Mr Speaker, according to Government's official statistics, Anguilla's gross domestic product (GDP), in real terms grew by 15% in 2006 to $281.9 million.  This represents an increase from 2005 when the economy grew by 10.9 per cent.   

Hotel and Restaurants continue to be the largest sector accounting for 32.7% of economic activity.  Banking and Insurance is the next largest sector accounting for 17.1% of economic activity.  The top three is rounded out by Construction which accounts for 16.7% of economic activity.  These sectors grew by 17.5%, 6.0% and 36.6%, respectively in 2006.  The strong growth in construction is linked to robust activity in all sub-sectors: resort, villa, residential and commercial construction.

Mr Speaker preliminary estimates for 2007 indicate that the economy once again would have grown in excess of 10% in real terms.  This would represent the 4th consecutive year the real GDP growth would have been in excess of 10 per cent.  While this is an impressive achievement, this level of growth is not sustainable as the economy is already experiencing severe shortages in labour which is contributing to rising wage inflation, particularly in the construction sector.  Consequently, Government will be challenged to manage the situation so as to curb inflationary pressures and to protect real incomes.

2.2 Fiscal  

Mr Speaker, fiscal performance is measured in terms of recurrent revenue relative to recurrent expenditure, and combining this with capital revenue and expenditure to give a picture of Government's overall fiscal balance. 

2.2.1 Recurrent Revenue

Mr Speaker, recurrent revenue collections at the end of October stood at $171.46 million.  We are therefore expected to surpass the 2007 budget estimate of $174.98 million.  In fact the revised estimate for 2007 is now $205.75 million.  To date the top 5 performers by revenue head have been Import Duty (Other), Stamp Duty, Accommodation Tax, Import Duty (Fuel and Gas) and Work Permit Fees.

Examining the top 3 earning heads in some detail, collections from the Import Duty (Other) revenue head in 2007 are projected to amount to $67.73 million.  This would represent an excess of $14.73 million from the budget estimate of $53 million.  The robust Import Duty (Other) collections are reflective of the economic boom that the Anguillian economy has been experiencing since 2004.  This will be the 4th consecutive year that Import Duty (Other) collections will have exceeded the budget estimate.  The Comptroller of Customs and his staff are to be congratulated for the diligence with which they go about the job of ensuring that Anguilla's principal revenue earner meets and, as we have seen, exceeds expectations. 

Stamp Duty continues to be a strong performer, with collections from this revenue head averaging $26.6 million per annum over the period 2004 – 2006.   Collections for 2007 are projected to amount to $32.3 million.  The strong performance in stamp duty collections since 2004 is testimony to the success of the investment strategy pursued by Government which will see some US$3.24 billion in investment in tourism accommodation over the period to the year 2020.

Rounding out the top 3 revenue performers, Accommodation Tax collections are projected to amount to $15 million for 2007.  This would represent an increase of 12% from 2006 collections of $13.4 million.  The projected increase in accommodation tax collections is directly attributable to an increase in visitor arrivals, particularly of the important stay-over visitor category, which is expected to increase by 10% from the 2006 figure of 72,970 to 80,267.

Mr Speaker, while we in the Anguilla United Front Administration are justifiably proud of the positive performance in recurrent revenue since 2003, as we seek to consolidate on the gains made we have no choice but to continue to forge ahead with the revenue objectives outlined in our 2005 Manifesto.   Economic progress has been accompanied by increasing challenges on the social development front and will require extensive interventions to correct such imbalances.  It goes without saying that these interventions have to be adequately funded and resourced.

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Source:http://www.gov.ai/