Remarks by

Hon. Natalio D. Wheatley

Premier and Minister of Finance

$100 million Loan Facility Signing

With CIBC First Caribbean Bank (Cayman) Limited

31 October, 2024

Protocol and Greetings!

Good Afternoon!

Today is a great day in the Virgin Islands! It is a great day to be a Virgin Islander!

When my administration took up office about eighteen months ago, we made it a priority to address the infrastructure woes of Territory head on.

As I reflected on this historic milestone for the Virgin Islands, I cannot help but remember just over seven years ago when the heartbeat of our Territory, our people, was rocked by the passage of Hurricane Irma on 6^th September, 2017. While we grappled with getting up, Hurricane Maria passed with another attempt to cripple the state of our social, physical and economic infrastructure. We often lose sight that these category five hurricanes impacted the Virgin Islands at a time when the Territory was already in a vulnerable state after experiencing torrential rains on August Monday one month earlier.

Some of us may ask, why do we have to hear this story again. YES, we remember that hurricanes caused damage that were estimated at three point six billion dollars, which incidentally was about three times the annual Gross Domestic Product of the Virgin Islands at the time. YES, we remember that the damage to land-based infrastructure was substantial and estimated at around four hundred and eighty-two million dollars. YES, we remember our roads were left in a dilapidated state; several of our schools and recreational facilities were destroyed; businesses and homes were destroyed.

But there is no harm in remembering what we have been through as a people. Looking at where we are now, we are reminded of how resilient this nation is; we are reminded that our businesses know how to keep the engines of our economy running. We are reminded that together, we can thrive as a nation in the midst of adversity.

Immediately following the devastation in 2017, the Government secured a loan in the amount of sixty-seven point five four million dollars from the Caribbean Development Bank to fund its recovery programme, which included rehabilitation, restoration, and reconstruction of critical public infrastructure throughout the Territory. This loan, combined with the use of local Government funding, continue to be the main sources for financing the recovery and development.

As we are in a reflection mode, let me pause and reflect on some of the public projects under the recovery and development programme that were successfully completed:

1. The Theodore Faulkner Administration Building on Anegada
2. The Flax Administration Building and Vanterpool Administration Building in the Valley, Virgin Gorda
3. The John E. George, Sr. Administration Building in Northsound, Virgin Gorda
4. The Bregado Flax Educational Centre, primary and secondary divisions
5. The Albert H. Chinnery Administration Building on Jost Van Dyke
6. The Jost Van Dyke Primary School and Multi-purpose facility
7. New water reservoirs at Zion Hill and Carrot Bay
8. Construction of the Enis Adam Primary School and restoration of other primary schools across the Territory
9. Rehabilitation of the L. Adorothy Turnbull Building at the Elmore Stoutt High School
10. Construction of four new classroom buildings at the Elmore Stoutt High School
11. Restoration of the Jeffery Caines Sports Arena on Virgin Gorda
12. Restoration of the A. O Shirley Recreation Grounds
13. Rehabilitation of the Virgin Gorda Police Barracks
14. Construction of over twenty social homes throughout the Territory
15. And rehabilitation and resurfacing of many roads, and construction of numerous drainage structures and retaining walls that support our roads throughout the Territory.

I would be here all day if I recount all of our successes in the recovery and development programme. But today is not about what we did in the past. Rather, it is what the next phase of our recovery and development will look like.

As a government, we have made great strides to identify financing for outstanding projects under the recovery and development programme. Despite our good efforts, we continue to be challenged with an expenditure bill continues to rise annually. This rise can be attributed to variables such as the impacts of the COVID-19 pandemic, a higher demand for Government services, increased reporting responsibilities, and fulfilment of the recommendations of the Commission of Inquiry, the AML/CFT Mutual Evaluation, and the Law Enforcement review. Traditional revenue streams are no longer sufficient to sustainably finance the development of our infrastructure.

You have heard me say repeatedly, that in order for us to fix our infrastructure, we must borrow. Well, my heart is filled with much pride and gratitude, for God has indeed brought us this far by faith and we are poised to embark on another phase of our recovery and development. We set out as a government to identify critical infrastructure projects in our recovery and development programme, that would be candidates for immediate loan funding.

The initial list, if my memory serves me right, had projects with a total budget of about three hundred million dollars. However, we wanted to ensure that our borrowing at this time was sustainable. The Ministry of Finance, with the assistance of the Commonwealth Secretariat developed a Medium-Term Debt Strategy, which included an Annual Borrowing Plan. The Debt Strategy was approved by the Cabinet and the House of Assembly, and lays the foundation for public borrowing in the medium term, demonstrated that a total debt envelope of one hundred million dollars is sustainable to sustainable capital expenditure programme. To further demonstrate our commitment to good governance and transparency, we invited six of our local institutions to respond to a request for proposals, and submit indicative term sheets for a one hundred-million-dollar loan facility.

The questions have been asked, and perhaps will continue to be asked: why did we limit the RFP to local banks? Why didn’t approach the Caribbean Development Bank where it would have been possible to get a lower interest rate? I can assure you that the decision for engaging local institutions was properly informed. The Debt Strategy analysed, among other things, the socio-economic impacts to the Territory of borrowing in the short to medium term. It also considered government’s ability to service its debt and the risk of obtaining a floating interest rate, which is commonly linked to the movement of interest rates in other jurisdictions like the United States. The Debt Strategy recommended that the best option for borrowing now to boost the activity and security of our local economy, is to secure a loan from a local institution with a fixed interest rate. Therefore, the RFP process provided us with a local institution that is able to provide the best fixed-rate loan facility.

In a few moments, this government will sign the largest loan agreement in its history, with CIBC First Caribbean (Cayman) Limited in the amount of one hundred million dollars. The projects identified to be funded with proceeds of this loan supports our National Sustainable Development Plan, which is the roadmap for development in the Virgin Islands through 2036. Each project is mapped against the National Goals and Outcomes of the NSDP.

Three projects are included in the loan under National Goal #1 – Health and Wellness. These are, the Dr. D. Orlando Smith Hospital Improvement Plan, Construction of an Almshouse in Long Look, and the administration of a Crown Property Programme. Under National Goal #2 – Education and Learning, the loan will fund the Construction of the Virgin Islands School of Technical Studies Building on the Elmore Stoutt High School Campus.

There are six projects under National Goal #4 – Infrastructure, including, Water Network Improvement, the National Sewerage Programme in Cane Garden Bay and East End/Long Look, Road Town Improvement Plan, Reconstruction and Improvement of Roads throughout the Territory, and Terrence B. Lettsome International Airport Development Projects.

There will be two projects under National Goal #5 – Good Governance and Leadership, namely, Construction of National Immigration Detention Centre, Restoration of the Ralph T. O’Neal Administration Complex. Lastly, and by no means the least, one project is included in the loan under National Goal #6 – Environment, namely Removal of Derelict Vessels throughout the Territory.

It is the intent of my administration to deliver these projects with a sense of urgency. This however, does negate our commitment to ensuring that the projects are properly planned, designed, implemented, and adhere to all planning rules and procurement guidelines. Very shortly, the Ministry of Finance will be publishing a procurement plan for the implementation of the projects under the loan facility, which is intended to prepare the supplier market for procurement of the projects. We will ensure that the public is kept up to date on the status of these projects, including the financing, so that the public can help to keep us accountable for the use of its hard-earned tax dollars. Information on the projects will be made available on various media platforms and through public statements and reports.

I would like to publicly thank the Financial Secretary, Jeremiah Frett, and his stellar hardworking team in the Ministry of Finance for leading the charge in the acquisition of this loan. They conducted the analyses necessary to inform the decision to pursue this loan; they facilitated the RFP process and the negotiations with CIBC to bring us to the point of signing an agreement. Ladies and Gentlemen, this is an incredible achievement and they worked hard! I said I wanted a loan and they gave me a loan! Thank you, FS Frett; thank you, DFS Dr. Glasgow; thank you, Macro-Fiscal Coordinator Mrs. Richmond-Phillips.

I would also like to express appreciation to the legal team that represented the Government in the loan negotiations including Senior Crown Counsel Renard Penn, and Omonike Robinson-Pickering and Matthew Cowman of Walkers, who acted on behalf of the Attorney General.