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COMMENTARY: Reflect on financial independence achieved 40 years ago

Wheatley

By Benito Wheatley, Contributor

It should not be taken for granted that the British Virgin Islands (BVI) is today financially self- sufficient or that the Government’s finances are managed by a Minister of Finance appointed from among the elected representatives of the legislature (i.e. House of Assembly).

This was not always the case. At the introduction of ministerial government in 1967, finance was not a portfolio devolved to the elected Government. It remained under the United Kingdom (UK) appointed Governor who also oversaw Britain’s financial assistance to the territory referred to as grant-in-aid.

By 1971, the BVI was in a deep recession and the Government remained dependent upon Britain to fund its large budget deficit. However, through prudence and determination, the coalition Governments led by the late Chief Minister Dr the Honourable Willard Wheatley, MBE, LLB between 1971-75 (i.e. Wheatley/Virgin Islands Democratic Party/United Party) and 1975-79 (i.e. Wheatley/Virgin Islands Party), steered the territory out of recession and into a robust economic recovery from 1974 onward.

The exceptional public management of this period encouraged Britain to follow through on turning over responsibility for the finance portfolio from the Governor to the elected Government under the stewardship of the Chief Minister. On 1 st June 1977, Dr Wheatley became the BVI’s first Minister of Finance.

By 1978, the Government independently closed the budget deficit and ended the year with a budget surplus of $1.3 million. This eliminated the need for further financial assistance from Britain and officially brought an end to grant-in-aid in the territory more than two decades after the BVI became a British colony in its own right.

Surplus

At the end of the subsequent budget year (1979) the surplus grew to $2.7 million on the continued growth of revenue from tourism and a rebound in construction. The territory has since remained financially self-sufficient as successive Governments have generally run budget surpluses or balanced budgets.

Financial autonomy was the next critical step in the BVI’s march toward greater self- determination, which was preceded by the introduction of ministerial government in 1967 and the restoration of the legislature (i.e. Legislative Council) in 1950. The new finance portfolio endowed the elected Government with the fiscal and regulatory authority that positioned the BVI to later reinvent the financial services industry after the termination of the BVI-US double taxation treaty in 1981.

The Chief Minister, Dr Wheatley, and his various ministers (i.e. Oliver Cills, Conrad Maduro/Dr Q. William Osborne, OBE, Alban U. Anthony and H. Lavity Stoutt) deserve much credit for their steadfast leadership that ensured the territory became financially self- sufficient and gained its financial autonomy.

This, of course, could not have been achieved without the dedication of the numerous public servants who worked tirelessly in the national interest.

The 40th anniversary of the end of grant-in-aid is an opportunity to reflect on the importance of the BVI’s financial independence which remains a key pillar of the self-determination of the territory.

Benito Wheatley is a Policy Fellow at the Centre for Science and Policy at the University of Cambridge and the former BVI Representative to the UK and EU.

Copyright 2018 BVI News, Media Expressions Limited. All Rights Reserved. This material may not be published, broadcast, rewritten or distributed.

14 Comments

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  1. Albion says:

    Quick correction: I believe that Wheatley’s second coalition government was with the UP (not the VIP, who ousted him from power in 1979). His first coalition government was with the now defunct VIDP led by Q.W. Osborne.

    • Benito Wheatley says:

      The Ministers of the coalition Government of 1975 included Chief Minister Dr. Hon. Willard Wheatley (Independent), H.Lavity Stoutt (VIP) and Albany Anthony (VIP). Indeed it was a Wheatley/VIP coalition.

  2. Van Winkle says:

    Good history lesson. But I strongly disagree with you that the BVI is “financially independent”. Not unless you take that to mean being able to balance the books, in which case “financially responsible” might be a better term.

    Without prolonging this post I would say that to be truly financially independent, the BVI will have to diversify its economy and start manufacturing and exporting a lot more. But being mostly reliant on the services sector is not reliable financial independence. If it was the pain felt after Hurricanes Irma and Maria would have been much less.

    • Benito Wheatley says:

      There is a difference between the BVI’s financial independence and its economic independence. In a highly globalised world the BVI is economically interdependent with other economies. This has been the case for some time, particularly as it concerns financial services and tourism. However, the BVI’s financial independence rests on the local government’s constitutional responsibility for finance and the financial self-sufficieny the government has maintained since 1978 in which the territory is able to pay for its own budget. Grant-in-aid was a direct form of external dependency that brought with it external controls over the BVI’s financial affairs.

  3. Political Observer (PO) says:

    Firstly, the Hon Willard Wheatley must be complimented for weaning the BVI off the grant-in-aid. Secondly, the Wheatley government provided a good financial platform/foundation to build on but subsequent governments seemed to have squandered the opportunity. And thirdly is the BVI financially independent?

    The BVI is self supporting (does not depend on grant-in-aid) but may not be financially independent. It is a small, resource-poor, and open economy locale that depends heavily on foreign direct investment. It a service-based economy with tourism and financial services as the twin pillars of the economy. As such, its economy is sensitive to economic downturns in the US, Canada, UK and other developed economies; it is subject to external economic shocks. When the economies in developed countries sneeze, small economies like the BVI catches the flu.

    • Benito Wheatley says:

      There is a difference between the BVI’s financial independence and its economic independence. In a highly globalised world the BVI is economically interdependent with other economies. This has been the case for some time, particularly as it concerns financial services and tourism. However, the BVI’s financial independence rests on the local government’s constitutional responsibility for finance and the financial self-sufficieny the government has maintained since 1978 in which the territory is able to pay for its own budget. Grant-in-aid was a direct form of external dependency that brought with it external controls over the BVI’s financial affairs.

      • PO says:

        @ Benito, if the metric for financial independence is local government/Premier controlling finances, not the crown-appointment Governor, ok. However, IMO the BVI is not currently economically independent. In my view, economic independence is Virgin Islanders controlling the majority of the territory’s resources, along with controlling the factors of production. This is not currently the case, for the BVI is highly dependent on external investment. If the inflow of visitors slowed dramatically or if financial services companies registrations declined drastically, the VI residents quality of life and standard of living and per capita income would be negatively impacted.

        • Benito Wheatley says:

          I agree fully that economic interdependence is the order of the day and that most countries are not economically independent. They are linked through international trade and the global financial system upon which the world economy is based. The BVI is no exception.

          • PO says:

            @Benito, good discussion. True, voluntary free trade among nations can create wealth. Generally, countries produce things that they have a comparative advantage in and trade for the rest. The BVI produces little and import much (everything) and produces few things with which it has a comparative advantage (producing a good at a lower opportunity cost than others). Further, the BVI economy is primarily tertiary(service based), ie, tourism and financial services. Both of these sectors depend heavily on external investment/contribution. Further, the BVI lacked the natural resources to develop either a primary economy (mining, farming, fishing, forestry)or a secondary economy (using primary resources to produced finished products). The BVI has a challenging economic road ahead, given its small size and dearth of natural resources. Dr. Hon W. Wheatley government moved the ball past midfield and it is up to the next generation of leaders to move the ball farther.

    • Benito Wheatley says:

      There is a difference between the BVI’s financial independence and its economic independence. In a highly globalised world the BVI is economically interdependent with other economies. This has been the case for some time, particularly as it concerns financial services and tourism. However, the BVI’s financial independence rests on the local government’s constitutional responsibility for finance and the financial self-sufficieny the government has maintained since 1978 in which the territory is able to pay for its own budget. Grant-in-aid was a direct form of external dependency that brought with it external controls over the BVI’s financial affairs.

  4. What Time Is It? says:

    A very informative and enlightening article indeed. Thanks bro. Wheatley. However, as important as it is, I would have imagined many more comments would ave been made after being online for several hours. Perhaps they will be .

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    • stewie says:

      Sorry, I didn’t mean to vote you down. I meant to hit reply! Just wanted to say that you know if a piece will attract a lot of comments within the first hour of publication. Comments only tend to taper off as the hours go by, so I think this article has more or less maxed out on comments.

    • Benito Wheatley says:

      Thank you kindly. My pleasure to exchange with you and others. Hopefully those who read the article got something meaningful out of it.

  5. Ooo says:

    Teacher Willard ain’t do nothing by he self. All you sickening man. Sowande is not Willard. Stop trying to look political mileage…

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