"Agenda for Change"
Dr. The Honourable Errol Cort
Minister of Finance and the Economy
Wednesday, 31st March 2004
AGENDA FOR CHANGE
Speaker, 'Change' is inevitable in a progressive society. Alfred
North Whitehead once said: "The art of progress is to preserve
order amid change, and to preserve change amid order." 'Change'
is therefore the watchword of progression. When we tire of
well-worn ways, we seek for new. It is against this background
that the United Progressive Party outlined its Agenda for Change
in the 2004 Manifesto, designed to usher in Government in the
Sunshine and which provides the foundation for the Budget of
Speaker, the scales that weigh the future direction of our
beloved Antigua and Barbuda, are finely balanced. A wrong move
in either direction is likely to result in consequences that
could be long-lasting and difficult to reverse. 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.
In this regard, Madam Speaker, the actions we take must be well
thought out; they must be circumspect; they must be judicious;
and they must redound to the benefit of all, especially the most
vulnerable. That is why Madam Speaker, the United Progressive
Party, under the distinguished leadership of our Prime Minister,
the Honourable Baldwin Spencer, proffered to our people an
Agenda for Change, an agenda which resonated with the people of
Antigua and Barbuda, both citizens and residents alike, and
which received their overwhelming support in the General
Elections of 23rd March 2004.
are humbled by the trust and confidence that the electorate of
this country has reposed in us, and whilst the challenges are
great, we are not overawed by them, for we have been preparing
and equipping ourselves to assume this mantle of leadership for
some time now.
Speaker, nothing happens before it is ordained, and it is now
our time. I truly believe, Madam Speaker, that divine
intervention has placed us here at this time, as members of the
leadership of this Country, because, it is we who are best
positioned and best equipped to navigate a pathway for Antigua
and Barbuda, into the sunshine.
Speaker, as we assemble here today in this august body, there
are stormy clouds and turbulent waters around us. The policies
of the outgoing government and the conduct of its leadership
have brought immeasurable shame and pain to the people of
Antigua and Barbuda. The previous administration did not engage
in any strategic planning and the lack thereof resulted in
numerous fundamental failures:- failure to pay public servants
on time; failure to pay government suppliers and contractors;
failure to pay government employees' deductions to the Social
Security Scheme, the Medical Benefits Scheme and the Board of
Education; and failure to curb the unbridled, reckless and
irresponsible spending of the country's scarce resources.
The outgoing ALP Administration further caused immense
embarrassment to the nation by its persistent failure to meet
our international obligations. As a result, we have significant
outstanding obligations to France and Italy, as well as to
CARICOM and to the Eastern Caribbean Supreme Court, among
Speaker, this is the Antigua and Barbuda we have inherited.
Speaker, the world economy expanded by 3.2% in real terms in
2003 compared to real growth of 2.9 % in 2002. Economic growth
for the first half of 2003 was affected by adverse shocks, the
most significant of which was the war against Iraq. A quick end
to the hostilities coupled with a buoyant equity market and
monetary and fiscal stimuli, combined to spark an economic
recovery in the second half of the year. There was also
increased global demand for consumer durables.
currency market, the U.S. dollar depreciated some twelve percent
(12%), reflecting relatively low interest rates and a widening
US current account deficit. In spite of the foregoing, the
United States experienced four percent (4%) real growth as a
result of increased private spending.
Speaker, there are several international issues that can impact
the economy of Antigua and Barbuda, the more critical of which,
I will highlight at this time. While the international economy
is experiencing real growth, oil prices have not yet stabilized.
Global economic expansion combined with the impact of the War in
Iraq continues to push oil prices upwards. This trend will have
implications for the cost of doing business in Antigua and
Barbuda as it will impact on our Balance of Trade and could
exert inflationary pressures on the economy as a whole.
Speaker, it is my Government's intention to address at least one
of the areas in which increased oil prices impact on all of us.
It is our intention to remove the fuel variation charge on
electricity bills in order to reduce the cost of living, thereby
increasing the level of disposable income to all families. The
removal of the fuel variation charge will also reduce the cost
of doing business.
Speaker, we note the swiftness of the march towards
globalization as economies become increasingly intertwined and
interdependent. Specific to our region, we note the strides
toward the realization of the Caribbean Single Market and
Economy. We recognize that Antigua and Barbuda has a critical
role to play in this process; however, there is an urgent need
for us to become adequately prepared in order that we may reap
maximum benefit from a globalize world economy. There must and
will be continuous engagement between the Government and civil
society as we move our country forward and, in this regard, the
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
aspect of the international economic environment which has
implications for our twin-island state, is the move by first
world countries to provide job security and to prevent what they
perceive as leakages from their domestic economies, by enacting
legislation to restrict the ability of Multi-National
Corporations and International Service Companies from taking
advantage of the lower production costs and more favourable tax
regimes in countries such as ours.
Speaker, this action by first world countries will severely
impact on our ability to diversify our economy into profitable
service oriented sectors such as information technology and
financial services. We are however encouraged by the recent
favourable ruling of the World Trade Organisation (WTO) and we
are committed to defending our cause by pursuing policies that
will further advance the development of our international
challenging economic environment, most of the CARICOM member
states realized growth in real output in 2003, although the
rates slowed in some countries. Available data on the economic
performance of the region indicate that Barbados and Trinidad
and Tobago, two of our major trading partners, experienced two
point two percent (2.2%) and three point four percent (3.4%)
real growth respectively.
in the region was in excess of ten percent (10%). Inflation
remained modest at between one percent (1%) and three percent
(3%) for the region, with the exception of Guyana where
inflation was in excess of five percent (5%). Throughout the
region, the commercial banking system remained relatively
liquid, despite the reduction in interest rates.
It is our
intention through dialogue and moral suasion to encourage the
commercial banks in Antigua and Barbuda to allocate a more
substantial proportion of their loan portfolio for risk
financing, especially in the areas of agriculture,
agro-processing and small business development. We feel
confident that having regard to the warm reception and
cooperation that my Government has received from the domestic
commercial banking sector, our aforementioned goals will be
realized as we seek to deepen our working relationship with the
Speaker, the mismanagement, extravagance and avarice of the
outgoing ALP government has driven the economy of Antigua and
Barbuda to the brink of a precipice.
For the last
ten years, the ALP administration took the economy of Antigua
and Barbuda on a path of persistent decline. Economic growth as
measured by the rate of growth of real GDP has been in unchecked
decline from six percent (6%) in 1994 to an estimated two
percent (2%) in 2003.
debt continued to rise at alarming proportions to an
unprecedented level of 3.05 Billion Dollars as of December 2003,
making Antigua and Barbuda by far the most heavily indebted
country in the OECS sub-region.
fiscal hemorrhaging under the ALP administration continued
unabated and was being fuelled by that administration's
unchecked propensity for spending taxpayers' hard earned monies
on goods and services that were wholly unnecessary, unwarranted
and unproductive. It is significant to note that Government
Services experienced a ten point seven eight percent (10.78%)
expansion as a result of this indiscriminate spending by the
Speaker, an initial perusal of the fiscal position we inherited
from the previous administration indicates that the Central
Government's deficit position was in excess of one hundred and
fifty million dollars ($150 million) at the end of 2003. This is
more than twice the deficit position that was presented in the
2003 Budget tabled in this Honourable House.
Speaker, my Government is committed to rationalizing Government
expenditure. The first major issue on our Agenda for Change is
to cut out the extravagance, and eliminate pilferage and wastage
that were the hallmarks of the previous administration. In
signaling this new Administration's commitment to prudent money
management, the Prime Minister, the Honourable Baldwin Spencer
has led the way by reducing the number of government ministries
to nine. Government procurement of goods and services will be
rationalized; the purchase and use of government vehicles will
be reviewed along with the use of government telephones for the
purpose of making overseas telephone calls. Madam Speaker, all
Heads of Government expenditure will be reviewed and all
Government Departments with the responsibility for spending
public funds shall be called upon to tighten the reigns of
spending while simultaneously ensuring that there is openness,
transparency and accountability in the handling of public funds.
It should be
noted, Madam Speaker, that in keeping with our Manifesto pledge
to public servants and also in-keeping with our motto, "People
First", my Government has kept constant the budgetary allocation
for Personal Emoluments (i.e. wages and salaries to public
servants). In this regard, I am pleased to report to this
Honourable House that the United Progressive Party Government
has put in place the necessary financial arrangements to ensure
that public servants receive their wages and salaries. I am also
happy to report that for the first time in many, many years, and
under the direction of the United Progressive Party Government,
the Treasury Department has made a payment to the Social
Security Scheme, the Medical Benefits Scheme and the Board of
Education in respect of public servants' contributions that were
hitherto deducted by the previous Administration but were not
paid over to those respective bodies. This step is indeed, Madam
Speaker, demonstrative of a responsible Government that intends
to live up to its commitments to the people of Antigua and
While we play
our part as a responsible and caring Government, we also expect
that public servants likewise will play their part in providing
quality and efficient service to the public at large. To aid
this process, my Government is committed to carrying out a
comprehensive public sector reform or transformation process
geared at restructuring the public sector to adequately meet the
current and future challenges of modern day Antigua and Barbuda
and the concomitant expectations and demands of our people, all
within a framework of improved terms and conditions of work.
Speaker, let us turn our attention to the Tourism Industry. It
is an accepted fact that tourism is the world's largest industry
and offers virtually unlimited potential for sustainable jobs
and economic growth for Antigua and Barbuda. Regrettably,
however, tourism as our main engine of economic growth has been
contracting since 1994. In particular, the contribution of the
"hotel and restaurant" sector as a percentage of GDP has fallen
in every year from as high as eighteen percent (18%) in 1994 to
a current figure of approximately 12%.
Speaker, my Government shall move swiftly to mount an
all-embracing rescue mission of the tourism sector that will
propel rapid transformation of the quality of our tourism
product and produce significant levels of innovative destination
marketing. To this end, the Government will mobilize all
stakeholders in a national mission to so improve our tourism
product that we will exceed the expectations of our visitors. As
a first step in this process, we shall establish a National
Tourism Task Force comprising all stakeholders, with a mandate
to present a comprehensive Tourism Transformation Plan soonest.
We shall also
introduce a Hotel Concessions Act to stimulate investment in the
refurbishment, upgrade and expansion of existing properties and
to create an attractive environment for the construction of new
properties. My Government will also seek to introduce a Cruise
Tourism Policy designed to maximize the cruise sector's
contribution to the national economy.
there are a number of tourism related projects in the pipeline
that are likely to come to fruition during the current financial
year. The economic impact from these projects in terms of job
creation and the ultimate positive effect on Government revenues
will be significant.
Speaker, we also expect to derive increased returns from our
international financial and gaming sectors as we seek to harness
their full potential.
Speaker, we are all cognizant that this Administration was
elected a mere seven days ago. In recognition of the
constitutional requirement to lay the Appropriation Bill in the
House within ninety days from the start of the financial year,
my Government was compelled to make every effort to meet this
requirement lest there be a constitutional crisis. As a result
of this, my Government was forced to forego the detailed
preparation that we would have wanted to undertake for this our
maiden budget presentation.
Speaker, what is presented here today should be considered as a
Transitional Budget, with the expectation of our presenting a
more detailed budget later this year.
Speaker, in keeping with the framework within which this budget
is being presented, please allow me to make some remarks as to
my Government's revenue policy. My Government is committed to
preparing a register of all the country's assets and
liabilities, which said register has not been prepared in
decades. We are committed to strengthening the audit functions
of the administration in order to get a clear understanding of
the state of the country's finances.
Speaker, it is my Government's intention to conduct a
comprehensive rationalization of the tax structure, once we have
had an opportunity to carry out a forensic audit of the
country's finances. We intend to remove those taxes that place a
disproportionate burden on the lower income earners. Madam
Speaker, we have not been in office long enough to effect any of
these changes. As a result, the revenue estimates presented are
based on the potential revenue that can be derived from the
planned improvements to the present structure.
revenue for the 2004 financial year is budgeted at five hundred
and forty one million, ninety one thousand, four hundred and
twelve ($541,091,412). Indirect taxes account for sixty seven
point nine six percent (67.96%) of the anticipated revenue,
while direct taxes and non tax revenue account for nineteen
point six five percent (19.65%) and twelve point four percent
Speaker, it is my Government's intention to operate a simplified
and rational integrated tax structure. This will result in a
transparent system with lower administrative costs. This UPP
administration, Madam Speaker, will operate a tax system that
will facilitate compliance. We will transform the revenue
generating departments into professional revenue agencies
equipped with up to date technology and the requisite technical
staff. While this Budget has no new tax measures, my Government
expects and will ensure full compliance from all in respect of
the payment of all current and outstanding taxes.
Speaker, we intend to address the system relating to the
calculation and administration of property taxes during this
financial year, whereby property taxes will be calculated by
using the method of fair market value, thereby making a clear
distinction between the value of a home in an up-market area
versus that in a less affluent location, notwithstanding that
both homes may have similar building costs. Once we have
completed the re-calculation of property taxes based on fair
market value and have expanded the coverage island-wide, my
Government shall then proceed to implement its Manifesto pledge
of exempting all properties valued under $100,000 from the
payment of property taxes and waiving the property tax payable
on the first $100,000 on properties valued at under $200,000.
Where such properties are owned and occupied by persons over
sixty years of age, waiving the property tax payable on the
second $100,000 by 50%.
Speaker, Recurrent Expenditure for the 2004 financial year is
estimated at five hundred and sixty three million, six hundred
and seventy six thousand, and sixty three dollars
Speaker, the United Progressive Party Administration is
committed to fulfilling the mandate that was outlined in our
campaign Manifesto. We intend to implement a broad programme of
social transformation designed to eradicate poverty in Antigua
and Barbuda and create a level playing field for all persons,
while attending to the physical upgrading of all communities.
This will be done through the rationalization of our expenditure
into areas that will provide an improved quality of life for
all. Madam Speaker, we intend to allocate Central Government's
expenditure with one view in mind - putting people first.
Speaker, the United Progressive Party Government shall reduce
the burdens placed on our citizens in their golden years. My
Government gives the clear commitment that pensioners will share
fairly in the prosperity of this nation. In this regard, all
qualifying persons sixty years and over will receive a minimum
pension of $750 per month, with effect from 1st January, 2004.
Provision has therefore been made in this Budget to facilitate
the aforementioned payment to our pensioners. Subsequent Budgets
will reflect a further increase in pensions from $750 per month
to $900 per month as of 1st January, 2005 and to $1,000 per
month as of 1st January, 2006.
Madam Speaker, the Ministry of Education, Human Development and
Culture has been allocated thirteen point nine six percent
(13.96%) of this year's recurrent expenditure. My Government is
committed to raising the literacy rates and to promoting civic
pride and energizing the socio-cultural awareness of our people.
In this regard, we intend to reform the Ministry of Education to
allow for the more effective management of our school system.
Ministry of Education, Human Development and Culture, allocation
has been made for the commencement of school uniform grants of
three hundred and fifty dollars to primary school students and a
five hundred dollar grant to secondary school students in an
effort to provide some financial relief especially to the less
have also been made under this head to facilitate the
introduction of a National School Meals Programme for the
primary schools. This Programme will ensure that all primary
school students receive a daily, nutritious, well-balanced meal.
Speaker, the Ministry of Health, Sports & Youth Affairs accounts
for thirteen point five four percent (13.54%) of this year's
Sports, Madam Speaker, the first year of this United Progressive
Party's term in office will focus on redefining the role of the
Community Sports and Games Department and the National Sports
allocations to Youth Affairs will be utilized to mobilize a
National Youth Council which will be designed to facilitate the
execution of youth empowerment programmes and a Youth Business
Development Project as a dedicated business incubator for young
persons between eighteen and thirty years of age.
Speaker, the United Progressive Party Administration has
inherited an astronomical national debt well in excess of one
hundred and twenty five percent (125%) of GDP. This is a mammoth
challenge that my Government intends to confront aggressively.
We intend to review and update the country's debt profile over
the next ninety days so that we could give an account to the
public of Antigua and Barbuda.
profile is completed, we intend to embark on a two-pronged
approach to debt servicing. We will contact our major creditors
to negotiate debt forgiveness and/or debt rescheduling. A second
approach will be to establish a complete repayment schedule
based on my Government's revenue profile. These measures, Madam
Speaker, will be implemented through the National Debt
Coordinating Committee, which will include specialists from both
the public and the private sectors.
Speaker, debt service payments account for sixteen point five
nine percent (16.59%) of total Recurrent Expenditure in the 2004
Budget estimates or ninety three million, five hundred and
thirteen thousand, two hundred and eighty six dollars
($93,513,286). Of the total, nine point five eight percent
(9.58%) or fifty three million, nine hundred and eighty three
thousand, nine hundred and eighty nine dollars ($53,983,989) is
for the servicing of domestic payments while six point seven one
percent (6.71%) or thirty seven million, eight hundred and
nineteen thousand, two hundred and ninety seven dollars
($37,819,297) is earmarked for the servicing of the external
Expenditure for Fiscal Year 2004 exceeds Recurrent Revenue by
twenty two million, five hundred and eighty four thousand, six
hundred and fifty one dollars ($22,584,651) as compared to an
estimated budget deficit of sixty four million, two hundred and
ninety thousand, nine hundred and seventy eight dollars
($64,290,978) for Fiscal Year 2003.
Government intends to finance this deficit by pursuing a policy
of privatization among selected publicly held assets, with a
view toward creating the opportunity for our citizens and
residents to participate in the ownership of these assets.
Expenditure for Fiscal Year 2004
Speaker, my Government is committed to the establishment of a
Public Sector Investment Programme that will form the basis of
the annual development estimates or capital expenditure
statements as they are more commonly known. This is critical,
Madam Speaker, if our twin island state of Antigua and Barbuda
is to be provided with relevant capital developments that would
stimulate the expansion of the private sector.
is convinced that it should not play the dominant role in
capital investments but should rather be the conduit and make
strategic interventions, to facilitate private sector led
Speaker, an important phase in any public sector investment
project is consultations with all relevant stakeholders. In this
regard, my Government commits itself to engaging in constructive
consultations with the citizens and residents of Antigua and
Barbuda as a condition precedent to the finalization of any
public sector investment project.
Speaker, Barbuda is a very important part of my Government's
Agenda for Change. Within the 2004 Capital Estimates,
infrastructural development is proposed for Barbuda, which will
include the expansion of the Airport runway and the commencement
of road works. The works to be undertaken will be finalized
after consultations with the Barbuda Council.
there are three important projects that will consume the bulk of
the 2004 Capital Estimates. Madam Speaker, Antigua and Barbuda
is one of thirteen Caribbean countries bidding to host World Cup
Cricket 2007, the largest international sporting event to be
hosted in the region. My Government remains firmly committed to
ensuring that our bid is successful. As a consequence, four
million dollars ($4,000,000.00) has been allocated in the
Capital Estimates for the start up costs associated with
preparations for this most prestigious event.
of World Cup Cricket is a major undertaking that requires the
support and commitment of the entire country for it to be
successful. We will be required to construct a new cricket
stadium, upgrade our infrastructure and create physical
attractions to be utilized after the games, such as a Caribbean
Festival Theme Park.
Speaker, the second major component in the Capital Estimates
relates to the infrastructural improvements at the V.C. Bird
International Airport. The volume of traffic at the airport far
outweighs its infrastructural capacity. Work did commence at the
V.C. Bird International Airport under the previous
administration through a loan from the Kuwait Fund. Untimely
debt service payments of this loan resulted in a protracted halt
to the project. My Government is committed to the upgrading of
the Airport and will, as a matter of urgency, dialogue with the
Kuwait authorities to restart the project.
Speaker, my Government views the building of a modern Public
Library as an urgent priority. As such, my Government intends to
engage in discussions with the National Library Committee to
ensure the completion of the Public Library in the shortest
possible time. My Government has allocated one million dollars
($1,000,000) in the 2004 Capital Estimates to re-energize the
Speaker, we intend to restructure the road works programme to
cater to the entire nation of Antigua and Barbuda. There will be
an assessment done of the road network and a road programme
drafted so that the progress can be properly tracked. We intend
to conduct a road programme where those areas that have suffered
the greatest neglect shall be given priority.
Speaker, success in life comes not from holding a good hand, but
in playing a poor hand well. The United Progressive Party
Government has indeed been dealt a poor hand by the outgoing ALP
Administration. Notwithstanding this fact, my Government is
confident in its ability to cut wanton waste and reckless
mal-spending of our scarce resources and to manage this economy
in the best interest of all citizens and residents, with special
emphasis being placed on the more vulnerable in the society. The
United Progressive Party Government will govern the affairs of
this country in an open, transparent and accountable manner, in
keeping with the provisions of the Constitution of Antigua and
Speaker, as stated previously, the budget that is being
presented to this Honourable House is a Transitional Budget that
seeks to provide, among other things, some relief to the needy.
It also paves the way for the presentation of a subsequent
Budget later this year that will map out further aspects of my
Government's Agenda for Change.
Speaker, in my introduction, I had indicated that there are
stormy clouds around us, but as I conclude, citizens and
residents of Antigua and Barbuda should be encouraged to know
that there is a break in the clouds and clear blue skies
together with that bright sunshine are evident. The road to
success is however not going to be an easy one. It will take
time to correct the ills brought about by the policies of the
previous Administration and, in this regard, we crave your
patience as we steer this great nation on a path of prosperity
Speaker, Parliamentary Colleagues, Brothers and Sisters,
Comrades and Friends, welcome to "Government in the Sunshine".