Borrowing

FCO Turns Down Anguilla Request to Extend Borrowing Limits. Well, we all heard Minister Banks speaking at the Chief Minister’s Weekly Press Conference this week. I cannot pretend to quote him exactly. However, he tells us in essence that the British turned down his plea to permit us to borrow more money. His proposal was that we be permitted to borrow a large amount of money to take us through the present recession.

We recall that just a couple of months ago the government persuaded the House of Assembly to approve issuing some $200 million in bonds. It was not so difficult to persuade the House. After all, of the 11 voting members of the House, only 2 are in Opposition. The British would be well aware of how farcical such an approval is.

Then our brilliant leaders discovered they needed Auntie’s approval to make the borrowing that had just been approved. So, off they went to London, expecting it would be a breeze. After all, everybody knows what good businessmen they are. How could anyone in London doubt the seriousness of their proposal? Especially when there are general elections due in six months’ time. Surely the politicians in London would understand the exigencies of the situation?

Well, there was just one question. How are you going to pay back the money you plan to borrow? You are not going to leave it to the British taxpayer to bail you out, are you? Oh, you have no plan! A hurricane may strike next month and set all your plans aside? Is that any reason not to have a plan for paying back the borrowing? Do you go to a bank to borrow and not come with a business plan showing how you expect to be able to repay? Is getting permission to increase borrowing any different? Of course it is not!

And, Hubert is so right. Government has just given away one of its main sources of revenue. And, apparently, to people who were not even asking for the gift. First, they announced that they were going to bail out Flag Luxury Resort by taking over the white elephant golf course in exchange for all the bed tax and aliens landholding revenue from that real estate development project. For the next thirty years! Then they announced that they will severely cut the taxes for Viceroy. Then, they will severely cut the taxes on real estate transactions with all foreigners until further notice.

Anguilla made its reputation as a destination of choice through its little up-market boutique resorts. We risked destroying that market by permitting mega-resorts like Flag and Viceroy. We said we were doing it for two reasons. One was we needed major new employers for our burgeoning population of school-leavers who were entering the work force. Secondly, we needed the revenue that the sales would produce. To hell with boutique and with up-market. It is a question of jobs.

Well, we permitted Flag and Viceroy to import massive amounts of cheap Asian ‘slave’ labour, resulting in minimal local employment. Then, we astonished them by gifting them with the opportunity to unload their over-priced units free of all sales taxes. Our explanation? We thought it was an excellent initiative to stimulate the economy!

No income. No ability to pay back borrowings. No way.