Opposition Leader in the Anguilla House of Assembly, Evans McNiel Rogers, asked Chief Minister and Minister of Finance, Hubert Hughes, two questions during the meeting of the House on Wednesday, February 15.
Mr. Rogers’ first question, which he said Mr. Hughes did not answer, despite his reply, was as follows:
(a) “In your press statement of January 3, 2012 and commenting on the possible impact of the “non assent” to the 2012 budget by December 30th, 2011, you stated… “It means that our proposed revenue generating measures – not taxes – are compromised and it means that every single day that we are unable to put our 2012 Budget into effect, we become compromised in meeting our monthly targets and in meeting the overall deadline set by the UK.”
“Can you tell us how much revenue was lost due to the 2012 budget being assented to on January 13th, 2012?”
Chief Minister: “In response to Question (a) raised by the Leader of the Opposition, my primary concern at the beginning of the year was the quick and expeditious approval of Anguilla’s Budget as we would all recall the uncertainty which prevailed in 2010 and 2011 when the Budget was assented to in June and April, respectively, and remedial measures which had to be put in place. While it is true that on occasion the UKG has assented to GoA’s Budgets in January and even February, prior to April 2010 the UKG, to my memory, had never disallowed aGoA’s Budget. To again disallow the 2011 Budget meant the order of things had dramatically changed and we could not take for granted that the UKG would approveAnguilla’s 2012 Budget in an expeditious manner.
“I am therefore pleased that the UKG assented to the 2012 Budget towards the end of the 2nd week of January and sincerely hope that this brings to an end the mistrust with which the UKG has viewed GoA Budgets over the two previous budget cycles. The record of my Government in turning around the dire fiscal situation, which we inherited on coming to Office in February 2010, has been well documented. But, to reiterate, we have turned an approximately EC$70 million recurrent deficit at the end of 2009 to a recurrent surplus of approximately EC$21.51 million at the end of 2011.
The positive fiscal performance continues, as at January 27, 2012 recurrent revenue collections were EC$17.719 million while recurrent expenditure was EC$12.114 million to give a recurrent surplus of EC$5.605 million. But one good month does not make a year, and I have admonished my technical staff to be diligent in the collection of Government revenues and to be ever watchful of Government expenditure. My Government intends to continue on the path of restoring Anguilla’s finances to a sustainable footing so that we can meet the legitimate expectations of the people ofAnguilla.”
Mr. Rogers’ second question was:
(b) “It has been reported in the local press, and commented on by you in your interview with Keithstone Greaves, that the Government of Anguilla approved a Contingency Plan in the EXCO sometime last year. Can you tell us what are the main measures included in the Contingency Plan and provide Members of the Opposition in this Honourable House with a copy?”
Mr. Hughes’ reply was as follows:
“In response to Question (b) raised by the Leader of the Opposition, the Executive Council of GOA, at its sitting of December 16, 2011, approved a “Contingency Plan” for submission to the UK Foreign and Commonwealth Office (FCO) as per the request of the UKG as a condition for approval of the 2012 Budget.
“To quote directly from Executive Council Minute 11/876 – ‘… potential corrective measures were presented to Executive Council who sanctioned these options for further consideration in the event that contingency measures are required’.
I am attaching the referenced Contingency Plan for 2012:
GOVERNMENT OFANGUILLACONTINGENCY PLAN FOR 2012
Purpose
The purpose of this Contingency Plan is to have a documented guide for the continuous monitoring of the fiscal situation of the Government of Anguilla. It will also provide a menu of options to consider for implementation in the event that the budget does not stay on track.
The Ministry of Finance believes that to be in a position to implement a Contingency Plan that an anticipated shortfall should be determined. This can be done if trends in Revenue and Expenditure can be assessed so that a determination can be made about the timing and amount of the shortfall and when it would be necessary for a Contingency Plan to be implemented. Therefore, it is agreed that the first quarter actuals will be used as a preliminary guide of predicting the likely outcome of the budget. It is also possible that while there may be underperformance in a particular month or even in a quarter, the opposite is also true in that in another month or quarter the budget can over-perform which can ultimately result in the closure of the gap. It must be noted that the performance of the relevant accounts is not evenly spread over the year.
Over the years the Ministry of Finance has been employing early warning and response systems such as the regular meeting of the Fiscal Review Team and Fiscal Evaluation Group, the ongoing Funds Control mechanism and other budgetary controls to monitor the fiscal situation. In the event that there is a deviation of significant concern from the budget it will be forwarded along with recommendations to the decision makers for suggestive corrective action to be considered and approved. It should be noted thatAnguillawas commended by the ECCB Monetary Council for implementing and sustaining a robust fiscal monitoring and response mechanism.
In addition to the Fiscal Review Team which mainly consists of officers within the Ministry of Finance, the Permanent Secretaries and the Deputy Governor meet on a monthly basis. During these meetings the fiscal position of the Government is reviewed and discussed. Permanent Secretaries are made aware of any concerns related to expenditure and revenue within each ministry for corrective measure and follow up for the next meeting. The financial position is circulated each day to the Deputy Governor, the Ministers and all Permanent Secretaries so that they would be aware of the financial position before commitments are made.
While the Contingency Plan speaks to 2012, the Government of Anguilla is committed to fiscal reform, including tax reform, with a view to ensuring that the public sector can meet its obligations going forward.
Contingency Options
The following potential corrective measures were presented to Executive Council who sanctioned that these are options that maybe considered for further discussion in the event that contingency measures are required:
Expenditure Measures
Controlling Personal Emoluments
• It is agreed that redeployment will be the first option in lieu of hiring for filling vacancies. Only in exceptional cases will jobs be advertised externally.
• No acting allowance will be paid for acting except in the case of statutory appointments and other special cases.
• Review compensation structure and responsibilities of cleaners. Consideration will be given to outsourcing cleaning to service providers.
Controlling Goods & Services
• Restrict overseas travel to funded and exceptional cases.
• Implementation of energy savings initiatives.
• Streamlining Procurement mechanisms and procedures with a view to reducing costs on goods and services.
• Negotiate with ANGLEC for cost sharing of street lighting.
• Implementation of VOIP and other telecommunication systems that will result in savings.
• Review insurance policy on Government vehicles to ensure that annual premiums reflect depreciation.
• Initiation of Government Vehicle Pooling Scheme.
NB. If it is deemed necessary a portion of the 2012 budget will be restricted.
REVENUE MEASURES
Arrears
• Collections Unit in Inland Revenue Department will be established with the goal to aggressively pursue the collections of outstanding revenue (arrears).
Temporary Tax reduction/Supply side measures
• 50 per cent reduction in Stamp duty charged under Alien Land Holding Regulation Act for resale properties – specific timing and duration to be determined.
• Extension of temporary reduction in rate of duty for Vehicles and parts – specific timing and duration to be determined.
• Consideration be given to the removal of customs service charge for a specific list of food items.
New Tax Measures
• Consideration be given to implementing the tow measures that were originally deferred:
Rental Car Levy
Restaurant Levy
Cost recovery Measures
• Consideration be given to applying some level of charge for services now provided free of cost by Government
Social Safety Net
• Consideration be given to the removal of all duties on staples (rice, flour, milk, brown sugar).
Securing Stablization Funds
The Government of Anguilla has available to it approximately EC$40.0 million under the EDF 10 programme which must be disbursed by the end of 2013. While EC$12.24 is included in the 2012 capital Budget,GOAhas targeted receipt of EC$20.0 million. Excess funds received in 2012 can be used to meet any recurrent shortfalls and to increase reserves.
The Government of Anguilla is requesting that the Foreign and Commonwealth Office does its utmost to assistAnguillain unlocking these funds as identified.
Debt Restructuring
Consideration be given to refinancing the EC$50.0 million note held with the Anguilla Social Security Board by issuing a bond on the Regional Government Securities Market with a view to lowering debt service costs, while at the same time injecting new funds into the economy.
Overdraft Facility
The Ministry has been monitoring the cash flow position on a daily basis and will continue to do so. This is done in an effort to minimize the usage of the overdraft facility and as a result interest charges.
However, if it is required the Government of Anguilla has an overdraft facility of twenty million Eastern Caribbean Currency (EC$20,000,000) available to meet short term obligations.
Conclusion
As you would realize some of the measures can be used in a preventative rather than a corrective manner. The Budget process being a dynamic and ongoing one has built in mechanisms that are capable of ensuring that deviations from the estimates are kept at a minimum and where necessary addressed in the most appropriate manner. While we are optimistic about realizing the budget estimates, we are ever cognizant of how sudden our environment can change. We are keen to maintain the ability to respond. The Government of Anguilla will continue to work with our development partners in particular, CARTAC, ECCB and CDB, to strengthen fiscal management.
