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Do what UK says, borrowing locally 5 times more expensive

“We got to do what the lender is saying we must do” — Vanterpool

By Davion Smith, BVI News Journalist

The British Virgin Islands will spend five times as much on loan repayments if it refuses the United Kingdom’s £300 million loan guarantee and borrows from the BVI Social Security Board (SSB).

That is according to Communications and Works Minister, Mark Vanterpool.

Some legislators who are opposed to the UK’s offer are suggesting that the BVI borrow from local lenders such as the SSB. But, Vanterpool said borrowing locally will cost the BVI several unnecessary millions.

While crunching numbers in the House of Assembly on Friday, Vanterpool said government has pre-hurricane borrowings of roughly $125 million and is currently paying approximately $25 million yearly to settle that debt.

Cheaper

He said if the BVI accepts the UK’s loan guarantee, the territory would be able to receive loans at a one percent interest rate, which would be considerably cheaper than that annual $25 million price tag the BVI is currently paying.

The minister said if the BVI borrows another $125 million for hurricane recovery; with backing from the UK, the territory would only pay $23,792,000 interest over a 25-year repayment period.

Without the UK’s guarantee, the BVI would have interest rates of at least 3.5 percent, Vanterpool said.

“If we borrowed it at $3.5 percent from the Social Security Board or some other lending institution, we would have paid $129,000,212 in interest. That’s the difference between a one percent rate and a 3.5 percent rate,” Vanterpool reasoned.

Do what the UK says, locals need help

The minister said the BVI should be happy to accept the UK’s conditions, given that the territory has the opportunity to save millions.

He then assured that government does not intend to borrow the entire £300 million (roughly US$400,000,000) that it can receive with a guarantee from the UK.

“The people need help … We got to do what the lender is saying we must do. What’s wrong with us? When the bank give you the money, you got to do what he tell you to do. What style we cutting? How we get so bright?” Vanterpool asked while addressing legislators who are opposing the UK’s offer.

Opposers

So far, Opposition member Julian Fraser and government backbenchers Marlon Penn, Delores Christopher, Alvera Maduro-Caines, and Melvin ‘Mitch’ Turnbull have all objected to the UK’s offer.

They said they don’t agree with the Recovery Agency and Board, which are conditions of the UK’s offer. The BVI is being told to implement the Agency, which will then have full control over how recovery funds are spent.

Legislators are currently locked in a heated debate in the 13-member House of Assembly on whether the BVI should implement the said Agency.

The legislators must vote whether to implement the Agency before March 31.

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

39 Comments

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  1. Reasonable Man says:

    Minister Vanterpool is right, now everybody get on board and lets get the place fixed. Loans like this come with conditions period.

  2. Bite and blow says:

    Other Opposers to the proposed bill;Hon Skelton, Hon Christian, Hon Fahie……after negotiation and agreed changes this bill will become an act. Excellent points are being brought out but the HOA pontificating is entertaining.

  3. Watching says:

    Only reason some not agreeing is so they can get their hands in the cookie jar.
    They making up reasons so it sound like ‘oppression’ and colonialism. We are a Dependent Territory. Now is the time we depend on the big country.
    The people just want to get this recovery moving ASAP, cheap, smart, transparent!
    Let’s do it, get ahead and stay in the game!

  4. Hodgie says:

    If you guys weren’t wasting the country resources and trying to play big. Wouldn’t have been in this predicament. So you all want to borrow locally so as to continue what both political parties have been doing all these years. Wasting what you borrow in the tax payers name.

    • @Hodgie says:

      Playing big indeed. So big til them form them mouth talking about people need to live within them means, when the list so long where them own self is concerned. I see a day coming allright.

  5. are we still discussing this? says:

    Why is this decision not made already? 6.5 months later we should have the money secured and projects well under way. Politicians are paralysed by fear of making an unpopular decision that will lose them the election. In the meantime, people are homeless and suffering. For all things holy, have the b***s to make a decision and stand by it. Because all this dithering will result in a lost election anyway.

  6. strupes says:

    Don’t take advice from this man at all…Remember him trying to introduce A— S—- to us?

  7. LOL says:

    Look who is talking, mr.cost overrun himself

  8. ActionMan says:

    Thank you ActionMan for making sense to it all. Instead of taking our pension funds we can recover the BVI with low cost funding.

    A VOTE AGAINST RECOVERY IS A VOTE AGAINST THE PEOPLE OF THE BVI!

  9. LOL says:

    The UK will have to approve the SSB borrowing as well and they won’t do it for obvious reasons. We need to take our heads out our a-ses and get the country rebuilt!

  10. Sam the man says:

    Mr Vanterpool is right here and respect to him for saying it I thought he was losing ground to M— but this in my opinion moves him way back in front!!! M— is too easily led I expected much better….all these ministers that oppose the agency are like the blind leading the blind and they don’t want to face up to the fact the BVI is poor at managing its money well and openly… It has struggled to deliver every major scheme so far so when such a massive sum is being secured there had to be conditions!!!! Without a vision the people perish….. And some of these ministers don’t have a clue…

  11. Crisis! says:

    Serious day! All this talk about the UK ‘standing on our neck’ and colonial oppression and all the nonsense these HoA members are shouting – we are at serious risk of blowing our future!
    Hush up and get this recovery going as fast, cheap and transparent as possible! That’s what we care about!
    All you just wish you could get your hands near he cookie jar so you using politricks to make it sound like you standing up for the people etc. Listen, we are a UK dependency, face up to it and use it to help the territory go from disaster to an advanced small-island economy. If you fail to take this opportunity you will be marked down in history as the agents of our island’s downfall.
    Whatever your chat, nothing chang s that this is a way to borrow money at least HALF AS CHEAP as any other way we could borrow it. This shows donors and lenders we are a progressive territory willing to think of our future – not a backwater of greedy, entitled fools so arrogant we’re turning on those trying to help us.

  12. Ok says:

    For those who playing politics and thinking this will give them their shine, it will backfire badly on them. Just watch.

  13. vi says:

    Any member who votes against this will not get my vote. We need the help and we need it now.

    • Hmmmm says:

      We need the help yes but by fairness and not those guys picking their contractors and only gave help to party members to secure elections next year.

  14. Sigh says:

    5 times more ecpensive but you get to keep your freedom. This is how the beast plays the game. Wait till your back against the wall and make an offer the supposedly to good to refuse. But only a fool will go with it just because it cheaper and quicker.

    • Dark hour says:

      Men love darkness rather than light as their deeds are wicked….Freedom? Well I guess so to continue to thieve, rob, mis appropriate funds etc hence why some ministers don’t want the UK Agency policing them but boy do they need it!!!

      • Sigh says:

        The UK allowed our government to get away with murdered so thatbwe would surrender our sovereignty no problem. Many Bvislanders are full of money and no sense, always want something for nothing. If the uk wasnt there what the hell woukd bvi do? A set of whining cry babies if u ask me.

    • A man says:

      Not really – if your finances and prosperity decrease then you lose your freedom. This offers the chance to have some operational controls (akin to any loan agreement, and in reality the same as if the BVI looks to borrow elsewhere) but a path to freedom. The alternative is that the BVI will go down the tubes and eventually someone (whether UK or IMF) will impose harsher restraint and control.

    • Que? says:

      Fool’s talk – Freedom comes at a price! Our politicians stole that from us. Now we as a country must pay the piper – right about now a majority of us are happy to lose a little ‘freedom’ for a great deal more transparency and no doubt a brighter future once we purge these fools that got us here! Your version of ‘freedom’ is not how must of us feel currently, even though you seem to believe you are far wiser and brighter than the rest!

  15. Econonics says:

    We need money, we need help. Vanterpool correctly points to much higher interest rates going it along. Opposition members express concern that the UK will be too involved which may also be valid.

    The question becomes what is best for the BVI. Having seen both of political parties squander money unaccountably for decades, I don’t think having more accountability for our elected officials is a bad thing for the territory. Certainly the low interest rate is beneficial. I don’t see the UK “taking over” just wanting to make sure the money isn’t squandered as it has been historically.

    I encourage our Premier to openly disclose the terms of the agreement. I encourage those in the opposition to find a way to utilize the much lower interest rates with perhaps some tweaking to the existing legislation. Lastly, I would encourage all of us to not let this loan guarantee slip through our hand due to our usual petty bickering. Too much as at stake we need to rise to the occasion and find a solution quickly.

  16. Online Now says:

    I have little doubt that this is the only realistic option to repair the infrastructure and Government buildings.

    I do however have concerns about the private buildings that have not yet been repaired and are under insured. I certainly don’t expect any of the recovery money to go to individuals but what are the plans in terms of these dilapidated buildings, boats etc.?

  17. Diplomat says:

    At the risk of sounding like a severely damaged CD, the territory was battered by 2 Cat 5 catastrophic hurricanes, Irma and Maria, along with being inundated by a historic flood, and needs to borrow money from either internal or external sources to rebuild. The UK, the VI Mother country, offered £300M ($403M) of loan guarantee/co-sign. However, let’s not get things all twisted up in knots; the UK is not providing the VI a loan of $403M. True, the UK co-signing the loan can result in the VI borrowing at a lower APR.

    A 1% interest rate, it is practically free money and it needs to be snapped up now. Nonetheless , the ? is begging to be asked. Which agency is loaning money at 1%? At 1% the agency is assuming most of the risk. Typically, most investors have a minimum hurdle rate, ie, a minimum rate at which they will invest money. Again if the VI can get money at %, it needs to sprint at Usain Bolt speed and gobble it up.

    Moreover, it is an open secret that local lenders charge high APR on loans. But having a rate 5 times the external rate is telling, if true. Could the MoF compile and publish information on the payback amount for various rate, payback period……….etc. Ok. The Premier did not fully consult with elected members, the public………etc before proposing ( government sources indicate that the proposal was local) setting up a Recovery Fund Managing Agency to the UK. Perhaps, the Premier felt, given that the territory is in crisis that he was empowered to move with alacrity to get the deal done. Clearly, the assumption back fired.

    Nonetheless, it has been approx 6 months since the hurricanes devastated the territory and the territory needs to move forward with warped speed with the recovery process. Lets admit (Premier may need to eat crow) that mistakes were made and let’s come together to get the recovery show on the road. The territory is in crisis. If current leaders cannot come together on a plan to the lead the territory out of crisis, perhaps it is high time that an election is called and let voters decide who they want to lead the territory out of crisis.

  18. TurtleDove says:

    Sometimes you have to swallow a bitter pill….I say do it as long as all the documents are are shared.

  19. Sunshine says:

    Won’t the 3.5% interest to Social Security belong to Social security? And why can’t we negotiate a lower rate with Social Security? Why give it (the 1%) to those international bankers?

    Even if we get the loan from Social Security, we still need the management agency but I would put it under the Governor’s office since the government has proven it cannot get value for money. I think the UK would support this.

    • Future retirement says:

      Good question @sunshine. Does social security have that type of money to lend while simultaneously making retirement payments to those who contributed and are expecting it? If it does and if the BVI could pay back at 3.5% your idea may have merit. On the other hand, if the government doesn’t pay it back it would put the future retirement of our citizens likely into bankruptcy. I doubt it has those hundreds of millions needed and probably best to proceed with cheaper funding through other sources I would think.

  20. 007 says:

    Country Above Self!!! 6 Months After Irma……

  21. Freedom says:

    We need our freedom which is why we need to finalise this loan guarantee. Uk wants BVI and OTs to stand on their own two feet financially. This is no secret. This is the OPPPOSITE of wanting to take control of and responsibility for the BVI.

    Uk cannot go into this deal with current governance levels so far below what BVI nationals should reasonably expect.

    Freedom also means, as is pointed out, having cheaper money to rebuild the infrastructure. Remember if we have the infrastructure, then we can build our economy which means more jobs and prosperity and time and money to devote to people and areas that are most needy. If we spank it away as we have done we will come through this without much needed infrastructure that enables our businesses to thrive and without the educational and healthcare needed for the long term welfare of the nation.

    Freedom is having multilingual children with the grades to get to the worlds best universities and compete as entrepreneurs and as professionals, as inventors and artists. Freedom is not sitting jobless, dodging bullets in a broken country that smells of faeces hating everyone who wasn’t born here.

    Freedom is having the economy robust enough to meet its obligations and then some in order that the UK or any other institutions need minimal input. An economy full of opportunity for BVI nationals that is robust and forward planning. For a country our size, that sort of economy depends on more work permit holders and more permanent residency being granted in line with our competitors and with our needs and constraints. If you think a few hundred long serving expats being granted some certainty to continue and deepen their commitments and investments here is a problem and not a massive boost, you may need to rethink what you want this place to look like in 3-5 years.

    Freedom is having our islands improved to a standard where we are proud to show it off and accept visitors and where we love to live.

    Freedom is having greater food security producing some of our own fresher and better, greater renewable energy produced here not by imported dirty diesel, dealing with our waste so we are not walking through it or swimming in it.

    Freedom is having a choice of amenities here, vibrant towns suitable for all; those with limited mobility, with children, who want to go out and socialise.

    Freedom is so many things but it is not threatened by our government being accountable for a huge rebuilding project.

    Let’s do this and do it well.

  22. Sam the man says:

    Hate to say it but St John, St Thomas, St Martin and even PR are making way more progress on the recover than we are….now why’s that? how come we are being left behind? ….Poor vision less leadership that’s why, and 6 months on and the government can’t even agree on how to acquire the money to rebuild – an absolute disgrace! I am not a massive fan of Dr Smith but on this subject I do 100% back him and he is right – we need the finance and must accept the Agency to police it…how else are we going to recover? The ministers that oppose this clearly only have their self aggrandizement in mind and that says it all about their character or lack of…..they smoke screen it in patriotic rhetoric which we all see through and know what is really going on… ” don’t they tell us how to manage the money” – well they insist on it and they will with good reason too….

    • watcher says:

      BVI should count itself lucky it has a major country that takes an interest. There is absolutely nothing for the UK in this and the average British taxpayer would probably tell BVI to get lost. Brits have zero rights or privileges here so why should Britain care?

      Yet they do. And BVI should thank its lucky stars.

  23. snafu says:

    As a British taxpayer and BVI taxpayer I totally agree. Quite frankly, I think the UK should say you’re on your own, we’re buggering off, get on with it and don’t forget to turn the lights off when the last person leaves. Go stew in your own juice. Nobody can fix stupidity.

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