“I wanted to provide an update to my statement of 13 January, to explain in more detail some of the discussions and developments over the past three weeks.
The Government of Anguilla and the UK Government are continuing to discuss a number of important detailed elements of the resolution plans to ensure they are both affordable to the Government of Anguilla and sustainable.
Since 13 January, there have been a number of meetings between the Anguillian and UK Governments, the majority also involving the ECCB, IMF, and Caribbean Development Bank; many more emails have been exchanged. Attention continues to be focussed in three areas:
• how best to support the growth of the Anguillian economy alongside the Government of Anguilla’s plans for returning to compliance by 2025 with the borrowing limits set out in the Fiscal Responsibility Act 2013;
• considering what arrangements might be introduced to strengthen public financial management to help manage the challenges of an increased level of debt; and
• arrangements relating to the appointment, accountability and governance of the organisations implementing the resolution, such as the new bank and the Asset Management Corporation;
Let me say a little more about progress on each.
Expenditure plans to grow the economy and meet debt obligations: The Government of Anguilla shared with the UK Government, on 20 January, outline plans for future revenue and expenditure through to 2025. This included the expected costs of servicing the debt arising both from the resolution of the banks and earlier CDB borrowing. This has helpfully clarified the Government of Anguilla’s plans for taxes, public services and future spending to support economic growth, including possible support from the UK to help deliver capital investment plans. The Chief Minister set out the case for the UK to provide economic support to Anguilla in his letter of 30 October to the Prime Minister. The UK wants to continue to support Anguilla’s economic development and UK Ministers are urgently considering how this is best achieved.
The Government of Anguilla has long committed to restoring and maintaining fiscal stability and achieving growth and budget surpluses. A key part of delivering that will be ensuring suitable arrangements are in place to strengthen public financial management to help manage increased levels of debt. As the Anguilla United Front’s manifesto recognised, that will require reforms in a number of areas of policy. The issue gains further potency if UK Ministers are to be persuaded that any UK taxpayers’ money also invested in Anguilla will be effectively used. For that reason, UK and Anguillian officials are discussing what an ambitious list of economic reforms might be, perhaps along the lines of equivalent strategies the IMF have agreed with countries it has assisted. The UK is ready to provide a financial adviser to support the Chief Minister and his team deliver their ambitious reform programme within the fiscal framework agreed with the UK.
Governance of new bodies: Finally, it is important that the board of the new bank is provided with a robust governance framework so that it can provide strong professional leadership, and ensure its transparency and accountability.
The Government of Anguilla will need to manage its shareholding in the new bank on behalf of all the people of Anguilla. Executive Council needs to establish a robust arm’s length relationship that sets the Board clear objectives and delegates to them responsibility for delivery. For its part, the Board must include some individuals with proven banking experience able to carry out the fiduciary and legal obligations of board members of an internationally active and strictly regulated bank. The Board also needs the assurance that it will be safeguarded from undue day-to-day operational interference from outside, for example in terms of who it wants to employ. So the bank ‘by-laws’, which will set out how the various players will act, and how responsibilities should be safeguarded, are important documents. The Board also needs to agree a credible business plan in order to enable the Caribbean Development Bank to provide the proposed loan for bank recapitalisation.
The proposed Board members have in the past three weeks made good progress on preparing a draft business plan for the bank, which is under discussion with the ECCB and CDB. The Government of Anguilla has reiterated their commitment to the privatisation of the bank as soon as practicable. The UK Government has made an offer to fund technical banking assistance for the Board. Government of Anguilla officials are currently considering possible amendments to the standard by-laws. This is all welcome progress.
The UK is continuing to discuss with the Government of Anguilla, IMF and ECCB the arrangements for the proposed Asset Management Corporation. How this resolves outstanding non-performing loans will be an important issue both for those borrowers in default, and for Anguillian taxpayers.
As a result of all these continued discussions, I have still not assented to the Appropriation Act or the Banking Acts. Government of Anguilla spending is continuing under a provisional warrant, as allowed for under the Financial Administration and Audit Act 2010. Once again, I apologise for the continued inconvenience this may be causing in some areas.
I continue to recognise the ongoing concern of the public to see tangible progress. I therefore warmly welcome the recent constructive collaboration. I am hopeful that substantial further progress can be made in the coming fortnight.”
Christina Scott
Governor of Anguilla
3 February 2016
(Published without editing by The Anguillian newspaper.)
