IMF Flags Risks in 2026 Budget as Temporary ABST Cut Clouds Revenue Outlook

The International Monetary Fund has cautioned that Antigua and Barbuda’s 2026 Budget faces risks to its revenue outlook, warning that a recently announced temporary cut in the Antigua and Barbuda Sales Tax (ABST) could undermine fiscal targets if not promptly reversed.

In a concluding statement following its Article IV consultation mission, IMF staff said that, based on its baseline macroeconomic assumptions, implementation of the 2026 Budget would imply a primary surplus of about 1.6 percent of gross domestic product, placing it within the authorities’ fiscal resilience target range of 1½ to 2 percent of GDP.

However, the IMF noted that this estimate does not take into account the government’s announcement of a temporary reduction in the ABST rate from 17 percent to 7 percent, as the timing and duration of the measure have not yet been specified.

Staff warned that the tax cut is likely to weigh on revenue performance, at a time when Antigua and Barbuda is seeking to strengthen fiscal buffers, reduce financing needs and place public debt on a firmer downward path.

Despite recent gains, the IMF said underlying revenue collection remains below the authorities’ own objectives and lags behind regional peers. It stressed that promptly restoring the ABST rate would be necessary to make progress toward the government’s target of raising tax revenues to about 20 percent of GDP and sustaining a primary surplus consistent with medium-term fiscal goals.

The Fund said stronger and more durable revenue mobilization would help ease financing pressures, support debt reduction efforts and improve resilience to economic shocks, while cautioning that reliance on temporary or one-off measures could weaken the credibility of the fiscal framework.