Government to balance Budget in three years - Expects Deficit of $26 million in 2010

(The Valley, Anguilla) - The Government of Anguilla, facing unprecedented economic challenges met with the people in a first of its kind, pre-budget public meeting at the Rodney MacArthur Rey Auditorium (Campus B) on Tuesday, April 20, 2010 for a comprehensive 3h+ discussion.

The event was moderated by nominated member Hon. Haydn Hughes.  All four members of the AUM government were panelists on the evening and also present to make important presentations to those in attendance were members of the Ministry of Finance. The moderator acknowledge the presence of AUM colleague, Sam Webster, Speaker of the House Hon. Barbara Webster-Bourne and member of the opposition for Island Harbour, Hon. Othlyn Vanterpool.

The Hon. Hubert Hughes, Chief Minister and Minister of Finance initiated the evening’s discussion with a candid analysis of what he described as the, "Chronic","Chaotic" and "Dismal" state of the economy, saying that his government now has the, “Daunting task of cleaning up this mess.”

The Chief Minister is not known for mincing words and it was obvious that even with a global audience paying close attention to his government's every move, the message is not going to be tailored.  Along with his Ministers and support group, the event was smartly setup to show measures, sure to be unpopular, that the government will not be taking to attempt to balance the budget. The presenters went about detailing why there was a need to increase Government revenue rather than cut expenditure taking care to indicate that no new taxes would be introduced and only select increases were on the cards.

Mr. Hughes made it clear that he believes the former AUF government demonstrated poor fiscal management, poor governance and he offered sympathy with 'allegations of corruption made by others'. He said that these points were made to the British in a visit to England by the AUM to present the state of affairs inherited by his government.

According to the Hon. Chief Minister, the AUF prior to their defeat at the polls had requested the Foreign and Commonwealth Office (FCO) finance a revenue study and when that was completed Hughes said his government made an appeal to the FCO to conduct an expenditure study. Both studies were conducted by UK consultants, who Hughes acknowledged as having worked very hard to produce some interesting conclusions which he said strengthen their report of poor fiscal management by the previous government.

Some of the suggested corrective measures from the consultants, revealed during the evening, included drastic cuts to the civil service including; reducing the number of Government Departments, reducing the number of civil servants and introducing part-time work.  Hughes made it clear that his government was not willing at this time to take any of those measures. Even where spending may seem to be excessive, he conveyed the sentiment that he believes the negative social consequences of the cuts would far outweigh any benefits.

Other panelists described recommendations of tax base broadening as well as tax improvements to ensure more reliable sources of revenue were filtered into the budget while removing those tax sources that are highly dependent on variable factors.

 After listening to the night’s conversations it is fairly certain that there will most likely be tax increases on tobacco and alcohol and according to Hon. Haydn Hughes tax on prescription medication is being removed. He also suggested that increases on alcohol and smoking were being done in part to discourage consumption of these goods – a concept that counters potential gains.  Other changes may also be revealed on budget day.

On the topic of a Balanced 2010 Budget, the Chief Minister said during the meeting that the British Government has given his government three years to come up with a balanced budget and that the Caribbean Development Bank, who they are negotiating with for a Policy Based Loan to refinance at much improved conditions debt currently held with local commercial banks, has accepted that their 2010 budget will have a deficit, projected at about $26 million.

The initial feedback we've received from a brief interview with a senior official at one of the local banks on the island was very postive in relation to the Government's decision, indicating that it could offer more savings to the Government of Anguilla and more liquidity to the Banks. "This could be a win, win situation," the offical said.

In 2009, the deficit brought forward by the AUF government was reported at about $69 million with an additional $30 million between December 2009 and February 2010.

“We will restore Anguilla, to stability, decency and good governance”, said the Chief Minister.

Deputy Chief Minister and Minister of Social Development, Mr. Edison Baird was optimistic in his projection that the deficit could be reduced by about 14 million next year with the government producing a balanced budget the following year.

“We will do all we legally can to collect lost or given away money” Chief Minister Hughes said in reference to concessions and waivers given to developers by the previous government.

“We will ensure that allegations of corruption as reported to the British foreign affairs committee are thoroughly investigated,” he added.

After several presentations detailing the process and recommendations of the consultants and the finance department, the panel faced questions from the audience which were answered relatively forthright.

Of particular note was the tone of nationalism in the Chief Minister's answers especially about the level of foreign owned businesses that have popped up on the island in the past few years.  

“The privileged 20 [in Anguilla] have no concern for the underprivileged 15,000”, said Mr. Hughes.

“I questioned what type of Chamber of Commerce and Industry we have had in Anguilla over the years which permitted the destruction of the Anguillan culture of owning the business sector over the counter”, Mr. Hughes said was what he did in a keynote address to the Chamber of Commerce recently. He was applauded briefly when he made reference to the prevalence of Chinese business on the island - calling on a sentiment, well rooted in the psyche of Anguilla, where historically Anguillians have owned their land and businesses.

“Today I am ashamed when I see a three storey building going up in The Farrington and another one going up on the Rey Hill Road, all in the last years of a bad government who cared nothing of the culture of Anguilla and the stability of our economy,” the Chief Minister said in obvious reference to foreign owned businesses, again to applause.

He then verbally chastised the population for allowing the virtual collapse of the economy before changing the government in light of the first five years of the AUF.

Budget day is planned for April 23 in the House of Assembly, with debate on April 27.