Allocations for UK loan guarantee already reflecting in BVI’s public debt

Allocations for the United Kingdom multimillion-dollar loan guarantee is already being reflected in the British Virgin Islands’ current debt, Head of the Macro Fiscal Unit Michelle Richmond-Phillips has said.

Addressing the Standing Finance Committee (SFC) earlier this year, Phillips said $181.1 million was allocated in the 2019 budget for public debt. She said this figure is less than what is actually owed.

According to the SFC’s report on her statements, this is because it “includes amounts for new debt”.

“The figure ($181 million budget allocation) was calculated based on the assumption of the government’s acceptance of the loan guarantee proposed by the UK.”

The UK promised the territory that it was willing to offer a £300 million loan guarantee to assist with hurricane recovery. However, during an interview last year, Financial Secretary Glenroy Forbes said the lack of unaudited financial statements stalled the BVI’s ability to access loans through the UK.

Total debt in excess of $230 million

In the meantime, Phillips indicated that the total public debt as of last December was $232.69 million. 

“Of the $232.6 million, the central government debt was $151.79 million, and guaranteed debt was $80.9 million,” the report said.

Noticeable change in guaranteed debt

Phillips had also told the SFC that there was also a “noticeable change in the trend for debt servicing on the guaranteed debt side” last year.

She said there had been a change from $16.5 million in 2015 to $41.7 million in 2016. This represents disbursements under the BVI Electricity Corporation Social Security Loan.

According to the said SFC report, there was a disbursement of $50 million from the government to a BVI Ports Authority (BVIPA) loan.

The BVIPA also received $2.1 million in 2018, and there are two more disbursements outstanding to the BVIPA for another loan. This is in relation to a $5.8 million loan that government stood as a guarantor for the authority in 2018.

Last year, the former NDP government guaranteed the loan for the BVIPA from the First Caribbean International Bank.

The then Premier Dr D Orlando Smith said the purpose of the loan was for the BVIPA to purchase ‘port equipment’, guarantee an unspecified ‘line of credit’ or loan from the bank, and to fund what is known as ‘interest and net swap payments’ of an existing loan.

A total of $1.7 million is to be used to purchase the port equipment, $2.1 million to be used for the so-called interest and net swap payments, while the BVIPA will use the remaining $2 million to guarantee the unspecified line of credit.