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Speeches

by

 Dr. Errol Cort

Minister of Finance & the Economy

STATEMENT BY

HONORABLE DR. ERROL CORT

MINISTER OF FINANCE AND THE ECONOMY

TO THE

HIGH LEVEL SEGMENT

OF THE

MAURITIUS INTERNATIONAL MEETING

TO REVIEW THE BARBADOS PROGRAMME OF ACTION

ON THE SUSTAINABLE DEVELOPMENT

OF SMALL ISLAND DEVELOPING STATES

Port Louis, Mauritius

January 13, 2005

Mr. President,

Heads of State and Government,

Honorable Ministers,

Excellencies,

Distinguished Delegates,

Ladies and Gentlemen,

“Greetings”! from the small island developing State of Antigua and Barbuda .

This collective “island” greeting from my government and people to this gathering of the international community is tinged with heartfelt concern for the future: the collective, sustainable development future of small island developing States (SIDS).

This concern is further exacerbated when one considers the overall conclusions of the Secretary General of the United Nations who, in his latest report on SIDS, concludes that, and I quote, “…progress in implementation of the Programme of Action has been mixed. The small island developing States still face major challenges to their sustainable development. Accelerated implementation will require a renewal of political commitment by all States to the Programme of Action and to related international commitments and pledges.”

But the overarching goal of this meeting gives me some hope. For if indeed we succeed in “…adopting a proactive strategy to further implement the Programme of Action approved a decade ago at a Global Conference in Barbados…”, then we, SIDS, will have taken a further step in achieving the sustainable development future which we all aspire to.

But such a step will require concerted and collective efforts at the national, regional and international levels.

Mr. President,

I am pleased to say to this august gathering that, at the national level, my government has established a socio-economic “compact” with the people of Antigua and Barbuda , which is part of a comprehensive blueprint known as the “Agenda for Change.” The Agenda, which incorporates the principles of good governance, transparency, accountability and stakeholder consultations, also serves as the vehicle through which my government has begun mainstreaming the three (3) pillars of sustainable development: economic, social and environmental.

On the economic and social front, Antigua and Barbuda is in the process of creating an enabling environment to attract much needed foreign direct investment into our economy, and we have in place the supporting governance structures. These include:

1.                 annual public sector budgets based on realistic revenue projections and involving stakeholder consultations;

2.                 a National Strategic Development Plan that will detail the Government’s economic programmes for the period 2005-2010;

3.                 the establishment of an Investment Authority that will serve as a one-stop-shop for investors and will function as an investment promotion and facilitation agency;

4.                 development of a comprehensive economic diversification strategy;

5.                 an enhanced Financial Services Regulatory Commission to monitor and assess operations in the international financial services sector, including Internet gaming;

6.                 the establishment of  an Integrity Commission for the purpose of receiving declarations of the affairs of persons holding specific positions in public life, for the purpose of establishing probity, integrity and accountability in public life and for related matters;

7.                 a  Prevention of Corruption Act which, among other things, makes it  unlawful for a person to commit an offence by corruptly soliciting or accepting, whether directly or indirectly, property or a benefit or advantage for himself or another person for doing an act or for omitting to do an act in the performance of his/her functions as a public official;

8.                 a National Economic and Social Council  that will promote the goals of economic growth and development, participation in economic decision-making and social equity; and

9.                 a Freedom of Information Act which is intended to promote maximum disclosure of information in the public interest, to guarantee and facilitate the right of access to information and to provide for effective mechanisms to secure that right.

Given the importance of the contributions of civil society to the

sustainable development, my government is making every effort to involve them in all aspects. This is particularly true on the environmental side of the sustainable development ledger, where we are in the process of finalizing:

1.                  a National Environmental Management Strategy, which requires

the government to collaborate with civil society to develop and implement and promote a programme that will ensure the proper management of our natural resources; and

2.                  a comprehensive environmental management legislation to ensure

          effective management of natural resources and coordinated

          national follow-up to and implementation of our obligations under

          various international environmental agreements.

Mr. President,

          At the regional level, Antigua and Barbuda is a member of the Caribbean Community of nations (CARICOM), one of the first regional integration organizations. The formation of this organization was due in part to the early realisation that, as a region, we face common problems that could best be solved with common approaches.

          It therefore should come as no surprise that the Caribbean region is in the process of accelerating efforts towards deeper regional integration, with the eminent implementation of a region-wide Single Market and Economy (CSME).

          Hand in hand with the CSME, the region is pressing for greater commitment and more funding for programmes in sustainable development and related areas including disaster mitigation - especially the setting up of early warning systems, vulnerability reduction, resilience building, trade adjustment, energy, tourism and culture.

          We are also facing many challenges in the area of agriculture, food production and food security, features we share with many SIDS. As we seek to form partnerships in these areas, we are reminded of the fact that food production and security are vital to reducing our vulnerability as SIDS, and critical to preserving the wellbeing of our people. Consequently, there is no objective or endeavour of greater importance.

Mr. President,

          A meeting such as this affords us the unique opportunity to share our concerns with and seek appropriate assistance from the international community. It also provides us with an opportunity to operationalise many of the lessons learnt since the adoption of the Barbados Programme of Action (BPOA) in 1994. These include broader roles for women, youth and civil society in the further implementation of the BPOA, and developing meaningful partnerships for sustainable development in SIDS among and between all stakeholders.

It is against this backdrop that I wish to highlight some of the urgent concerns of my country. They include: (1) the economy; (2) the environment; (3) new and existing infrastructure; (4) education; (5) healthcare; (6) employment; and (7) good governance. Given these urgent concerns, it is important that the outcomes of this meeting on the agreed priority areas are practical; measurable; implementable and time bound.

Anything short of this would be a disappointment.

Mr. President,

          As SIDS, we are facing a future whose only certainty is change.

          As SIDS we are confronted with many problems and difficulties - some intrinsic and timeless, others extrinsic and new.

          If we are to make progress towards sustainable development we must build capacities; deepen the engagement of civil society, in particular women and youth in the further implementation of the BPOA; strengthened our resilience; reduce our vulnerabilities; and promote problem-solving actions that mobilize key actors and constituencies.

          The practical actions we are about to adopt here in Mauritius must therefore encompass the aforementioned.

          My country, my region, the SIDS and, indeed, the entire international community are counting on it.

Mr. President,

          Let me conclude by thanking you, your government and people of Mauritius , for the warm hospitality extended to all participants at this meeting, and for the excellent facilities provided.

          I would also like to express my government’s condolences to the government and people of the countries of South East Asia , who suffered immense loss of life from the tragic occurrence of the tsunami in December 2004.

Our sympathies are with them.

          I thank you, Mr. President.

Dr. Errol Cort's

address to the

Antigua & Barbuda Chamber of Commerce

on

July 15, 2004

ANTIGUA AND BARBUDA: TAKING  STOCK; CONFRONTING THE  CHALLENGES

Ladies and Gentlemen:

In my maiden Budget Address, which was delivered on Wednesday 31^st March 2004, I had at that time intimated that Antigua and Barbuda was at a crossroad.  In this regard, I then sounded the following warning, which I believe is even truer and more profound now than it was then:

“It is therefore most critical that, at this juncture in Antigua and Barbuda’s modern socio-economic history, we make the right decisions in the overall interest of the people of Antigua and Barbuda, and we must seek to implement these decisions decisively.  There is no more time to waste.  The time to act in the constructive interest of our people and our Country is now.”

Ladies and Gentlemen:

It was believed that the prevailing socio-economic conditions were dire and that the prospects of finding immediate solutions thereto were remote.  If I were simply concerned on 31^st March 2004 about the state of our economy, now I am alarmed, for even though it appeared to many of us that Antigua and Barbuda was in a mode of crisis, now that the clouds which concealed the barrenness of our economic and social landscape have dissipated, swept away by the openness of Government in the Sunshine, the truth is revealed; and, Ladies and Gentlemen, the truth is far worse than any one of us could have imagined.

What, you might ask, is the factual position at this “juncture in Antigua and Barbuda’s modern socio-economic history”?  A picture they say speaks a thousand words. So, permit me, Ladies and Gentlemen, to share with you a pictorial profile of some key economic indicators.  

Ladies and Gentlemen: I have endeavoured to share with you a full and pragmatic picture of the state of the economy of Antigua and Barbuda from a macroeconomic standpoint. It is clear that macroeconomic stability is of fundamental necessary and could only be achieved through the pursuit of sound macroeconomic policies.

What then are some of our policy options as we seek to map the way forward? I shall discuss these options under four (4) headings.

ACTIVE DEBT MANAGEMENT PROGRAMME

Anoop Singh, Director in the Western Hemisphere Department of the International Monetary Fund (IMF), in a 2004 Paper entitled: The Caribbean Economies: Adjusting to the Global Economy, opines that in order to boost and to sustain growth, Caribbean countries must “develop a more supportive macroeconomic policy framework with declining public debt burdens and strengthened financial systems”.  Singh cites ensuring debt sustainability and maintaining financial sector soundness as cornerstones of such a policy, which would facilitate, amongst other things, higher fiscal reserves and promote private sector credit for growth.

If we were to use Singh’s criteria for a supportive macroeconomic policy, Antigua and Barbuda would fall decisively short in respect of debt sustainability.  In particular, total debt (external and domestic) increased from 55% of GDP in 1998 to well in excess of 100% of GDP by 2003. This is to be compared and/or contrasted with the ECCB’s Fiscal Benchmark of a debt to GDP ratio of no more than 60%.  Further, ‘Debt Service Due’ more than doubled over the same period and interest payment obligations are preliminarily estimated to be around 25% as at December 2003.

Ladies and Gentlemen: The Ministry of Finance and The Economy is currently pursuing discussions with the domestic commercial banking sector with a view toward consolidating and rescheduling the Government’s debt to the said banks and also negotiating a more favourable rate of interest, which at present varies between 10% to 15% per annum.

In respect of the Government’s indebtedness to local suppliers, the Ministry of Finance and The Economy is exploring the possibility of providing these local suppliers with an option of accepting a discounted sum payable in full through revenues raised by floating bonds. This option, if accepted, would certainly provide a welcomed stimulus to the economy of Antigua and Barbuda.

Discussions regarding debt forgiveness and debt rescheduling have also commenced with some of our external creditors, including the Government of Italy who is our largest single external creditor and whose debt represents 79% of our official bilateral debt.

It is also timely for me to announce that the Ministry of Finance and The Economy will host a wide cross section of International Donor Agencies at a meeting to be held here in Antigua on 26^th July, 2004.

The public shall be kept informed with the progress of these and other debt related discussions.

FISCAL ADJUSTMENT

In a 2001 article in Finance and Development entitled ‘Economic Stabilization in the Caribbean’, Alvin D. Hilaire, in analyzing the responses of four Caribbean countries to serious economic difficulties in the 1990s, concluded that:

“Fiscal measures need to be at the core of a prudent macroeconomic policy framework and must be maintained if growth is to be sustained.”

In one of the earlier slides, it was demonstrated that should this Administration opt to continue the economic policies pursued by the former ALP Administration, the Country’s debt to GDP ratio would approximate 150% by 2007, while on the other hand, an adjustment programme would achieve the desired target of a 60% debt to GDP ratio within a ten year period.

An adjustment programme is therefore imperative.

In this regard, the Ministry of Finance and The Economy is at present studying certain possible revenue enhancement measures as proposed by the OECS Tax Reform and Administrative Commission. The Tax Commissioners have proposed a possible composition of a more efficient tax system, which would generate tax revenue of between 25% to 30% of GDP, as compared with the current tax revenue of 17.2% of GDP. The combination of taxes recommended by the Tax Commission consists of Personal Income Tax, Corporate Income Tax, Property Tax, Trade and Excise Tax and a Transaction or Value Added Tax. The Government welcomes the views and/or comments of the general public on this very important subject matter.

While we review possible tax options within a framework of making the current tax system more equitable and efficient, the Government is extremely concerned over the high levels of discretionary waiver of duty and taxes that, under the previous Administration, averaged, in value, approximately 170 million dollars to 200 million dollars per annum. It has also been drawn to the Government’s attention that in a number of instances, persons and/or entities were given duty and tax concessions by the previous Administration in a manner that has led to unfair competition and the creation of an uneven playing field. In an effort to level the playing field and to PUT RIGHT WHAT IS PATENTLY WRONG, holders of duty and tax free concessions granted prior to 24^th March, 2004 will be required to have these concessions validated by the Ministry of Finance and The Economy acting on the instructions of the Cabinet. Where concessions are deemed to create an uneven playing field, they will likely not be validated by this Administration.

Further, the Government shall also introduce a policy of granting partial waivers of duty and taxes in some instances to eligible applicants as opposed to continuing the practice of granting full waivers.

On the expenditure side, the Government has been seeking to rationalize its expenditure. In this regard, I am pleased to report that while Public Sector Wages and Salaries had averaged approximately 16.6 million dollars per month between January and March 2004, the month of June 2004 recorded a decrease of almost 1 million dollars as Public Sector Wages and Salaries fell to 15.8 million dollars.

The Government shall continue to pursue various options all in an effort to curtail expenditure.

GROWTH ENHANCING REFORMS            

Ladies and Gentlemen: The United Progressive Party Administration is fully committed to institutionalizing processes that would facilitate a level playing field, by removing the hitherto inappropriate involvement of Ministers of Government in investment decisions, and by placing certain aspects of investment considerations under the jurisdiction of a capable agency. Toward this end, the Government, in keeping with our Manifesto pledge, is in the process of establishing a ‘one-stop-shop’ Investment Agency under the Ministry of Finance and The Economy. This Investment Agency will be charged with the responsibility for, inter alia, investor facilitation, administration of incentives, investment marketing and promotion, research and data collection and the provision of technical assistance. Also, under the remit of this Agency shall be the completion of an Investor Roadmap for Antigua and Barbuda. It is expected that this Agency will give detailed guidance to prospective investors (whether local or foreign) on how to start-up a business, the procedures for obtaining work permits, the tax implications for various kinds of operations, the applicable laws, reporting requirements and the like. The conceptualization of this Agency is at an advanced stage through a collaboration of effort involving certain International Agencies.

Other growth enhancing reforms to be pursued by this Government shall include improved wage setting mechanisms by linking wage increases to productivity, enhanced accounting and business reporting standards and increased investment in education and training. 

Ladies and Gentlemen: The Honurable Prime Minister recently announced a special tax incentive programme for investments that take place between now and November, 2004. In particular, I wish to announce that investors will be eligible to receive a 10 year corporate tax waiver if they invest a minimum of 10 million dollars and, in the process, create a minimum of fifty (50) new jobs.

PRIVATIZATION

My Government is of the view that PRIVATIZATION of certain public assets could lead to greater efficiencies, lower costs and, ultimately, increased benefits to consumers generally. Appropriate statements will be made in due course regarding this matter.

CONCLUSIONS

Ladies and Gentlemen: The economy of time does not permit me to continue for much longer. I shall therefore close with a challenge to all, namely: Embrace The Continued Development of Antigua and Barbuda as a Personal Campaign. No doubt, tough decisions are necessary and imminent but we will be the ultimate beneficiaries of these decisions. In this regard, I crave your active support and your patience in advance of the 2005 Budget which will be delivered later this year, and which will more clearly delineate and further elaborate on a number of policies referred to in this presentation.

I thank you Ladies and Gentlemen.

Dr. the Hon. Errol Cort

15^th July, 2004

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STATEMENT BY THE GOVERNOR FOR ANTIGUA AND BARBUDA

DR. THE HONOURABLE ERROL CORT

Board of Governors Meeting

Caribbean Development Bank

Tobago

May 12-13

Madame Chairman, Fellow Governors, Mr. President, Directors and Officers of the Bank, Observers, Guests, Distinguished Ladies and Gentlemen:

On behalf of the Government and People of Antigua and Barbuda, I would like to express our deep appreciation for the warm hospitality extended to our delegation by the Government and People of Trinidad and Tobago, and by the Officers of the Caribbean Development Bank (CDB). I am truly heartened by the hard work and dedication that has culminated in the successful hosting of this the Thirty-Fourth Annual Meeting of the Board of Governors of the CDB.

I also wish to take this opportunity, Madame Chairman, to convey, in particular, best wishes from our Prime Minister, the Honourable Baldwin Spencer, to the Prime Minister of Trinidad and Tobago and his Government, to other Heads of Government, to Governors, to the President and Officers of the Bank and to the People of this outstanding Republic.

On a sad note, Madame Chairman, the Government and People of Antigua and Barbuda convey our condolences to the Government and People of Dominica on the passing of the late Prime Minister, the Hon. Pierre Charles, who, I am advised, served with distinction in his capacity as a Governor of the Bank.

Madame Chairman , Antigua and Barbuda is at the crossroads in our Nation’s socio-economic and political development, having only fifty (50) days ago changed its government, which government had hitherto ruled for an unbroken period of twenty-eight (28) years. It is most critical that, at this juncture, we make the right decisions in the overall interest of the People of Antigua and Barbuda , and we must seek to implement these decisions decisively.

The New Administration, under the distinguished leadership of Prime Minister, the Honourable Baldwin Spencer, was ushered into government on a platform which had as its main focus “An Agenda for Change”: Change of approach in the management of public finances; Change in the culture of decision making; and Change in the general approach to governance. Hence, the tenets of Accountability, Transparency and Good Governance were the building blocks upon which the New Administration promoted itself, and upon which the present Government shall reconstruct a new Antigua and Barbuda that will fully embrace the practice of prudent fiscal management of public resources. In this regard, my Government is committed to pursuing the requisite adjustment measures that will effectively correct the existing chronic fiscal imbalance.

Madame Chairman, my country’s protracted record of debt default will be given priority attention by the New Administration. We are very cognizant of the fact that the accumulation of arrears on the external debt has adversely affected my country’s creditworthiness and its ability to access external funding for the Public Sector Investment Programme (PSIP). We are in the process of formulating a strategy with respect to debt management and, in this regard, we will very shortly be communicating with our creditors with a view towards negotiating arrangements that would see Antigua and Barbuda return to timely and sustainable debt servicing.

Madame Chairman, there is much to be done, but we are confident that with the assistance of friendly institutions such as the Caribbean Development Bank, and the aid and good will of countries with whom we have had a longstanding association, we shall succeed.

Madame Chairman, there are a number developments that are unfolding at this time, some of which we note with concern and others which we applaud. Given the serviced-based nature of our economy, with a strong emphasis on tourism, the rising trend in oil prices is the source of much anxiety. Should this trend continue, the likely impact on consumer prices will be significant. Perhaps, Madame Chairman, the time is opportune to look afresh and anew at alternative forms and/or sources of energy in an effort to minimize the effects from future volatility in oil prices.

Madame Chairman, we further note the swiftness of the march towards globalization and whilst we are hopeful that the process will eventually lead to higher living standards and an increase in economic opportunities for our people, we remain concerned over the timeframe during which these benefits shall accrue. In an essay entitled “Globalization’s Missing Middle”, by Geoffrey Garrett, the writer concluded:

“The benefits of market integration are more than merely theoretical, but, on the ground, they have also been considerably less than was promised. The losers – poor people in the west and middle-income countries – are caught in the crossfire between the stringent demands for success in the knowledge economy and the harsh realities of competing in low-skill production against countries where people will work for much less but can do at least as good a job. This is globalization’s missing middle.”

According to Garret, middle income countries like Antigua and Barbuda are likely to struggle in the wake of the globalization movement. In addition, our prospects are made more complicated and our vulnerabilities are further laid bare by our small size. It is for reasons such as these, Madame Chairman, that my Government intends to place special emphasis on human resource development, as we are ever mindful of the fact that our citizens and residents are our chief resource and represent the intellectual capital that will be employed in our quest to champion any obstacles of globalization.

Madame Chairman, we also note the strides towards the realization of the Caribbean Single Market and Economy (CSME), and the advancement in the work towards the establishment of Caribbean Court of Justice. We are committed to playing our part in the deepening of the integration process and to ensuring that the CSME becomes fully operational.

Madame Chairman, there must and will be continuous dialogue between my Government and civil society as we move our country along a chosen developmental path. In this regard, my Government pledges its commitment to a continuous process of consultations with civil society through the establishment of the National Economic and Social Council as a main pillar in a participatory democracy.

Madame Chairman, in light of the advanced stage of Haiti’s application for membership to the Bank, it would be remiss of me if I did not mention that Antigua and Barbuda is concerned over that country’s social and economic turmoil and the ensuing hardship that is currently placed on the people of that country. We are also resolute in the view that all efforts must be directed toward ensuring that the principles of democracy are practiced to the fullest extent in Haiti .

Madame Chairman, I turn briefly to the performance of the Bank as captured in the Financial Statements as at December 31st 2003 . I note with commendation the generally improved performance of the CDB in a number of areas. With respect to loans, grants and equity, gross approvals in the amount of $197.5 million as at December 2003 represent a significant improvement over the same period for 2002, where the amount was $128.8 million. In terms of disbursements, the period under review registered $122.6 million as compared to $119.0 million for the previous year. Antigua and Barbuda welcomes the progress made in the rate of approval and disbursements, and sees this trend as the CDB’s positive and progressive response to calls from Borrowing Member Countries (BMCs) for the institution to be more client-friendly.

In respect of the Ordinary Capital Resources (OCR), we observe with satisfaction that operating income for 2003 was significantly ahead of that recorded for the prior reporting period: $20.0 million as compared to $15.6 million in 2002. In this regard, we applaud the Bank for its discipline in containing administrative expenses in light of its increased activity as evidenced by the increased number of loan approvals and rate of disbursements. We further wish to praise the Bank for successfully implementing a borrowing strategy that has led to a reduction in the cost of funds by $2.8 million, thereby giving a further boost to operating income. Congratulations are also in order for the effective manner in which the Bank managed its OCR loan portfolio, thus resulting in there being no non-accruing loans at the end of fiscal year 2003.

I would like to embrace this opportunity, Madame Chairman, to thank the CDB for the patience and good will it has exercised towards Antigua and Barbuda over the past year, as my country’s fiscal position deteriorated even further over the previous fiscal year, with adverse effects on our commitments to the Bank. I am pleased, however, that as at the end of the last quarter, Antigua and Barbuda ’s loan accounts with the Bank are up-to-date, and it is my Government’s intention to keep the said loan accounts current, as we endeavour to act in a responsible manner with respect to our future financial obligations to the Bank and to other creditors.

Madame Chairman, Antigua and Barbuda commends the CDB for the support that it continues to give in a number of very important areas: HIV/AIDS; human resource development, public sector reform; and institutional development in order to facilitate micro businesses, to name a few. Indeed, these are some of the very areas to which Antigua and Barbuda must effectively address as we review and restructure our socio-economic programme. Madame Chairman, I take this opportunity to signal to the Bank that Antigua and Barbuda would be most appreciative in receiving the expertise of the Bank in addressing some of the aforementioned areas, as my Government seeks to transform the economy of our twin-island state. I also take this opportunity to thank the CDB for its commitment to Antigua and Barbuda , as evidenced by a number of projects that are ongoing, including the Basic Education Project and the Airport and Seaport Enhancement Project. These two projects are important components of our Capital Development Programme.

Madame Chairman, the Caribbean Development Bank has established itself firmly as a premier developmental institution in the Caribbean and beyond. Antigua and Barbuda is satisfied that the Bank has remained true to its mission and its purpose, and we challenge the institution to be even more creative in finding ways to assist its BMCs in these difficult times. We are confident that this challenge is not beyond the reach of this institution, for some of the best, brightest and most dedicated Caribbean minds are assembled here.

In concluding, I wish to congratulate once again the President, his management team and members of his staff for their superior effort in fiscal year 2003, and I thank them for the efficient and professional, yet friendly manner, in which these proceedings are being conducted.

Thank you Madame Chairman.