My People,
The Anguilla United Front Government is grateful to the entire Anguillian community for the manner in which our recent victory at the polls has been received. It gave us a sense that, for the most part, Anguillian voters either welcomed or accepted the election results in the true spirit of Democracy.
At this time several weeks have elapsed since we ascended to office and despite the many presentations we have made on the various media — Anguillans still want to get an assessment of where things are for our new Government. It is therefore expected, as it was promised, that at some point as the Minister of Finance I would give you a briefing of that situation.
During our election campaign our party pledged that we would hit the ground running, as from day one. We were confident that we have the ability to “fix” the current situation in the interest of the people whose support we sought at the polls. That confidence has not waned — and we remain as determined as ever to bring Anguilla back to the levels of growth and prosperity we once enjoyed.
It has been the mantra of my campaign to reiterate the importance of Jobs; Business Opportunities; Investment; and Training towards enabling us to recover from this period of sluggish growth and uncertainty. That mantra must now be upgraded to a symphony — with all its parts working in harmony to achieve the desired results of a strong and vibrant Anguillian economy. It is now our job —because we are the Government.
A number of persons have asked me the question: “Did the past Government leave any money behind?” The source of this question is two-fold. Firstly, because the past Government claimed that they met the Treasury empty upon coming to Office. And secondly, because elements of the same Government are now boasting that they left money in the Treasury.
We have no time for such frivolous debate. A vibrant economy earns revenue for Government — to provide for the needs of its people every single day. No new Government inherits money that has been sitting in the treasury waiting to be spent. The management of the economy is a fluid process, which is conducted over time — it is dynamic and therefore not measureable on a particular day.
Money in the bank is not yours — if you have bills to pay or outstanding checks coming in. Similarly, a Government boasting of reserves is mere vanity — if the bills owed exceed the reserves it is boasting about.
The truth is that Anguilla is really no better off today than it was five years ago — in a certain sense it is worse off — since the basic requirements of electricity and water for maintaining a modern existence are not readily available across our communities. And it is common knowledge that many families have suffered from the loss of jobs; businesses; land; homes; and other property and amenities for many years.
This situation is dire and is affecting the position of our indigenous banks — because many persons are unable to meet their commitments or avail themselves of the necessary financing support for their particular needs.
On my first day in the office as Minister of Finance I requested and received a report on the budgetary performance of the Government of Anguilla for the first quarter of 2015. The Ministry officials did a professional job in presenting the various elements of the budget giving me the full confidence that as far as the Government of Anguilla is concerned there is a positive correlation between Revenue and Expenditure.
To the naked eye things appear to be going well. That presentation showed that there was an overall surplus of EC$6.64 million as of April 23, 2015. But upon further analysis things are definitely not what they appear to be.
For example, the surplus or reserves of EC$31,029,396.90 at the end of the first quarter can be gobbled up in one fell swoop — if the deferred payments to public servants of almost EC$30 million and over EC$ 12 million owed to ANGLEC and other agencies are paid. That is a total of some EC$42 million — for emphasis eleven million dollars more than the reserves we are holding.
Furthermore, an analysis of revenue shows that a large portion of the increase in 2014 is made up of grants from the European Development Fund; the Caribbean Catastrophic Regional Insurance Fund (CCRIF) and DfID (Department for International Development). This is therefore not revenue from any positive economic activity. So while we congratulate the Ministry of Finance for balancing the Budget on paper, there is much cause for concern after further examination.
There has also been the view spread in the wider community that Anguilla no longer has any public debt obligations. In other words it is being said that over the last five years the past Government was able to completely eliminate our national debt. Unfortunately, the report from the Ministry of Finance on public debt shows a totally different picture. Instead of a reduction in Public Debt there is an actual increase over 2010 levels.
As of March 31, 2015, the total public debt was EC$212, 394, 390.78. ($33 million more than in 2010). In addition, because we are only paying the interest on EC$154,878,286.33 of that total amount — beginning next year we will need approximately EC$12 million dollars more each year when payments on the principal becomes due. In plain words, in addition to our normal commitments, in 2016 Government must raise one million EC dollars more every month just to service our loans.
There are also arrears in revenue collection of approximately EC$30 million — of which some EC$12 million is due to the Government’s position on the Cap Juluca issue. Checks from Cap Juluca have not been cashed over that period — yet the property has been operating in a state of flux for over two and a half years. The remainder of the arrears consists of property taxes; business licences; and accommodation tax.
The point must be made that while there needs to be improvement in the level of the arrears in these traditional areas — the impact of a lack of decision-making on Cap Juluca is both affecting the viability of that property as well as the ability of the Government to meet its budgetary commitments. Such shortfalls can have a multiplier effect on the fiscal situation. In the end requiring the population to pay even more taxes to adjust for such losses.
Another issue is that there has been no public sector capital development of any consequence in the last five years. To put it bluntly, the Government has not spent sufficient money on building roads; improving the quality of Government properties, including schools; repairing and improving port facilities; and developing the infrastructure capacity generally, to accommodate increased usage over time. The impact of not spending adequately on capital development in the short term is that in the long term it will be more expensive to address. Costing future taxpayers much more because of inflation and depreciation.
The result of all of these policies has been that there has been little or no growth in the economy over the last five years. The Gross Domestic Product (GDP) figures from the Anguilla Statistics Department and the ECCB shows that the growth rate progressed from minus 5.77% in 2010 to a projected positive 1.27% at the end of 2015. To put it clearer, the growth rate was negative up to 2013; less than 1% after 2013 and is now projected to reach just over 1% this year. These kinds of growth figures cannot lead to positive results for the wider community. I therefore totally disagree with the wholesale acceptance of the view that by balancing the budget and building up reserves — we can build a vibrant economy.
Taxation and expenditure management are only two sides of the development equation. That equation has many sides. And one of the most important is investment — be it local investment or foreign direct investment, both are critical.
We cannot be constantly talking about surpluses and reserves while people are losing jobs and business opportunities; banks are foreclosing on mortgages and people are losing their homes and property; the island is rationing water; there are many homes and families without electricity; there has been little in the way of infrastructure development for almost four years; and people are unable to meet their medical expenses. The island cannot be doing well no matter how neat the columns in our budget look when our people are experiencing these dire situations.
Neither should we put in place taxes that obstruct investment. The Interim Stabilization Levy is a case in point. Here we have a tax that punishes an employer for hiring additional staff and encourages him/her to keep wages low. The end game becomes that the employee suffers from a freeze or reduction in wages; the employer is reluctant to invest in further expansion of services; and the overall economy slows down. In the first place it is wrong to implement taxes that are inequitable and unfair and that is why our Government has pledged to repeal the Interim Stabilization Levy by the next annual budget.
Then there are the Statutory Bodies. Over the years either micromanaging by Government or the scarcity of competent Board members have created an untenable situation for achieving proper governance. This is reflected in the capacity of these institutions to deliver quality and professional services. Our Government is committed to ensuring that when persons get the opportunity to serve on Boards they also get the opportunity to advance their knowledge of the role they are expected to play. This knowledge can be useful for their personal development as well as in future appointments.
In keeping with this I have asked the President of the Anguilla Community College, Professor Louden to design a “fit for purpose” certification course for all persons who are appointed to Government Boards and Boards of Statutory Authorities. Once appointed as a Director or Board Member the appointee can at his or her own pace enroll in the program. After the first term such a person will not be considered for reappointment if he/she has not completed their Board certification.
The Certification course is not intended to be beyond the reach of anyone who has basic comprehension skills but will enable persons selected to serve on Boards to understand their duties and responsibilities. This initiative will not only improve the effectiveness of the members or directors but the overall efficiency of the various institutions as well.
Speaking of Boards, the Government has decided to make some early and sweeping adjustments to a number of Statutory Bodies, namely, the Water Corporation Authority; the Anguilla Air & Sea Ports Authority; and the Tourist Board. There is no question that all these institutions deal with extremely important aspects of life on Anguilla and have some urgent critical decisions to make. The Water Authority must deal with the serious lack of potable water island wide; the Port Authority must deal with pressing matters relating to port development; and there has been a total absence of clear leadership and direction among Government and quasi- Government Tourism Agencies — indeed there has been confusion.
There is also no question that adjustments to ANGLEC and the Anguilla Social Security Board will follow shortly. And we intend to make adjustments to other Boards as well paying close attention to proper procedures and the governing legislation. In some cases it may be prudent to revamp entire Boards. And we have every intention of doing so if it is necessary for the proper functioning of the Agency in question and in the best interests of the people of Anguilla as a whole.
The final issue I will touch on in this presentation is the situation with our indigenous banks. Since coming to Office the greater part of my attention has been spent in understanding this situation. This includes meetings with the Governor; the FCO; the ECCB; Senior Officials in the Ministry of Finance; my personal advisors; and talking to other interested parties and stakeholders.
Given the far-reaching consequences of not doing the right thing I must be very circumspect in treating with this issue. And while I fully understand the eagerness for information on this subject — one can run the risk of spreading misinformation in the process. Misinformation can be damaging to even the healthiest Bank.
I have informed the various players that for over eighteen months shareholders and customers have been kept out of the conversation. Anguillans have exhibited exceptional patience and tolerance. It is now time to allow them to have some input in the solution process. Such participation must be managed carefully with the proper protocols in place. We will find a way to ensure that such “restricted consultations” can happen.
But our Government’s responsibility is to find a solution that ensures the protection of the rights of all depositors and we are determined to achieve that even at a cost to Government. Secondly, our Government will only accept a solution that maintains local ownership in the indigenous banking sector. And finally, we must begin to discuss plans to strengthen the financial services sector as a whole bearing in mind that the world is watching how we handle these banks as well as their offshore subsidiaries.
I believe that this is more than enough for one sitting. So I thank you for your patience. My colleagues and I intend to use all available forms of media to communicate with the public. The challenges that I have outlined may seem daunting but we understand that they are what they are — and it is our task to fix them. We do not intend to look back — the way is forward and our success lies ahead.
May God Bless you all! And may God bless Anguilla!
(Published without editing by The Anguillian newspaper.)
