage of windfall revenue from tourism projects, but capital spending remains low. A new fiscal framework could achieve a better balance between current and capital spending that is in line with the resources available and builds buffers in good times. A comprehensive tax reform is being planned aimed at improving the efficiency and equity of the tax system and simplifying the tariff structure. Some reversal of increases in the government wage bill, which doubled during the boom years, may be unavoidable.

“The downturn has placed strains on the financial system, affecting asset quality and liquidity. The mission welcomes the Financial Service Commission’s efforts to enhance nonbank supervision, particularly in light of the failure of two regional insurance companies, and to intensify coordination with the Eastern Caribbean Central Bank and with other regional regulators. The offshore financial sector offers some potential to diversify the economy, but the balance between the potential economic benefits and the regulatory costs and reputational risks needs to be weighed carefully.

“The mission appreciated the open and fruitful exchanges with representatives of the authorities and the private sector and wishes to express its gratitude for the excellent cooperation and kind hospitality.”

Chief Minister Hughes expressed gratitude to the IMF team which agreed to his request and that of his counterpart in Montserrat to undertake the study in the islands. He was particularly grateful as it was “not usual that the IMF has any bilateral connections with British Overseas Territories.” He further pointed out: “The concept in Anguilla, when they heard that the IMF was coming here, was that Hubert Hughes had invited the IMF to introduce austerity measures on the people of Anguilla. That’s far from the truth. The IMF’s coming to Anguilla can only do positives to Anguilla – at least they will give us some positive exposure.”

Mr. Hughes said that the IMF’s statement had brought out some facts that he had been talking about. “Boom and bust is not the best way to go about economic development and this is exactly what we have been doing,” he stated. “I spoke repeatedly about the unsustainable approach to tourism in allowing the type of projects which brought in thousands of workers from outside, and now we have a bust situation where we have chronic unemployment in the construction industry.”

The Chief Minister took the opportunity to say that his government was in the process of revitalizing the economy and he gave special praise to two of his ministry’s finance and economic personnel, Kathleen Rogers, and Dr. Aidan Harrigan, whom he said had done marvelous work in trying to redeem the situation. He criticised the planned transfer of these Permanent Secretaries, saying it was something his Government could not accept at this time.

Governor Alistair Harrison commented that while Mr. Munroe said the IMF team’s visit to Anguilla was at the invitation of Mr. Hughes, he wished “to make it clear that the British Government also welcomed very much these visits to Montserrat and Anguilla.” He thought the missions were particularly relevant as the two Overseas Territories were also members of the Eastern Caribbean Currency Union, and also in terms of the two territories themselves.

“I think it has been an extremely productive visit,” Governor Harrison said. “I enjoyed some very good discussions with the team and I believe they have looked extremely thoroughly at all the issues that are confronting us. There are a lot of things in their work which we will need to consider as we take things forward.”

admin
By admin August 15, 2011 11:23

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