Over $3.6 Billion Needed To Restore BVI Economy And Infrastructure

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By Mellica McPherson-Ganda

As it currently stands if the Territory is not able to secure loans and adequate financing, the BVI might have to become dependent on the United Kingdom – a worst case scenario that Premier and Minister for Finance, Dr. the Hon. D. Orlando Smith said cannot be allowed to happen.

On Tuesday 31 October Premier Smith laid bare the current social and economic situation of the British Virgin Islands to a Committee of the United Kingdom House of Commons and declared that the current Territorial budget cannot provide the financial support the Territory needs. Therefore, he pointed out that if assistance via loans is not provided the BVI will have to become dependent on its mother country.

Hon. Smith spoke frankly about the state of the BVI as he testified to the International Development Committee of the United Kingdom House of Commons during the Committee’s deliberations on the effects of hurricane Irma on the British Overseas Territories.

While summarizing and driving the point home on the current state of the Territory’s finances the Premier explained that even though the BVI had a high per capita gross domestic product prior to Irma, the same cannot be said at the moment as the major economic pillars have been affected and various government funds were tapped into. The Premier told the Committee: “Even though we had a relatively highly GDP before, right now our GDP is [Premier chuckles and does “the I am not sure” hand gesture].”

In further laying the cards down to depict how grim the situation has become, the  BVI Leader declared: “If we do not get the kind of assistance that is needed to be able to rebuild the economy then we will become a dependency on the United Kingdom, and that is something that we do not want — you do not want. It’s something that we are not accustomed to. We have always been able to take care of the needs of the Territory, but this is something that we never expected and we need to deal with it. So we need that kind of assistance to deal with it,” he said.

Premier Smith further explained to the Committee that the BVI situation was contributed to by three natural disasters. He said: “We had three catastrophic events. There was severe flooding such that we have never had before, there was hurricane Irma, and then there was hurricane Maria. Immediately after the events as we started the cleanup the immediate recovery there was assistance from many individuals who live in the BVI and also friends from neighbouring islands…”

These disasters incurred spending and affected revenues, therefore the Premier stressed that alternate arrangements and assistance is necessary: “now we have to look at the long term – because of the extent of the damage we are not able to do that within our budget. So we have to seek out assistance in terms of loans and any other forms of financing we can. We would like to have assistance in grants or even concessionary funding, but these are subject to what the United Kingdom and other countries are able to give us,” the BVI Leader urged.

In further painting a picture of the devastation on the ground Hon. Smith told the UK Committee: “Quite frankly the people of the Virgin Islands were battered and shattered. There are many who have nothing left, and we are seeing many cases of significant hardship. It is estimated that almost 20 percent of the population, that is almost 6000 persons were temporarily displaced.”

The BVI Leader also reported that 80 percent of the buildings was damaged with many left uninhabitable or beyond repair. “Our infrastructure and many vital services were severely impacted. Government buildings including those of the police, fire service and the prison suffered major structural damaged. Every school sustained damage. A third of our primary schools suffered major damage and most of the main high school campus had been totally obliterated. Our modern hospital which was built specifically to withstand a category five hurricane stood very well, but many of the community clinics were badly damaged,” he pointed out.

In tallying up the cost, the Minister of Finance explained that the preliminary estimate of the cost of the damage range up to $3.6 billion dollars, almost 3.5 times BVI’s pre-hurricane GDP. Insurance, he said, will cover some losses particularly for the private sector, but the Premier noted that coverage is far from universal especially among home owners.

He also mentioned that the BVI tourism sector, which is the single largest employer and biggest contributor to the Territory’s GDP has been severely hit. However, he is heartened by the conversations he had with representatives from this industry and their commitment to building back better in the tourism area. In general, Hon. Smith told the Committee “The overall damage caused by the hurricanes inevitably has an overall impact on the GDP and BVI Government revenues.”

As he highlighted Government’s focus, the BVI Leader noted that attention is now on repairs, getting schools and health services back to full strength, restoring power and ensuring, that the police, prison and court provide security and confidence in the rule of law

He also pointed out that the restoration of the tourism and financial services industries are critical to rebuilding the BVI economy. Hon. Smith disclosed that Government has a vision for long term recovery.

In chronicling the rebuilding efforts Hon. Smith said: “We will continue with the restoration of our economy and the main sectors for example the tourism industry that was badly hit. … We expect and we’re hoping that the cruise visits will begin early in the coming year and we have indications from the operators in the yachting industry that they will begin operations within the next month — that is the month of November; and in fact they have already begun to rebuild their fleet and of course when they begin their operations it will not be as to the strength as it were before the hurricane, it will take some time to build that up. We will continue to work with our tourism partners to be able to see that industry get back to normal as soon as possible.”

FINANCIAL SERVICES

As it relates to the financial services industry, the Premier lauded the resilient factor that was incorporated in to that sector and said: “Because of the resiliency that was built into that system service continues to function, though not quite at the same level. Because of the lack of housing and accommodation many people were displaced and some had to travel to other countries like the Cayman Islands, like Puerto Rico but still could operate from there by using BVI structures.”

“The court which is important to that system is also being affected and so we have a temporary court set up in St Lucia and hoping to have that repatriated as soon as possible. We are working very hard to rebuild with the industry that we do have but the extent of the damage is about 3.6 billion dollars and makes it impossible to cover everything: so we will need assistance, whatever assistance we can get in terms of loans and other forms of financing that may be offered,” he explained.

In addition to Premier Smith, the Committee heard from the representatives of Anguilla and the Turks and Caicos Islands, two journalists who covered the response; and also questioned Lord Bates, Minister of State at DFID, as well as other officials who were involved in oversight of the response.

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