Borrowing restrictions currently placed on the territory in the Protocols for Effective Financial Management agreement between the BVI and the UK could be waived if ever the territory is impacted by a major natural disaster or catastrophic event.
Premier Andrew Fahie said this is possible through a ‘natural disaster clause’ that the UK is prepared to consider based on concerns government had raised over the impact of future disasters on the territory.
He said: “Your BVI Government stated that the borrowing ratios in the debt section of the Protocols for Effective Financial Management did not sufficiently consider the impact of natural disasters and catastrophic events which can place the territory in an unforeseen vulnerable position.”
The financial agreement – which was signed in 2012 – currently prohibits the BVI government from borrowing more than 80 per cent of its recurring revenue.
Since concerns were raised, Fahie said: “The UK government stated to us that it is prepared to consider including a reference to natural disasters and catastrophic events in the debt section of the Protocols for Effective Financial Management.”
We will be impacted by natural disasters
While addressing members of the media this week, Premier Fahie argued that, based on the territory’s geographical location, the BVI is not only susceptible to hurricanes, but also to other disasters such as earthquakes.
And should any of these disasters impact the territory to any great degree, the BVI might need to borrow extensively to rebuild; as is now the case since hurricanes Irma and Maria.
“The BVI is no time soon moving from the path from where hurricanes come. They are not moving from the path of the earthquake belt, because we are on an earthquake belt whether people want to hear it or not,” Premier Fahie said.
“So there are a lot of unforeseen catastrophic events that can happen and we want to make sure that those are taken into consideration or removed on how we want to deal with the ratios.”
Provisions needed to be made
He said in the event of another impact by a natural disaster, the territory would never be inside the confines of borrowing requirements outlined in the aforementioned BVI-UK agreement.
Premier Fahie said making provisions in the agreement for disasters was one of of the things the BVI wanted, going into recent negotiations with the UK about its loan guarantee offer.
“We want to ensure that when we go to financial institutions that the conditions as much as possible are in favour of the people of the Virgin Islands and they will have a better stake in the main players in this recovery,” he surmised.
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