By Horace Mills, BVI News Online Staff
The British Virgin islands (BVI) government has received a strong vote of confidence regarding its handling of the economy, and is being told that it may be envied by much larger economies such as the United States and Britain.
That attempted vindication comes at a time when the parliamentary opposition and other members of the community have been accusing the current administration of pushing the economy towards the brink, noting that Government recently had to borrow $25 million to help cover operational expenses.
That view is not being supported by representatives of government-owned BVI Finance Limited, as well as British firm Capital Economics.
Capital Economics is the company that Government has hired to conduct – among other things – an assessment of the local economy. The assessment was presented this week in a report titled: Creating Value – The BVI’s Global Contribution.
Capital Economics, in the report, said it has found a number of positives about the local economy.
“Policy makers around the world would be envious of the BVI’s fiscal position,” it declared.
“While other countries – including the United Kingdom, the United States and Germany – have also run fiscal deficits for the last decade, theirs have averaged a larger share of Gross Domestic Product over this period. The BVI enjoys minimal debt in stark contrast to other nations. For example, Britain owes more than US$2.5 trillion to its creditors, equivalent to 84.0 per cent of its Gross Domestic Product, or US$37,600 per person,” added Capital Economics.
‘Sound fiscal position’
The company further stated that the BVI has managed to maintain a “relatively sound fiscal position” despite the impact of the global financial crisis.
It said that has happened although the BVI “runs a surplus of around US$45 million on its trade accounts”.
Capital Economics also compared the territory’s debt with what exists in much larger economies.
“BVI enjoys minimal debt, with its annual public sector net debt reaching US$117 million in 2015. This is equivalent to just 11.5 per cent of Gross Domestic Product, or US$3,700 per person. The territory’s debt consists largely of borrowing for infrastructure projects.”
“Debt interest payments are estimated to have totaled US$4.7 million in 2016, and are expected to total US$4.3 million and $3.6 million in 2017 and 2018 respectively,” added Capital Economics.
Balanced and sustainable economy
Meanwhile, the Capital Economics report stated that, despite the BVI’s relatively small size, it remains a real, balanced, and sustainable economy.
“It is a remarkably balanced economy: tourism accounts for one in four jobs, while the international business and finance [industry] accounts for one in 10. Half of the BVI’s economic output derives from these two key sectors,” said Capital Economics.
It added, “With Gross Domestic Product of roughly US$32,500 per capita, the BVI’s levels of prosperity are among the higher performers in the Caribbean and Latin America region.”
We should be very proud
Representatives of the government-owned BVI Finance, who presented the Capital Economics report to journalists this week, joined in speaking highly of the territory’s economy.
Head of Business Development at BVI Finance Gary Hayes stated that, based on the assessment, the BVI’s two main economic pillars – tourism and financial services – are still robust.
“The key position is how important both [industries] are to the BVI. It’s a very very successful twin economy for a population of up to 40,000 people and an island the size it is. It is very unique, and something that BVI should be proud of that we have two really robust industries,” Hayes said.
Kedrick Malone, who also represents BVI Finance, said the BVI economy is sustainable.
“From a fiscal standpoint, the tourism sector generates $395 million while the financial services sector generates $337 million. In total, BVI has a trade surplus of $45 million.”
“As you can see, these are real figures; these indicate that the BVI is a real economy. It’s very balanced; it’s a very sustainable economy, and financial services is a very critical part of that,” added Malone.
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