Following an announcement and counter response between Premier and Minister for Finance, Hon. Andrew Fahie and His Excellency Governor Augustus Jaspert earlier this week, the Premier announced that there is no issue between the BVI and its mother country. In fact, the BVI Leader stated that he will still lead a delegation to the United Kingdom to discuss the loan guarantee.
The discussion about the loan guarantee and the arrangement between the BVI and United Kingdom Government was publicly discussed on 16 August when Premier Fahie released a statement to the public.
In that statement the Premier expressed concerns about the loan guarantee. In fact, Hon. Fahie said that aspects of the agreement infringes on the Territory’s Constitution and puts the BVI outside of the ratios prescribed in the Protocol for Effective Financial Management .
According to Hon. Fahie the UK Government is demanding some control in order to provide the up to £300 million of loans guarantee. He said that the UK is requesting that the funds be handed over, managed and controlled by the Recovery and Development Agency (RDA). This the Premier said affects the autonomy the Territory enjoys.
The Premier mentioned that Government has no problem adhering to the requests, however he said that he believes that in the interest of the people and the Constitution, the agreement should be renegotiated. In noting the changes he would like to see resulting from the new negotiation the Premier said: “The distinction about which funds should be automatically placed in the Virgin Islands Recovery Trust Fund, and which should not, needs to be clarified.”
Specifically, Hon. Fahie pointed out: “The Virgin Islands Recovery and Development Agency Act, No 1 of 2018, as currently worded, is being interpreted to mean that ALL moneys received by Government.”
In relations to the Protocol for Effective Financial Management the Premier explained that when the document was signed on 23 April 2012, it included the application of certain financial ratios that were based on the figures and the economic environment of 2012. These, he said, changed substantially after the protocols were agreed upon, and even more so after the natural disasters of 2017. Therefore, the Premier said that based on the times the Territory is enduring and what the BVI is dealing with, the particular conditions should not be strictly applied or the ratios should be revised or suspended.
Hon. Fahie also mentioned that the Territory has been seeing revenue decline that was generated by talks of registry of beneficial ownership and the economic substance requirements: “It should also be noted that since 2014, for almost each fiscal year, revenues have been trending downwards. This has been partly due to the market’s negative reaction to the impending introduction of economic substance and open public registry legislation. Attempts to compensate for this loss of business and loss of revenue by increasing registration fees in 2018 does not seem to have stopped the drop off rate,” the Premier said.
In his response to the Premier’s statement on 19 Augustus His Excellency Governor Augustus Jaspert assured residents that the United Kingdom Government was not trying to infringe on the Territory’s Constitution or autonomy.
The Governor said that the loan guarantee agreement is a result of discussions between the UK and Virgin Islands Governments. He said that both government’s discussed how best to support the Territory’s long term recovery and development; and both were clear that the Government of the Virgin Islands retains management of the Territory’s finances and the policy direction of Government as per the Virgin Islands’ Constitution. “There is no change to this,” Governor Jaspert said.
Furthermore, the Governor explained that the loan guarantee does not take control of public finances away from the BVI Government, nor it changes arrangements as set out in the Constitution. He said, “The UK Government has no intention that control of the management of public finances be transferred to the RDA…I assented to the Virgin Islands Recovery and Development Agency Act on 12 April 2018, as the Virgin Islands Government’s legal view was clear that it does not conflict in any way with the Constitution.”
The UK Representative announced that the arrangement with the loan guarantee was in keeping with international best practices and reflected agreements by both governments: “The agreed approach was for the UK Government to underwrite and guarantee loans of up to £300m to support the Territory’s recovery – offering to stand with the Virgin Islands in negotiations with lenders, backing the ability to repay and deliver a BVI-led recovery.”
“The conditions are linked to international financial best practice. By adhering to them, the Government will simply be ensuring financing to the RDA is well managed.” Similarly, any banks offering loans will want to set conditions on their use and repayment. This is good financial practice, ultimately ensuring value for money, accountability and transparency for the people of the Virgin Islands,” he added.
As it relates to the Protocol for Effective Financial Management the Governor said that the UK is willing to consider proposal to extend the Territory’s compliance to the Protocol: “The UK Government has acknowledged that any new borrowing could cause the Government of the Virgin Islands to remain temporarily out of compliance with the existing borrowing ratios under the Protocols for Effective Financial Management. The very offer of a loan guarantee is an indication by the UK Government that if the Government of the Virgin Islands’ analysis shows that it will breach the borrowing ratios, the UK Government would consider proposals for an extended date to return to compliance and it has made clear that there are already arrangements under the Protocols for Effective Financial Management to do just that,” Governor Jaspert said.
On Monday evening the matter of the loan and the concerns about Protocols ratio was put to the public at a public meeting held at the Auditorium of the Community College.
At the meeting Premier Fahie assured that there was no conflict between the BVI and the United Kingdom and that the matter will be ironed out when the delegation travels to the UK for the meeting with members of the UK Government.
“If it is that we cannot negotiate anything than the loan guarantee that is a telling sign, a very telling sign; but we will have to sit down at the table and see these things for ourselves. I am going to keep the people of the Virgin Islands informed, because you send us there and you are the ones that we have to be accountable to,” he said.
As it relates to the relationship with the UK and the matter at hand, the Premier said that he is handling the situation with respect. “All we are saying is that we are respecting you (UK) as the country that is over us. I’ll never disrespect anyone but we need to have mature conversation, because if it is a partnership you don’t give me what you think is best for me or I give you what I think is best for you. We sit down and we communicate with each other and come up with what is best for each other. That is what a partnership means for me.”
“We’re going to do this partnership in respect I am not going to create any war, I am going to sit down with the UK officials when we go up with some tea, we’re going to discuss the thing like grown adults …We all went to school, there is no need for it to be seeming like you’re negotiating with me from above. We are going to be doing it across the table,” Hon. Fahie said.