No fiscal space left after $100M borrowed, Penn says
Eighth District Representative Marlon Penn has warned that the BVI has little borrowing room left after securing a $100 million loan, arguing that poor execution could leave the territory burdened with debt and deteriorating infrastructure for years.
Speaking on the Talking Points radio programme, Penn said the territory’s borrowing capacity is now severely constrained.
“We went through the budget process in December, and we learned that right now, with the $100 million that the government has borrowed, we don’t have any fiscal space, as they call it, to borrow any additional money. The most that we could borrow is an additional $20 million based on the borrowing guidelines that we have in place right now,” Penn said.
He cautioned that the limited headroom means the government must be deliberate in how it spends the loan funds.
“So that means that if the government don’t effectively execute these projects in a way where we have maximum benefit from it, for the next 10 to 15 years, we’ll be saddled with bad roads, bad infrastructure, that we can’t borrow the money to address because we’ve tapped out,” he stated.
Penn said the opposition had pressed for a clear plan during debate on the loan in the House of Assembly. “That’s why we were so adamant when we had the debate on the loan in the House of Assembly to see a clear plan in terms of how the money is going to be spent,” he said.
He argued that the borrowed funds should be directed towards infrastructure that improves daily life and generates revenue. “We have to be so careful how this $100 million is spent,” Penn said.
Penn further argued that debt repayment will also affect future governments. “Our children, our grandchildren, are holding the bag for the next 10 to 15 years, paying back a loan that we can’t get no additional money because we’ve tapped out in terms of borrowing capacity,” he said.
Penn maintained that while borrowing to address infrastructure was justified, execution remains the central issue. “One thing I would say is that it was a right decision to borrow money to address the infrastructure issues of the country. The challenge that I have is the way that they’re executing that money,” he stated.
He said failure to prioritise roads, water and other critical systems could leave the territory with debt obligations but limited tangible improvements. “We can’t be reckless in spending people’s taxpayers’ money,” Penn said.
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I would like to know how the interest rate we have for this $100m loan compares to the rate we would have got for upto $400m when it was guaranteed by the UK Government.
I suspect that the UK guarantee would have made the rate lower. Also, interest rates generally were significantly lower in 2017 and 2018.
Getting infrastructure fixed well and sooner would have also had their own benefits in terms of increased productivity nfor economic activity.
Oh well; our government knew better.
I would like to know how the interest rate we have for this $100m loan compares to the rate we would have got for upto $400m when it was guaranteed by the UK Government.
I suspect that the UK guarantee would have made the rate lower. Also, interest rates generally were significantly lower in 2017 and 2018.
Getting infrastructure fixed well and sooner would have also had their own benefits in terms of increased productivity for economic activity.
Oh well; our government knew better.
When is Government offices going to move back into the admin complex ???
@smh: facial expressions of the VIP premiere, we shall not move back into the administrative building now, many family members and politicians who are part of the entitlement elites are getting serious cash on their pockets and funds the VIP election campaign.
Totally ridiculous Government is not in the Admin buildings since 2017.
VI is laughed at by all watching.
I love the words ” Our kids will be holding the bag for the next 10-15 years”…VIP need a proper flogging for loaning 100 million dollars and trying to spend it in less than a year.
Why don’t they use some of that money to improve the Hospital with new equipment, hire Specialist Doctors and make sure we have all the necessary items in stock. This would save lots of money now spent on private clinics. It will make our Medical school more attractive and might even result in Medical-Tourism with St. Thomas so close by and their residents now going to Costa Rica even Colombia.