By Mellica McPherson-Ganda
Premier and Minister for Finance, Dr. the Hon. D. Orlando Smith was poised to plug and quell some of the serious allegations that have been forming a think hazy wall of distrust and concern among the populists with the delivery of promised reports on Budget Day.
However, the BVI Leader was forced to present his 2017 budget address empty handed and admit that none of the promised crucial documents were available. This situation was further exasperated by the ringing of economic alarm bells by the Opposition.
The Heart of the Budget
Included in this year’s appropriation is some $5,488,350 in financing/interest costs, and $12,500,000 allocation for the Reserve Fund, which Government noted would satisfy the reserve requirement agreed to in the Protocols for Effective Financial Management.
Premier Smith explained that of the projected recurrent surplus of $33,238,000 Government intends to utilize $15,920,000 for infrastructural development across the entire spectrum of Government, and $2,209,500 for capital acquisitions within the institution of Government itself.
Additionally, it was mentioned that Government intends to utilize $26,700,000 in debt financing to further promote its infrastructural development programme. Additionally, it was announced that in order to meet revenue target Government revised its fiscal plan from what was embarked on last year.
This change takes into account increases in areas such as Cruising Permits, where government expects $1,910,000, Transportation maintenance fee, which will be a fee charged when licensing vehicles, and is expected to yield $170,000.00.
Other fees include Telecommunication Royalties, which will be implemented as soon as discussion with the Telecommunication Regulatory Authority and the telecommunications sector is finalised and is expected to produce $2,250,000.
There is also plan for an environmental levy, which will be collected at the ports of entry earning government $1,500,000. It was also noted that improved water billings is expected to result in about 3.6 million dollars in 2017.
Look at These Figures
Premier Smith valiantly defended the financial decisions his government made in 2016, most of which will flow over into this financial year. Nonetheless, he optimistically explained that much planning was in the pipeline to keep the Territory on firm footing.
Even though, the Premier’s address was assuring, his tone was comparatively different to that of previous years where he boasted loftily of the standings of the economy. For instance, this year’s highlights of the revenue and expenditure plans was void of the previous praises, and focused on forecast revenue amounting to $323,112,631; which was a small decrease from 2016’s $330,846,500.00. Albeit this year’s revenue surpassed 2015’s $311,136,000, and 2014’s $301,746,000 revenue.
In contrast to 2016, where the Premier highlighted that the $330M revenue was larger than the annual amount that Government has been collecting for the past years. This time, he quickly moved on to explain expenditures which is comparatively lower than previous years.
Government has now announced that it intended to spend $277,374,631 on operations, a clear decrease from the $286,512,400 that was spent in 2016, $278,339,600 in 2015, and the highest in recent years of $282,655,000 that was budgeted in 2014.
At face value the decrease in the expenditure lulled and calm some, but the waving red flag of debt by Leader of the Opposition, Hon. Julian apparently ignited community concern.
“The budget for 2017 has been reduced as far as revenues are concerned for 2016. It gives me cause for concern on whether the economy is contracting and if you are going to have a reduction in revenue in your budget and you are going to double your debt – I think citizens should be concerned; as Opposition Leader I am,” Hon. Fraser declared as he mentioned Government’s borrowing intentions.
Empty Hands—What Was Promised—What Occurred
Last year Premier Smith announced that he expected to receive the findings from the Capital Economics Group out of the UK on the value of BVI financial services to the global economy. Hon. Smith noted that he was hoping that the study that was commissioned to examine and illuminate the contributions of the British Virgin Islands’ financial services industry to the global economy will be ready to be included in the budget.
The Premier did not have the report in hand when he appeared in the House on Monday and instead he announced that he was hoping to receive the document by the end of the week.
Unfortunately, the absence of the missing audits was not allowed to slide. This was partly because last month after a comment about unaccounted money was made by First District Representative, Hon. Andrew Fahie in the House of Assembly, Premier Smith announced:
“While no audited statements of the Governments accounts have been submitted to the House of Assembly since 2006, these statements have been worked on, and those that are ready will be submitted at an upcoming sitting of the House of Assembly.”
Therefore, it appears that there were expectations that at least one of the outstanding audit reports would have been laid in the House.
On Monday, no audit report was presented. Instead the Premier explained that Government sought to address the manner in which Treasury reports are compiled. “We did that by hiring a very experienced consultant in 2016, who continued on the work by PWC in 2012 and CARTAC in 2013, and has identified and addressed accounting issues as far back over two decades ago, further verifying the efforts we made in our initial term of office in 2003 to advance our accounting standards and practices,” Hon. Smith said.
To this end, the Minister of Finance declared: “After completion of the critical 2012 report, we made a number of corrections in our accounts coming out of the PWC and CARTAC reccommendations, we have now signed an agreement with the firm BDO to assist the Treasury in preparing the subsequent reports for submission to the Auditor General. I expect that audited Accounts will be brought current by the end of this Budget Cycle. The Audit reports, prior to 2012, will be submitted shortly to this House of Assembly as well.”
This explanation was not well received by Hon. Fahie who in an interview after the Budget Address tore into the comments and alleged a constitutional breach: “The requirements of the Constitution cannot and must not be subjectively complied. Not a single substantive statement has been made by the Premier with regards to the effects of not presenting, in accordance with Section #109 of the VI Constitution, to the House of Assembly the audited financial statements of 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015 and now 2016. Our current Financial Secretary has been engaged in his post by the National Democratic Party since 2004. The findings of the “Always-Present-PWC” is grossly questionable and the hiring, once again, of BDO will be scrutinized one paragraph at a time.”
“As you are aware, His Excellency has been asked to use the Power of his Office to cause the Audits, already completed, to be presented to the House of Assembly. It is gross and not acceptable that, in accordance to the time table announced here today by the Premier, this critical Constitutional task will not be completed prior to His Excellency’s exit from the territory by mid-2017 and will be left to his successor. Promises have been made before by the Premier and promises have been broken. There is absolutely no signal that this is yet another empty promise. In order for anyone to chart the course forward for any future destination they must be clear of their present position. The people of the Virgin Islands are tired of fancy speeches with some well-intended goals but void of transparency and accountability. We cannot continue to put on put. This is now eleven budgets totaling approximately $3.3Billion dollars with absolutely no accurate account of how the people’s money has been spent for the last ten budgets and now adding an eleventh one. This is a clear definition of non-transparency and the abuse of power,” he added.