STATEMENT BY HONOURABLE ANDREW A. FAHIE
PREMIER AND MINISTER OF FINANCE
MANAGEMENT OF THE ECONOMY
14 APRIL, 2022
Good day and God's Blessings to all the people of the Virgin Islands.
May I begin by thanking all those persons who participated in the National Prayer and Fast, which was held earlier this week from Sunday, 10 April, 2022, to Tuesday, 12 April, 2022, as we prayed for God’s guidance and protection as we continue to weather the numerous challenges facing our people from causes outside our borders and beyond our control.
In unity there is strength and with GOD everything is possible. The outpouring of your prayers show your love for these Virgin Islands, and it is one of the reasons He continues to favour us.
We are into the 25th month of the COVID-19 global pandemic – the worst pandemic to hit the world in over 100 years. We are always mindful and vigilant that we are not out of the woods yet, as we see in different parts of the world communities continue to experience outbreaks and economies continue to feel economic impacts from COVID-19.
We have come a long way from where we started out two years ago in terms of what we know about the virus, how to manage it, and how to adjust to living and working with COVID-19 under the New Regular. This has allowed for economic activity to resume substantially, albeit effects on supply chains and the cost of goods and services continue to be felt – including here in the Virgin Islands.
Of course, while we continue to adjust to facilitate further ramping up of economic activity in the Virgin Islands, especially in our tourism industry and the related businesses, we are also dealing with the impacts of the conflict taking place in Ukraine since last February.
These impacts are rippling through economies across the world. No economy is being spared. And we in the Virgin Islands are no exception.
Over the last few weeks in particular, we have all been feeling these impacts in the cost of goods and services.
Your Government is fully in touch with what is happening and how this is affecting our people. We continue to monitor the situation abroad, and how this is affecting you. And your Government remains resolved to do everything in our power to help to cushion the impacts that these international developments have on our people and on the local economy.
The team at the Ministry of Finance, and in many of our Ministries and Departments, have been working very hard, continuously assessing the situation and advising on the adjustments that we need to make as your Government, to keep us sailing with the wind.
I wish to be emphatic that I have full confidence in the capabilities of our team. Their professional guidance is one of the main reasons why your Government was able to prevent our economy sustaining catastrophic damage during the earlier periods of the COVID-19 pandemic, and why our Virgin Islands economy has been, therefore, able to remain on a steady path to resurgence in the midst of COVID-19.
Lest we forget, the Virgin Islands economy began the phased and managed reopening since June 2020, and has kept steadily moving forward since, unlike what has been seen in many other countries, large and small.
Your Ministers, Junior Ministers and all our Government Members have also been working hard as a team in this effort, doing our respective parts, and working with the technical officers in the various Ministries.
Working as a team means everyone makes their input on matters, and we discuss and find the best way forward for the country. And when a decision is made, we abide by the convention of Collective Responsibility. Collective Responsibility is a convention and a tradition of Governance systems that are based on the United Kingdom model, where Ministers speak in one collective voice and support the decisions made by Cabinet as a body.
I point these things out to let you know that you have all right to have confidence in the stewardship of your Government and in our technical officers in the Ministries, and in particular the Ministry of Finance.
Where our economy is today versus where it could have been during the worst pandemic in the last 100 years is truly something to be proud of, and it speaks volumes of the capabilities of our people.
In addition, where our economy is today, compared to when we took office in 2019, and having to deal with the effects of the 2017 flood, two category 5 hurricanes in 2017, an imposed Commission of Inquiry, COVID-19 and now the effects of the conflict in Ukraine, that is something to be proud of, and it speaks volumes of the capabilities of our people. To God alone be the Glory.
And this could not have been achieved without the sterling efforts and leadership of your Ministers, the sound technical and administrative support of our public officers, our various Departments and agencies, and of course, the support and cooperation of you, the public.
And, you do not have to take my word on how well we have managed the economy during COVID-19. We have independent proof of the standard of our performance.
I am pleased to inform that the Caribbean Information and Credit Rating Services Limited (CariCRIS) has publicly affirmed its issuer ratings of CariAA- (Foreign and Local Currency) on its regional rating scale for the Government of the Virgin Islands.
I repeat that thanks be to God, the Virgin Islands has received a Double-A-Minus from the Caribbean Information and Credit Rating Services Limited, known as CariCRIS – one of the highest ratings that any country can achieve.
CariCRIS has rated the Virgin Islands’ level of creditworthiness as high compared to other countries the Caribbean, and projected a stable outlook. One of the factors that contributed to this rating, according to CariCRIS is the Virgin Islands’ prudent fiscal policy and the maintenance of low debt.
CariCRIS also noted that while COVID-19 set back our economic recovery in the aftermath of the 2017 hurricanes, your Government’s implementation of a number of initiatives to protect incomes and stimulate economic activity helped to expand GDP by an estimated 2.3% in 2021 from the projected contraction of 9.5% in 2020.
The Virgin Islands’ financial services sector posted an improvement for 2021 as incorporation figures were back up to pre-pandemic levels. In 2022, real GDP expansion is forecasted as tourism picks up and financial services activities stabilise notwithstanding lingering uncertainty brought on by the COVID-19 pandemic. These are the words of CariCRIS, an independent, well recognised and credible organization worldwide.
We all know that pandemic restrictions in almost every jurisdiction in the world affected air travel and tourism. But, as a result of the easing of restrictions globally and the world adjusting to a new normal, CariCRIS forecasts that Virgin Islands tourism is expected to rebound in 2022, though globally and locally it will take some time to reach pre-pandemic levels.
Based on the latest data available, CariCRIS reported, company incorporations and registrations in the Virgin Islands increased by 62.2% year-on-year, and the Virgin Islands remains one of the largest players worldwide in offshore company registrations, with a registry of approximately 372,911 active incorporated entities as at September 30, 2021.
Your economy has been in good hands during COVID-19, and it is in good hands.
Your Government has managed the economic impacts of COVID-19 very well. We have managed the economy and your finances well under difficult conditions.
You can, therefore, continue to trust in your Government and in our public officers as we continue to deal with the latest challenges brought on by the conflict in Ukraine.
And as I said, your Government is paying attention to what is happening on the international scene, as well as on the ground here in the Virgin Islands. We hear your concerns and we have been making the relevant adjustments to help you to get relief.
You would recall that on 25 March, 2022, as Premier and Minister of Finance, I announced an economic stimulus where all Customs duties on imports that are above 5% will be reduced to 5% starting 15 April, 2022, for the next three (3) months in the first instance.
Goods and services that are currently at 5% or less will remain the same.
This policy will apply to businesses, as well as private citizens.
Additionally, I announced that the import duty on diesel and gasoline would be reduced by 50% of their current rate, from 22 cents to 11 cents per imperial gallon for diesel, and from 32 cents to 16 cents per imperial gallon for gasoline.
As I explained on a prior occasion – and here is just one example - if a person imports a motor vehicle costing $30,000 including shipping, where the regular import duty would have been 20% or $6,000; under this initiative the duty will be capped at 5% and they would pay the reduced duty of only $1,500 during the period of this stimulus initiative. This would be a $4,500 savings on that one purchase. Imagine if any car salesperson in particular takes advantage of this initiative and purchases 10 cars at $30,000 each, they would be experiencing a savings of $45,000 overall, which must be passed on to the consumers.
Similarly, when it comes to importing food, clothing, construction materials, marine supplies and equipment, vehicle parts, products for senior citizens and all other items, even those involved in the tourism industry, where the regular Customs Duty is over 5%, persons and businesses will pay 5% and this will lower the overall cost of importing the item.
I am happy to advise that on 13 April, 2022, Cabinet approved these reductions in import duties. I am confident that all our legislators in the House of Assembly will have no problem supporting these measures that will give you, the people of the Virgin Islands, some relief in these trying times.
Cabinet has also approved, as part of this policy, the reduction of import duty on cement and propane by 50% of their current rate from 18 cents to 9 cents per 100lbs of cement and $1.20 to 60 cents per 100lbs of propane.
So these are some further measures your Government has put in place for the next three months to help you, the people of the Virgin Islands - our people in these times, and to keep the economy stimulated.
Do not forget as well that you can take advantage of zero import duty on most of the equipment and supplies needed for Going Green and switching to sustainable energy sources such as solar – another initiative passed by your Government earlier. By Going Green and generating your own electrical power, persons can save on their electricity bill and even earn money by selling their surplus power back to the grid.
The Ministry of Finance will continue to monitor the economy as we implement this stimulus.
Further, to ensure that the savings and benefits are passed on to you the consumers, your Government will be monitoring businesses through the Trade Department with its consumer protection function and in collaboration with various government agencies.
This will include comparing the prices declared to Customs when stock is imported by businesses against the prices on the shelves. The same will be done for gasoline and diesel fuel.
Your Government urges businesses to pass on the benefits from the reduced import duties to consumers.
When you support your consumers, they will be able to continue supporting your business. It is the circle of life and the circle of the economy.Do good and good will follow you.
We are in this together and together we will rise stronger and better than ever before.
In closing, on behalf of your Government and on my own behalf and that of my family, I wish you and yours a Happy Holy Week. Please be safe on the roads, while you go to church or when you go to the beaches.
I thank you and may God continue to bless and protect our beautiful Virgin Islands and our people.