Given the Chief Minister’s decision to make his letter to the Prime Minister dated 30 October public, we have been asked to similarly make public Mr Duddridge’s letter of 6 November to the Chief Minister. This is in order to provide reassurance that the UK is ready and willing to continue to support the Government of Anguilla to progress bank resolution and economic development for the long term benefit of all the people of Anguilla.
– Press Release from the Governor’s Office
The Letter is as follows:
06 November 2015
Chief Minister of Anguilla
PO Box 60
The Secretariat
The Valley
Anguilla
British West Indies
Dear Chief Minister,
I am now back at work as Minister for the Overseas Territories and am keen to take stock of progress towards the resolution of Anguilla’s insolvent banks, and your medium term fiscal and economic plans. I have seen your undates letter about the goods pier in Anguilla, and your letter of 30 October to David Cameron.
I think we are agreed that our immediate priority must be the resolution of current banking sector problems in Anguilla in a way that ensures the continued operation of critical banking services. and takes account of the interests of all the people and businesses of Anguilla.
As you know there are a range of options for resolving the banks. The UK Government funded PricewaterhouseCoopers (PwC) to provide you with advice on the financial position of the banks and the range of resolution options in May. I understand that you have decided on a resolution in line with the approach propesed by the Eastern Caribbean Central Bank (ECCB).
The UK Government remains ready and willing to help you identify and implement an affordable and sustainable bank resolution plan within the currency union. We have not yet seen a full proposal from the ECCB, despite asking for it for some months. I understand that in September the ECCB estimated that in order to fund the losses in the banks the Government of Anguilla would need to issue a ten year bond for aroUnd EC$600 million, requiring the government to raise some EC$70 million on average over each of the next ten years on top of current spending plans. This seems to be in line with the figures you have recently given the public in Anguilla. I am also keen to understand plans for the appointment, accountability, and governance of the authority responsible for implementatioh of the resolution.
As you set out in your letter to the Prime Minister, it is the respohsibility of your government to make decisions on taxes and on spending priorities. The UK Government has no wish to take this over. It is for you to decide on the overall level of taxes and to balance competing spending priorities that Ahguilla can afford, including your wish to fund the losses of the banks. The UK Government, however, retains a responsibility for security and good governance, We therefore want to work with you to ensure your approach supports long term stability and prosperity for the Anguillian people To this end our Governments have already agreed a framework for the management of public finances and Anguilla has enacted th1s mto law. The framework sets out, among other things, prudent borrowing limits, and the need to obtain agreement from the Secretary of State to any new borrowing or financial commitments over EC$20 million beyond these limits.
In my absence you spoke to my Ministerial colleague Grant Shapps on 25 September and undertook to write within a week setting out your banking resolution proposals. You also undertook to send us, by the end of October, a draft medium term fiscal plan and a draft 2016 Budget, which will both need to take into account the full cost of the bank resol’ution. look forward to receiving these.
In your letter to the Prime Minister you ask for agreement to a US$35 million loan from the COB and also for issuing bonds of unspecified amount. I am reaay, in principle; to consider additional borrowing to enable you to implement an affordable and sustainable resolution of the banks but, as I am sure you will appreciate, I will need a properly casted proposal to consider. I will also want to ensure that suitable arrangements are agreed to strengthen public financial management in order to help you manage the challenges of an increased level of debt.
Equally, I and the UK Government want to continue to work with you to support economic development in Anguilla. Infrastructure UK recently concluded that there was a good strategic case for extending the runway. We are Willing to provide technical support for the development of a business case and procurement strategy on the basis that your government remains committed to the strategy recommended by Infrastructure UK. The UK has also been encouraging Anguilla to develop a strategy for fisheries development. I understand this is imminent, and my offieials will continue to work with yours t0 support the next technical stage. We are keen to assist and support you in possjble projects with the COB to repair the Road Bay Jetty and redevelop the BJo.wing Point ferry terminal if these are priorities. We.are also open to helping you to develop and broaden your economy in other areas.
I appreciate that this is a full and challenging agenda. I am willing to diseuss and work with you on an these important issues. Our conversations will, however, be much more fruitful if you and the ECCB are able to set out in writing the detail of’the banking resolution model you are proposing and how you propose to manage the costs of this within the Government of Anguilla’s Budget, over the next three years .and in the medium term.
I lopk forward to hearing from you soon, and to seeing you in London in December.
James Duddridge MP
Minister for Africa, the Overseas Territories, and Caribbean
