4 October 2017
Lord Ahmad of Wimbledon
Minister of State for the Overseas Territories
Foreign and Commonwealth Office
King Charles Street
London
SW1A 2AH
Dear Lord Ahmad,
ANGUILLA- HURRICANE IRMA UPDATE & REQUEST FOR ASSISTANCE
1. On September 5 2017, Hurricane Irma impacted Anguilla as a category 5 hurricane with wind speeds of over 185 mph. Unfortunately, and regrettably, one life was lost and there is widespread infrastructural damage to utilities, Government assets and community services buildings, private homes, businesses, agriculture, natural resources and tourism properties. Activities are ongoing to clear the access of public roads and to restore electricity, water and communications services as well as the ongoing provision of relief supplies to the large numbers of affected persons.
Attached is the CARICOM Disaster Assessment and Coordination Report carried out by the Caribbean Disaster Emergency Management Agency (CDEMA) for your review. Also note that UN ECLAC will be on the ground to undertake an assessment using the Damage and Loss Assessment (DaLA) Methodology, expected to commence October 15th and will cover sectoral impacts and overall impacts on GDP.
2. The Government of Anguilla wishes to extend its gratitude for the swift response from the UK Government to date as seen in the dispatch of ships and aircraft with supplies and the deployment of soldiers and other key personnel to support the recovery and offer key assurances of future assistance.
3. To date Anguilla has also been able to secure its insurance payout from the Caribbean Catastrophic Risk Insurance Facility (CCRIF) in the amount of EC$18m/£4.9m, a grant from the Eastern Caribbean Central Bank (ECCB) in the amount of EC$1m/£276,494, an emergency response grant from the Caribbean Development Bank (CDB) in the amount of
4. US$200,000/£150,241 and a donation from the Government of St Vincent in the amount of US$50,000/£37,560. We would be grateful for any details or requirements necessary to access any similar emergency grant facilities from the UKG i.e. via CSSF as well as opportunities to access financing in the area of climate and disaster resilience.
5. Prior to Hurricane Irma Anguilla’s infrastructure needs were many, and were well documented in the Government of Anguilla’s repeated requests to the UKG for a substantial envelope of multiyear support for capital development. This situation has been exacerbated and further highlighted with the ultimate failure of prominent structures – Government offices, ports, schools, hospital and clinics that were inadequate, often from the damage of past hurricanes, but are now rendered unusable as a result of the impacts of the storm. Anguilla’s vulnerability in the area of access was also highlighted with damages to both ports of entry and also to those of neighbouring islands making regional and international travel connections impossible.
6. Fiscal challenges were also a reality prior to Hurricane Irma with underperforming revenues, cuts in expenditure and constrained capital expenditure. The Government of Anguilla’s approved recurrent budget for 2017 anticipated recurrent revenue collections at EC$214.90m, recurrent expenditure of EC$211.96m and a recurrent surplus of EC$2.94m. Almost mid-way through 2017, the budget forecast was revised given month months of actual data on collections and expenditure. The June Revised forecast projected recurrent revenue to be EC$206.72m, recurrent expenditure at EC$198.88m and a revised budget surplus of EC$7.84m. At the end of August -mere days before Hurricane Irma- the recurrent accounts were in a position of EC$18.17m surplus, significantly above the period estimate of EC$5.42m.
7. By all indications, the 2017/18 Tourism Season which runs from November 2017 to April 2018 will be lost as most of the tourism properties, including the top 5 largest properties, are unlikely to be open for the season (Cap Juluca was already due to remain closed for major renovations).
Tourism being Anguilla’s main source of economic activity, accounting for about 80 per cent of GOP when all impacts are included (direct, indirect and induced), the closure of the hotels will have a “negative multiplier” effect on the economy. Technical officers in the Ministry of Finance have estimated that as a result of the impact of Hurricane Irma there is likely to be significant revenue shortfall resulting in a recurrent deficit of EC$16.5 million. When capital account transactions and debt amortization transactions are included, the projections are for a deficit on the overall balance of EC$45.35m (see Projected 2017 Fiscal Outturn matrix attached). Financing this deficit means that fiscal reserves which stood at EC$15.9m at the end of August are likely to be exhausted by November. Indeed, approximately EC$6.9m in reserves were used to meet direct GoA expenditure for September as well as to pay subventions to statutory bodies such as the Health Authority and the Community College. It should be noted that one of the impacts of Hurricane Irma was to cause the suspension of the GoA Anglec share sale, proceeds of EC$23m were earmarked to be used for debt amortization. While forecasts for 2018 are still being formulated the initial indications are that GoA is again likely to face a recurrent and overall deficit for that fiscal year.
8. Overall, the damage and losses to Anguilla are so severe that it will require financial assistance from the UKG as Anguilla’s administering power in the short to medium term if we are to protect jobs, livelihoods and incomes and prevent a fullscale economic and social crisis. Indeed, our mind set is to turn this negative into a positive by securing for Anguilla the economic and social infrastructure required for sustainable development. We therefore table the following for the UKG’s consideration.
9. Recurrent Budget Grant Support
In light of the anticipated budget shortfalls, GoA is requesting that the UKG provides a recurrent budget support line to Anguilla as the need arises over the next 12 to 18 months.
11 Capital Budget Grant Support
Renovation and Reconstruction of Homes: UKG to provide grant funds to enable GoA to in turn provide grants to persons who are not financially able to renovate and reconstruct their homes. UKG to also provide grant funds to enable GoA to provide a capital injection to the Anguilla Development Board (ADB), which in turn loans funds at concessionary rates to enable persons to renovate and reconstruct their homes.
Social Infrastructure: The six Government Primary Schools and the Secondary School were damaged and in some cases will have to be completely rebuilt. This is a high priority area, as the aim is to have the rebuilt schools ready for the start of the 2018/2019 academic year. The Government Hospital was also damaged and this served to highlight that this facility has served its useful life and needs to be replaced by a modern fit for purpose facility.
Small Business Support: UKG assistance is requested to provide a grant to GoA to provide capital injection to ADB to provide loans to small businesses to repair and reconstruct their facilities and to replace inventory lost.
Economic Infrastructure:
Electricity Distribution -the Anguilla Electricity Company, which is majority owned by GoA, suffered extensive damage to its transmission and distribution network. In fact it is estimated that it will take up to six months to fully restore electricity throughout the island. With hurricanes such as Irma expected to become the norm rather than exception it is prudent that if Anguilla is to rebuild stronger and more resilient then an assessment be made of the costs of putting electricity in key areas underground. GoA is therefore requesting UKG grant assistance to conduct the assessment and to help fund the required investment.
Sea Ports Development – In 2016 the UKG pledged to provide capital grant assistance to GoA to construct a new cargo pier at Road Bay. Due to the passage of Irma and other reasons progress with this project has been delayed. GoA is requesting that these funds be carried over so that Anguilla can benefit from this project which is crucial to ensuring that Anguilla’s only port of entry for goods is up to the requisite standard and requirements. Blowing Point Port which is the main gateway for Anguillians and tourists to the island, suffered the loss of the terminal facility which again had outlived its useful life (CDB Board had approved the BPP Ferry Terminal Loan in 2008 but UKG disallowed due to the impact of the 2008 global financial and economic crisis) .
Airport Development – Prior to the passage of Hurricane Irma I had made the extension of the runway (along with support terminal and other facilities) at the Clayton Lloyd Airport a priority with the view of enabling Anguilla to have a more robust tourism economy. This question of adequate air access to Anguilla has been thrown into sharp relief as Anguilla’s primary hub, Princess Juliana International Airport in neighbouring Dutch St Maarten, has been closed since the passage of Hurricane Irma and is expected to remain closed for some time. GoA is therefore requesting UKG grant assistance to extend the runway at Clayton Lloyd Airport to a length that will support and enhance Anguilla’s immediate national security needs, enhances Anguilla’s growth prospects and reduces Anguilla’s over reliance on its neighbours for economic security. Also, as an intervention in the immediate term the GoA would be grateful if the UKG can give consideration to financing the 2017 costs of the ongoing Air Traffic Control and Fire Hall project at the Airport (UKG funded the costs of this project up to 2016 and GoA had requested continued assistance in 2017 but this was declined).
Road Development – since 2008 GoA has had in place a Master Plan for the Valley Roads Project which was the subject of an UK FCO funded “value for money assessment” in 2012. However, this project has been continually deferred because lack of resources. Proceeding now would allow the Valley Town to have this crucial infrastructure with the added benefit of putting in the requirements for underground electric cable.
Reconstruction of Government Office Accommodation – a number of Government buildings including the Governor’s Office Complex (which seats Executive Council Chambers}, the Police Headquarters and the complex housing the Anguilla House of Assembly and Courts have been damaged extensively. This provides the opportunity for Government to do a comprehensive masterplan and development of modern office accommodation to optimize productivity and reduce costs- currently Government rents a number of private facilities which adds to its recurrent costs.
Replacement of the Vehicle Fleet – GoA’s Vehicle Fleet already woefully inadequate and outdated suffered extensive damage as a result of Hurricane Irma.
12. Lord Ahmad, the areas mentioned are not an exhaustive list of what is required to put Anguilla on the path to sustainable development. And though a proud people whose natural inclination is to pull ourselves up by our own bootstraps, we recognize that there is no shame in asking for assistance, especially at a time like this. We stand ready to have discussions with UKG officials to agree a package of assistance for Anguilla to be provided over the short to medium term. In this regard we were heartened by the expressions of support provided by Foreign Secretary Johnson and Dfid Secretary Patel when they visited in the immediate aftermath of Hurricane Irma and look forward to the concrete realization of such pledges. We think that this is an opportune time for the GoA and the UKG to agree on the future of Anguilla and with a crucial element of this being the input of Anguillians to be derived from the Long Term Sustainable Development Plan consultation process. Not to preempt but it would seem that key principles of the Vision for Anguilla going forward would be to build an Inclusive, Resilient, Green and Smart Economy.
Your Sincerely
Victor Banks
Honourable Chief Minister
cc: HE Governor, Tim Foy
