Minister of Health and Social Development Ronnie Skelton has declared that he does not support the current funding mechanism for Government’s proposed extension of the runway at Terrence B Lettsome International Airport.
He told the House of Assembly yesterday that the plan may end up close to breaching certain borrowing guidelines outlined in the Protocols for Effective Financial Management, which Premier Dr D Orlando Smith signed with the United Kingdom in 2012.
“We are not against the airport project; we are against the procedure and the way it is being funded. Let us find another way to get it done,” Skelton said.
He continued: “To go and borrow direct borrowing by Government all of the money [for the project]; then it becomes an issue with the borrowing guidelines [in the Protocols]. It puts everything at the edge.”
China Communications Construction Company, which Government has selected as the preferred bidder on the project, said it can extend the airport runway at a cost of $153 million.
Issues surrounding the funding of the project dominated the 2017 Budget Debate, which ended close to 9pm yesterday with the government passing its $323M budget for this financial year.
Minister of Finance Dr D Orlando Smith, up to the end of the budget debate, did not publicly state how he will address the ‘funding’ concern, which prompted five Government lawmakers to declare that they do not support the airport project being pursued at this time or as currently planned.
Those five Government legislators are Melvin ‘Mitch’ Turnbull, Delores Christopher, Alvera Maduro-Caines, Ronnie Skelotn, and Archibald Christian.
Their stance was also shared by Leader of the Opposition Andrew Fahie, who abstained from voting for passage of the budget last evening, March 1.
Other lawmakers, in the meantime, supported the proposed project or were vague in expressing their position on it. Some also did not mention the controversial project throughout their contribution to the budget debate.
We should live by the protocols
The government minister who took the clearest and strongest position against aspects of the project during the debate, Skelton, noted that the territory has been abiding by the borrowing guidelines in the Protocols For Effective Financial Management.
That, he reasoned, should not be placed at risk due to the proposed airport project.
“When you look at the borrowing guidelines and the Protocols for Effective Financial Management, we are way inside all of those things. If we were outside, we already would have been reprimanded.”
“We are well within everything [in the borrowing guidelines]. But the Leader of the Opposition get up here [in the House] and making the people feel that we are doing something that is wrong. We are not doing anything; we are living within the guidelines,” Skelton further said.
He then explained the requirements of the Protocols for Effective Financial Management, and compared them to what he said is the territory’s current position.
Skelton noted that there are three ratios that should be taken into consideration, adding that none of them has been breached.
“It (Protocols for Effective Financial Management) says net debt as a percentage of recurrent revenue – we can go to a maximum 80 percent… if you round it off with easy Mathematics, it is $300 million it says based on the Protocols. We can borrow $240 million, and we would still not be in any problems… Of the net debt as a percent of revenue, we only 41 percent and we could go to 80 percent,” Skelton explained.
He further said: “Liquid asset as a percentage of recurrent expenditure – 25 percent [required in the Protocols for Effective Financial Management]. It says that those are the monies we must have in the reserves. We have $61 million; we are planning to put $12.5 million and that will satisfy the three-month requirement… Liquid assets; we are 25.03 percent and those numbers could go to 25 percent.”
Turning to the next ratio, Skelton told the parliament: “The debt service as a percentage of recurrent reserves – 10 percent [required in the Protocols for Effective Financial Management]. So it says that we can go up to $30 million in debt service; we can’t go beyond that. And this is very conservative. If you go and check all the other countries around you and internationally, you would see these numbers are very low numbers.”
Skelton, in the meantime, claimed that the British Virgin Islands has been fiscally prudent.
“We are very responsible and prudent people. We have always done what was right for our country. To sit here [in the House of Assembly] and make it look like we are doing things that are wrong for our country; that is not so,” said the minister who some members of the ruling National Democratic Party want to replace Premier Smith as minister of finance.
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