Premier Dr. the Hon. D. Orlando Smith delivered his fourth Budget Address in the House of Assembly on 17 November under the theme — Strengthening Growth; Securing our Future. In his one hour speech the BVI Leader announced that the 2015 projected revenues will be in the region of $311,136,000, with a $5,000,000 contribution to the reserve fund; and a $278,339,600 expenditure.
The Premier, who is also the Minister for Finance, declared that the 2015 Budget Estimates include employee compensation in the amount of $115,765,512, allocation of $67,839,488 for goods and services, an earmarked $69,991,500 for grants, $9,550,800 for social benefits, $10,709,800 for property and other expenses; and $300,000 in subsidies.
Hon. Smith explained that Government has an aggressive capital investment programme to the tune of $46,278,000 of which $16,328,000 will be funded from recurrent surpluses and $29,950,000 will be loan funded. The budget, he said, also accounts for some $11,063,000 in principal repayments on our outstanding loans, and some $4,182,500 in interest payments.
Ten of the 2015 capital investment programmes were identified in the Budget Address. These projects include: the National Sewerage Project ($8.6M), Infrastructure Rehabilitation project ($9M), Water Network Improvement Project ($1.5M), Peebles Hospital Project ($4.5M), Rehabilitaion of Schools ($2.2M),Various development projects in education and works ($31M), Road Infrastructure($4.65M), Completion of the Greenhouse project at Paraquita Bay ($2.0M), East End/Fat Hogs Bay Harbour development ($1.0M), the Iris O’Neal Medical Centre ($2.5M), and the Greenland Stadium ($.5M).
Dr. Smith announced that the Government continues to maintain relatively low levels of debt, with total public borrowing at only 16.2% of GDP in 2013. He stated that at the end of 2013, the total value of Central Government loans was $90.9M. Of this amount, Premier Smith stated that $76.9M or eight- 85% was domestic debt with the remaining $14M or 15% as foreign debt.
In fact, the Premier announced: “Parastatals’ debt decreased each year between 2010 and 2013 as loans were paid down…Also in 2014, we were able to secure an additional twenty-two million dollars (22M) for financing the National Sewerage project, equipping the New Peebles Hospital and facilitating improvements to various docks in the Territory.”
The Minister for Finance said that the partial disbursement of these two loans will bring total public borrowing to the low level of approximately 15% of GDP at the end of 2014. Total disbursed Central Government loans, he said will equal $92.6MM at the end of 2014.
In outlining his Government’s fiscal strategy Premier Smith noted that the past decade has seen expenditures growing at a much faster rate than revenues, and he added that every year since the maturing of the Financial Services Sector here in the BVI the gap between revenue and expenditure has been closing. As such, Hon. Smith said that Government is now at the point where action must be taken in order to provide for the continued financial sustainability of the Government of the Virgin Islands, and its ability to provide for the people of this Territory.
Hon. Smith declared that Government is very carefully devising a fiscal strategy that should enable them to take action without placing a further burden on the taxpayers of the Territory.
TAXES & FEES: FISCAL PRESSURE ON THE RISE
To do this, the Premier said that Government has decided to change the current work permit structure and fees will be based on occupation type with consideration given to average income by occupation type. Change will also result in water rates becoming more aligned with increased cost of purchasing and providing water. There also plana to introduce a Tourist Arrival Levy in 2016; Reverse the charging of import duties on FOB rather than CIF value; Adopt a more aggressive approach to the collection of current taxes and fees and arrears by reviewing current legislation to give revenue collecting agencies greater authority to enforce compliance; and Conduct an ongoing, comprehensive review of Government’s tax and fee structures with a view to closing loopholes, ensuring that fees at least cover the costs of providing services, and fostering the overall coherence of Government taxes and fees to advance transparency and fairness.
In addition to this the Premier said that Government is also placing downward pressure on all expenditures mandating that departments and ministries are much more careful in how and what they spend money on, in addition to identifying savings of five percent (5%) or more in their year to year budgets over the three-year-budget cycle.
In explaining the reasons for the implementation of the fiscal measures the Minister for Finance said: “Madam Speaker we are duty bound to the people of this Territory to provide the best fiscal and economic management possible, and to this end will continue to make the hard and necessary choices required do so, while at the same time making sure that the good honest hardworking people of this territory are in a better position to provide for themselves and their families.