UK Proposes Loan Guarantee For TCI

by Phillip Morton, Investors Offshore.com

08 February 2011

The UK government has announced that as part of its temporary control of the Turks and Caicos Islands – triggered by allegations of systemic corruption - it will provide a loan guarantee of up to USD260m to enable the stand-in government to repair its tattered finances.

The guarantee will allow the government, led by the newly appointed Governor of the Turks and Caicos Islands, Gordon Wetherall, to receive financing from local banks, expected to amount to USD260m over a period of five years, at below the otherwise applicable interest rate. The funds will be used to settle outstanding debts inherited by the new government.

The government is tasked with overhauling the island's fiscal regime to establish it on a sustainable footing, eventually achieving a fiscal surplus in the financial year 2012/13. The UK government has previously said that elections, to return the islands to localized governance and fiscal autonomy, would only occur after fiscal discipline had been restored.

Welcoming the arrangement, which is to be tabled before the UK parliament on February 17, Wetherall was quoted by a local newswire, FP Turks and Caicos, as saying:

“Securing commercial lending would be a vital step for the Turks and Caicos Islands. It would provide the time we need to rebuild financial stability and balance the budget. This guarantee would form an important step in our financial plan, and will help the achievement of key milestones that need to be reached before a date for elections can be set.”

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