Premier Gives Detailed Update About The Territory’s Economy


The annual budget will be delayed this year! However, Premier and Minister for Finance Dr. the Hon. D. Orlando Smith assured residents that the budget which is likely to be delivered in January will not be unduly late because April is the deadline.
In an announcement to the Territory that was aired on 6 December Hon. Smith updated the citizens about the present situation: “This year, we will be submitting our budget somewhat later than is customary – likely in January. While a December budget is ideal, budgets may be submitted after that time and indeed have been submitted by both sides of the aisle as late as April.”
The BVI Leader explained that the lateness was to ensure financial prudency: “We want to take our time in reviewing the allocations to the various programs that are carried on to ensure the most efficient use of Government resources. And this includes developing our capital programme. There are a number of critical decisions that have to be made on this front and we don’t want to make hasty judgments.”
Hon. Smith noted that one of the efficient measures being referred to will ensure that Government will no longer be owing money to goods and service providers: “Timely payments to vendors for services rendered is an issue which is largely related to the manner in which revenue is received by government; we have now put systems in place so that vendors can be assured of timely payments for services rendered, that they too can meet their obligations.”
He also explained that serious challenges to the economy stretch back to 2008 when the financial crisis set off the worst global recession since the Great Depression. Hon. Smith noted that the 2008 difficulties affected financial services institutions that do business here in the BVI by causing their flow of investment to slow down sharply.
Pundits indicate that no economy in the world has fully recovered from the 2008 USA banking industry quake which is still causing economic instability globally; unfortunately, the prospects are still gloomy due to very poor choices made by electorates in many countries: change many a time means going from the pot to the fire.
Dr. Smith elaborated on finer points: “then as the global economy began to recover, a new shock to the system was felt as regulators in the United States of America, United Kingdom and European Union all began to crack down hard on banks and other financial institutions. Billions of dollars in fines were imposed upon these companies.”
This the Premier explained was the genesis of the correspondent banking situation currently facing the BVI and the Caribbean region: “Suddenly, the banks that do business here in the BVI were concerned not just about serving their customers and clients but also about “de-risking” their operations – which is another way of saying they wanted to make sure they do nothing to offend their regulators. In this context, banks began reconsidering how they do business here in the BVI and in other jurisdictions and some banks began exiting the region entirely,” Hon. Smith explained.
“Indeed, these trends, as they relate to derisking, are so serious that the Deputy Chairman of the World Bank was moved to issue a warning that they threaten the stability of the entire Caribbean region,” he added.
The Premier also disclosed that the Panama Papers scandal is also having an impact on the Territory’s financial services sector: “Despite the fact that these (Panama) papers were illegally hacked from a law firm; despite the fact that these papers produced much smoke, but little fire; still, the media sensation they caused, coupled with the fierce attacks of certain NGOs and politicians have created even more fear among the banks and other businesses that support the BVI financial industry.”
Pundits explain some developments using consistently the term “conspiracy”.
However, the BVI Leader announced that the BVI Government is responding to the looming threats: “In the face of these challenges, we are not standing still – we are responding on all fronts. And that starts by fighting with all of our might to protect our financial services industry and to put it on course for sustainable growth long into the future. First, we are defending the reputation of our industry against all those who would besmirch it. Let me say to you clearly – the financial industry of the BVI is among the world’s best regulated and most transparent.”
Meanwhile, Premier Smith indicated the approach his government will follow: “We will focus on making our Government operate as efficiently as possible. We will ensure that every dollar we spend is directed toward areas that will deliver the greatest future returns. And we will look for other ways to increase Government revenues without placing undue burdens on the people of the Territory. But rest assured, whatever belt-tightening we must do it will not come at the expense of the common man or woman.”
“We will not be cutting core services or reducing our investment in your children’s schools, in your health-care, in your roads or infrastructure, or in helping grow your businesses and your economy. And we will continue to work hard to protect our environment that is so critical to our ongoing development,” he added.