STATEMENT BY PREMIER AND MINISTER OF FINANCE
HONOURABLE ANDREW A. FAHIE
DURING THE SEVENTH SITTING OF THE FIRST SESSION OF THE FOURTH HOUSE OF ASSEMBLY
Thursday, 17^th October, 2019

Mr. Speaker, I wish to update this Honourable House on my trip to the United Kingdom from 11^th to 13^th September 2019 where I led the delegation to discuss the conditions of the United Kingdom Loan Guarantee and other matters.

Our main message on this journey was that the people of the Virgin Islands, in a transparent and accountable manner, must be the main beneficiaries of the recovery agenda, with a clear understanding that ‘the people’ will ultimately be solely responsible for repaying the loan pertaining to recovery and to development. Our goal was to see how the people of this Territory, in a tangible way, would benefit from any loans that materialised from the guarantee. 

Mr. Speaker, allow me to put the trip in context:

In 2017, the August flood and hurricanes Irma and Maria severely affected the physical, economic and social infrastructure of the BVI with damages and losses almost tripling the Gross Domestic Product (GDP) of the Territory. In response, having initially secured recovery loan funding from the Caribbean Development Bank, it was determined by the Government of the Virgin Islands at that time that additional funding would be required to underwrite the recovery process. The United Kingdom Government set conditions around such support to ensure that all recovery measures represent value for money and that the additional borrowing is sustainable for the BVI. As a precondition to the UK’s support for guaranteeing up to £300 million of loans, it was recommended that a Partnership Agreement between the UK and BVI Governments be developed to establish the necessary structure that will drive recovery and thereby attract private investments.

When my Government took office we held a series of public meetings on 20^th and 21^st August to discuss the conditions of the UK loan guarantee. Subsequently, my office planned my official trip to the UK to discuss the conditions of the UK Loan Guarantee.

The visit to the UK originated from a request that I would have made to the Exchequer Secretary of HM Treasury Mr. Robert Jenrick in July 2019.

The BVI delegation held meetings with officials of the Foreign and Commonwealth Office (FCO), including its Director, Mr. Ben Merrick; Ministers of the UK Government – Lord Tariq Ahmad of Wimbledon who is the Minister responsible for Overseas Territories, and Minister James Duddridge from the Department for Exiting the European Union (DEXEU); officials of Her Majesty’s Treasury and Baroness Patricia J Scotland, Secretary General of the Commonwealth Secretariat.

There are a few highlights coming out of the meetings with officials from the FCO and Her Majesty’s Treasury where discussions were based on the items outlined in my letter to the Governor dated 9th September 2019.

In the meeting we expressed that the borrowing ratios in the Debt Section of the Protocols for Effective Financial Management did not sufficiently consider the impact of natural disasters and catastrophic events which can place the Territory in an unforeseen vulnerable position. Mister Speaker, the UK Government stated to us that it is prepared to consider including a reference to natural disasters and catastrophic events in the Debt Section of the Protocols for Effective Financial Management.

We raised concerns over the treatment the BVI would receive if we exceeded the borrowing ratios contained in the Protocols for Effective Financial Management. This is something all sides have long acknowledged as highly likely, given the current circumstances. 

The UK Government stated that it is prepared to work with BVI Government on coming back into compliance with the debt ratio if borrowing on the loan guarantee would cause the BVI to exceed the ratios.

We advocated that the Financial Secretary should be able to access the Recovery and Development Act Trust Fund for the expressed purpose of being able to return any funds borrowed directly by the Government of the Virgin Islands at the request of the relevant lending institution on account of the funds in question not being administered in accordance with that lending institution’s agreed rules and guidelines.

The UK Government has agreed to consider this condition, and the BVI Government has been asked to submit some additional information with respect to this issue.

We explained that not all funds received or funds allocated for all projects must be put into the Recovery and Development Agency Trust Fund. We indicated that recovery is one thing and development is another.

The UK Government agreed to consider the direct administration by the BVI Government of other sources of funds for investment in the recovery besides those borrowed on the loan guarantee to support building and rebuilding.

As a result of the positive discussions and taking into consideration the objectives of the new Government of the Virgin Islands to ensure that the people of the Virgin Islands benefit from recovery, we had been asked to prepare a plan of action to present to the UK Government by September 27 for moving forward, and we were happy to do so, despite having to prepare for two pending storms. This showed our resilience.

In order to assist this process and later activities, the UK Government opted for the setting up of a special steering committee to enable more direct communication between the Government of the Virgin Islands and HM Treasury. Throughout all the meetings with the FCO and Treasury officials expressed that the face-to-face meetings were better to address longstanding issues.

Our concerns with respect to ambiguous language that was used in some of the documents, such as the High Level Framework for UK Support for BVI Hurricane Recovery, would be revisited in the best interest of the people of the Virgin Islands. This includes reference to the divestment of public assets. BVI requested written clarity with references to “other mechanisms” and other terminologies in the documents. We requested that FCO respond to the points and we re-emphasised that our comitment to the concept of the Guarantee remains, with the terms yet to be agreed. 

I had a highly productive and positive meeting with Minister for the Commonwealth, the United Nations and South Asia Lord (Tariq) Ahmad of Wimbledon on the BVI-UK relationship and the loan guarantee offer. I proposed that the relationship with the UK be reset along the lines of the principles of 4Cs: Cooperation, Collaboration, Communication and Consideration. I welcomed his proposed direct dialogue where every three months we will exchange and update each other.

Lord Ahmad and I also spoke about building capacity of the people of the Virgin Islands. I also asked about opportunities for scholarships and training in the areas of maritime, aviation, and entrepeneurship. I also took the opportuntiy to speak about the UK Government providing the people of the Virgin Islands access to the military training.  

Overall, we walked away from the meetings with a clear understanding that it is a BVI-Led Recovery and that the Recovery to Development plan is BVI’s Plan. We were encouraged to set out what we want to see in BVI’s plan. We were reminded that the RDA is an implementation/execution agency that belonged to Government of the Virgin Islands under the Premier’s Office. It was reiterated to us that the Recovery and Development Act is the BVI’s Act and if the BVI does not want the UK Loan Guarantee Loan Package, it is the Government of the Virgin Islands’ decision. But, I see this as the Territory’s decision.

I was happy to discuss the many ways the BVI recovery was ongoing to address the myth that the BVI recovery is not happening. For example, I shared several initiatives undertaken since my Government took office including the recent completion of the L. Adorothy Turnbull building at the Elmore Stoutt High School and how successful the model was with using local contractors who completed the projects on time and within budget. I was happy to speak about the 1000 jobs in 1000 days initiative.

In speaking about good governance and the perceived stigma intentionally created in some quarters, I also took the opportunity to express that while the Recovery and Development Agency has its place as an implementation arm of Government of the Virgin Islands; it is important for the agency to operate within the same procurement rules and laws as central government.  

I took the opportunity to reaffirm Government’s campaign commitment to reset certain aspects of the relationship to ensure transparency and accountability through the implementation of the Register of Interest of elected members and enacting Procurement Legislation, the Ministerial Code, Procurement legislation over all, for example.

While in the UK, The delegation also met with James Duddridge, Parliamentary Under Secretary of State on the issues of Migration, European Union  Commitments to the Overseas Territories and the Loan Guarantee. Minister Duddridge shared the UK Goverrnment’s commitment to the Territories and their engagement of them through regular meetings with United Kingdom Overseas Territories Association in Brussels through their representative who is there on a weekly basis. He shared that the Territories will continue to have access to the EU under the Schenghen Visa scheme even if the UK leaves the EU.

He shared that UK will guarantee all EU promises to the Territories and will match commitments by the EU for funding. In some instances, BVI will not be able to get direct funding due to OECD rules on GDP per capita. He said there will be support on climate change and access to a Sustainable Development Fund which has £40M. There is also a commitment to fisheries export from the OTs.

Mr. Speaker, All in all we can say truly that the meeting was truly a success.

I paid a courtesy visit with Baroness Scotland, Secretary General for the Commonwealth Secretariat. Baroness shared and encouraged the BVI to share in a number of initiatives of the Commonwealth Secretariat like climate change, disaster response, and sustainable development to ensure the resilience of the people of the Virgin Islands. I look forward to us working together.

I wish to thank the delegation who represented this Territory well. They are Minister for Health and Social Development Honourable Carvin Malone; Financial Secretary, Mr. Glenroy Forbes; Permanent Secretary Premier’s Office Mr. Kedrick Malone; Special Envoy of the Premier, Mr. Benito Wheatley and  Director of Communications Mrs. Arliene T. Penn; The team was joined by Legal Consul/Operations Manager, Ms Tracy Bradshaw and Senior Political Officer/Cultural Attaché, Ms Siobhan Flax, both from the BVI London Office.