Opposition Slams Handling Of BVI Public Finances

by Amanda Banks, Tax-News.com, London

20 March 2003

Presenting this year's budget to the Legislative Council, British Virgin Islands' Chief Minister and Finance Minister, Ralph T O'Neal, said that the BVI is faced with a challenge in which 'developmental commitments and aspirations demand the generation of greater revenue flows to continue to fund . . . sizeable infrastructural and social projects'.

The 2003 budget estimates revenue collection of $197m, made up of recurrent expenditure of $169m and capital expenditure of $27m; in 2002 the government incurred a deficit of $11m on expenditure of $186m when revenues fell short of estimates by $29m.

The Chief Minister said that the administration had taken a conscious policy decision to ensure that the local economy would not contract to the point of collapse, but that if the BVI was to begin the process of securing the future of its residents, government must vigorously pursue a system of fiscal reform that emphasizes best practices appropriately buttressed by modern financial administration legislation. He said the government must deepen the revenue base of the BVI's economy while continuing to explore ways of conducting the affairs of the country in greater transparency while respecting individual privacy.

Chief Minister O'Neal said the public debt stood at $90m, with a debt service ratio of 4.3%.

During a debate, the budget and economic policies of the BVI government were severely criticised by Opposition leader Dr D Orlando Smith, who charged that the administration had been negligent in its handling of government expenditures, citing un uncompetitive public bidding process and major public projects over-running.

Smith pointed to the lack of proper sewerage facilities in some communities, over-crowding in classrooms, an unfurnished hospital and an apparent overrun in time and cost of the Beef Island bridge as examples of the Chief Minister's economic shortcomings. He also argued that the government has recognised the need for fiscal prudence far too late in the day.

“For months we have spoken the plain truth that in a declining economy it was necessary to spend our public money more carefully,” said Smith in his budget response. He also warned that the territory must not become too reliant on its tourism and financial services sectors. "And we called upon the government to invest in our people, support local businesses and farmers and expand our economic base so that we would not stand or fall solely on the twin pillars of tourism and financial services,” the opposition leader added.

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