The Honourable Premier and Minister of Finance and Health, Ellis L. Webster, MD, presented the Government’s 2022 Budget Address to the House of Assembly on January 4, 2022. The following are highlights from that budget presentation:
Introduction
The theme for last year’s budget was Restoring Anguilla’s Economy, Innovatively and Sustainably. This year’s, budget was presented to the House under the theme Advancing Through Adversity, Restoring Prosperity.
Adversity is a difficult or unpleasant situation, but it is [also] one of the most powerful forces in life. It can bring out your best or your worst. It is up to you.
Adversity provides the opportunity to believe — to revitalise your commitment to what you want to achieve and re-assess what you are willing to sacrifice to make it happen. It builds character, learning, resilience, creativity and conviction. It teaches us to embrace challenges and grow from overcoming them.
When faced with adversity you have two options:
1. Let obstacles overwhelm and keep you from pursuing all you were destined to accomplish, or
2. March forward, fight harder, push past the seemingly impossible circumstances. Turn adversity into triumph (prosperity).
Prosperity is a condition of being successful, flourishing or thriving. In other words, economic well-being. Prosperity enables people to gain meaningful employment, pursue opportunities, live productive lives and build a future for themselves and their families. It reduces vulnerability, enhances resilience and makes one economically stronger.
Restoring the economy requires advancing through adversity.
2021 Economy Review
The Eastern Caribbean Central Bank (ECCB) projected GDP to grow by 1.04 % in 2021, with a further consecutive 7.40 % recovery this year, in keeping with positive global growth projections. Anguilla is a small open economy in a global playing field. Rising commodity prices in the US, and other countries, means cost inflation for us here in Anguilla. Consumer prices are, on average, 2.08 % higher than the same period last year.
The economy is likely to operate below the 2019 or pre-pandemic level in these early stages while momentum builds. Due to subdued travel activity for three-quarters of the year, at year’s end, output in Hotels and Restaurant [was] projected to decline by 7.00 % year-over-year.
Today, there are encouraging indicators in bookings and airlift capacity, [and one] can anticipate a strong tourism season. One niggling source of uncertainty around the pandemic’s effect on tourism stems from the emergence of new highly transmissible variants which can result in severe disease.
Activity in Construction, along with Wholesale & Retail, saw the most significant increases over the course of the year, growing by 4.00 % and 5.00 %, respectively.
2021 Fiscal Review
For 2021, the recurrent revenue, had an estimated year-end outturn of EC$263.30 million, which is a 12.47 % increase in comparison to the 2020 collections of EC$234.09 million. However, as of December 31st , 2021 recurrent revenue outturn was at EC$263.65 million, which is 1.47 % over the 2021 budget estimate of $259.82 million. It is important to note, that included in the revenue receipts is EC$16.25 million from the UKG in respect to COVID-19 Financial Aid. The Government of Anguilla is thankful to the UKG for its ongoing support. At this point, gratitude is expressed to all the hard-working staff in the Ministry of Finance. Recognition is also given to the management and staff at the Customs and Inland Revenue Departments.
2021 Recurrent Expenditure
Recurrent expenditure performance for 2021 was expected to be EC$213.34 million. However, as at December 31st, 2021 the recurrent expenditure outturn was $213.99 million. This estimate is EC$13.37 million less than the budget estimate of EC$226.71 million and the actual outturn is $12.72 million less than the budget estimate.
Some arrears clearing included the civil servants deferred salaries of EC$2.34 million, contributions to the Eastern Caribbean Supreme Court of EC$1.06 million, and contributions to the Public Service Pension Fund of EC$2.76 million.
Capital expenditure for 2021 was expected to top out at EC$4.2 million, compared to the EC$2.87 million originally budgeted.
2021 Public Debt Report
Preliminary estimates show that total public debt, which comprises of Central Government, and Government Guaranteed and Non-Guaranteed debt of State-Owned Enterprises (SOEs) (‘General Government Debt’), as at the end of 2021 was projected at EC$452.33 million (63.15 % of GDP). At the end of 2021 Central Government debt stock was projected at EC$432.53 million, a decrease of EC$20.27 million over the 2020 debt stock of EC$452.80 million. Government guaranteed SOEs debt stock was projected at EC$3.04 million, a decrease of EC$1.67 million over the 2020 debt stock of EC$4.71 million. Non-Guaranteed SOEs debt stock was projected at EC$16.76 million, a decrease of EC$2.65 million over the 2020 debt stock of EC$19.41 million.
2022 Recurrent Expenditure
The Recurrent Expenditure Estimate for this 2022 fiscal year is projected to be EC$224.58 million excluding amortisation of EC$35.70 million. This is a 6.11 % reduction or EC$2.13 million variation when compared to the 2021 approved recurrent budget of EC$226.71 million.
Personal Emoluments for 2022 budget is estimated at EC$89.60 million resulting in 9.00 % or EC$7.31 million difference over 2021 approved budget of EC$82.29 million. This increase in part addresses statutory obligations under the Education Act to compensate teachers who attain enhanced qualifications, as well as, increases provisioning to facilitate additional policing needs and additional personnel needs related to the Inland Revenue Department and the Customs Department that will lead revenue mobilisation efforts.
Retiring Benefits show a slight increase of EC$0.47 million for the 2022 of EC$10.41 million when compared to the 2021 approved budget of EC $9.94 million. This is due to the number of persons attaining the age of retirement for this year.
Goods and Services resulted in an overall increase of EC$4.41 million, moving the 2022 budget to EC$60.16 million when compared to the 2021 approved budget of EC$55.75 million. This was mainly as a result of increases in provisioning for maintenance of buildings and roads, maintenance services related to electronic systems, insurance, and Government related GST expense from July 2022.
Current Transfers has an estimated budget of EC$48.30 million for 2022. This is a decrease of 17.00 % or EC$9.59 million below the 2021 approved budget of EC$57.89 million. Under this account, payments are made to statutory bodies, medical treatment overseas, public assistance, and sports, youth, culture and arts development initiatives.
Ministry of Home Affairs & Departments
The Ministry of Home Affairs has seen a slight decrease in the 2022 recurrent budget with a total of EC$8.51 million. This represents a decrease of 5.00 % or EC$0.45 million when compared to the 2021 approved budget of EC$8.96 million.
Ministry of Economic Development, Investment, Commerce, Information Technology and Natural Resources & Departments
The Ministry of Economic Development has for its 2022 budget EC$12.95 million. The increase of 10 % or EC$4.24 million over the 2021 recurrent budget allocation of EC$8.71 million is due mainly to planned consultancy for an E-Government Policy, increased staffing for the Department of Statistics and increased provision for maintenance services for various government departments’ digital systems.
Ministry of Finance and Health & Departments
The 2022 recurrent budget for the Ministry of Finance and Health is EC$101.10 million. This is a 6.09 % or EC$6.09 million decrease when compared to the 2021 approved budget of EC$108.09. This variance is mainly attributed to the discontinuation of the public assistance program for COVID-19 as the island re-opened and persons have been returning to work.
Ministry of Social Development and Education & Departments
The Ministry of Social Development has a 2022 recurrent budget of EC$48.11 million. This is a 7.00 % or EC$3.50 million decrease over the 2021 approved budget of EC$51.61 million. The reduction in this Ministry is mainly attributed to a reduction in the transfers and subsidies account.
Ministry of Infrastructure, Communications, Utilities, Housing & Tourism
The Ministry of Infrastructure has a 2022 recurrent budget of EC$23.24 million. This is a 13.00 % or EC$2.73 million increase when compared to the 2021 approved budget of EC$20.51 million. This increase is primarily for maintenance of roads, buildings, training of firefighters and a consultancy related to an energy management program.
2022 Recurrent Revenue
The recurrent revenue estimate for 2022 is EC$237.66 million, which represents a 9 % decrease in comparison to the 2021 recurrent revenue estimate of EC$259.82 million.
Taxes on International Trade continue to be a significant revenue source and we estimate to collect EC$48.88 million which represents 21 % of the total estimated recurrent revenues.
Import Duties are the largest driver of this revenue category and is estimated to total EC$43.51 million. Taxes on Goods and Services accounts for 47 % of the budgeted total recurrent revenue and is projected to be EC$112.44 million.
Taxes on payroll and workforce, which includes the Interim Stabilisation Levy, are expected to generate EC$15.39 million. This is a slight decrease from the actual outturn in 2021 which was expected to yield EC$15.96 million.
Taxes on Property is projected to bring in EC$ 11.66 million, which represents a 69 % increase over budget for 2021 of EC$6.91 million. There were two new taxes passed in 2021 which come into effect in 2022, the Goods and Service Tax and the Money Transmission Levy.
Goods and Services Tax
The GST is a broad-based tax with a more predictable revenue and replaces 5 other taxes. The rate and threshold levels are set to have less effect on small businesses and the poor. GST will take effect in Anguilla on 1st July 2022 at a rate of 13% and a registration threshold of EC$300,000.
The GST has been designed in line with accepted best practices and principles whilst still provided a bedrock of support for those who need it most with targeted exemptions and exclusions through the exempted and zero-rated list of items. Essential food items such as bread and flour will not attract GST. Medical services and education services are also exempt from GST.
Money Transmission Levy
In 2020, almost EC$ 38 million left Anguilla via money services businesses such as Western Union and Money Gram. This amount was even higher in 2018 at almost EC$ 50 million. These money services businesses are popularly utilised for the transfer of remittances, in particular non-commercial transfers of money by workers in Anguilla with familial ties abroad. Beginning this year, where money is transmitted outside of Anguilla via such money services businesses, these transactions will attract a 2 % levy on the principal amount of money transmitted.
Capital Budget
The capital expenditure envelope for this year is EC$2 million and will support the implementation of the Anguilla Population and Housing Census and the outfit of the ALHCS laboratories.
Over the next several weeks, The Anguillian will provide a more in-depth report on the 2022 Budget presentation at the individual Ministries’ level.
