Crisis

Government is to be commended on sharing this information with us. Our previous experience of government's handling of our money was that they would tell us, “It is none of your business”. Hopefully, they will keep it up.

It paints a stark picture.

“STATEMENT ON FISCAL POSITION

March 12, 2010

As a follow up to the presentation made by the Ministers of Government on the 11 March, 2010 please find following a release of the Fiscal Position as at December 31, 2009 and current.

Recurrent Revenue

At December 31, 2009 recurrent revenue collections totaled EC$145.65 million.  This represents a 30% decline from 2008 recurrent revenue collections of EC$203.74 million.  To put the situation truly into context, 2009 recurrent revenue collections were not only lower than 2008 but lower than 2007 and 2006 collections as well.  Consequently it is no exaggeration to say that recurrent revenue situation in Anguilla has been set back 5 years.  Key revenue heads such as Customs Duty Other, Stamp Duty and Accommodations Tax were down by 33%, 54% and 25%, respectively from 2008 collections.  It should be noted that revenue collections of EC$246.92 million was budgeted for 2009.

Recurrent Expenditure

Recurrent Expenditure for the year ending December 31, 2009, on the other hand, was EC$204.17 million, marginally lower than recurrent expenditure of EC$206.87 million in 2008.  A retrenchment in public sector salaries and wages and a partial freeze on hiring were key to cutting expenditure from the budgeted amount of EC$241.81 million for 2009. 

It should be noted that there were some EC$14.25 million in unpaid invoices as at the end of December 31, 2009 which will be accounted for in 2010 as they are paid.  These include:

1. 
   
   Anguilla Social Security Board: EC$6.88 million (Benefit Contributions)


2. 
   
   Civil Service pension Board: EC$1.57 million (Pension Contributions)


3. 
   
   ANGLEC: EC$1.32 million

Recurrent Balance

The recurrent balance, which is the difference between recurrent revenue and recurrent expenditure, for 2009 was a deficit of approximately EC$58.52 million.  This translates to an average monthly recurrent deficit of just under EC$5 million.  This is clearly unsustainable.

Capital Expenditure

In terms of capital expenditure this was approximately EC$10.58 million, a fraction of the EC$98.12 million budgeted for 2009.  The Capital Budget bore the brunt of the austerity measures imposed by Government.

Overall Balance

Given the situation with respect to the recurrent and capital accounts Government’s overall balance for 2009 was a deficit of EC$69.10 million.  This deficit was partially financed by the drawing down of Government’s fiscal reserves in the amount of EC$39 million.  The remaining deficit was financed by borrowing from the local and regional banking system. 

As a result of the deficit on Government accounts Central Government Debt increased to approximately EC$172.1 million in 2009, up from EC$149.65 million at the end of 2008. The government has found itself in a position where it has been borrowing money each month since October 2009 to fund Civil Servants salaries and other obligations. This practice is unsustainable and cannot be continued indefinitely. This will even prove to be more difficult because of the financial crunch where Banks and other lending institutions are finding it difficult to lend to government because of liquidity issues and the borrowing guidelines that the British Government has agreed with the Government of Anguilla.

The current Fiscal Position as at March 11, 2010 is as follows:

• 
  
  Overdraft position: deficit of EC$13.7 million


• 
  
  Payables: Unpaid bills: EC$16.3million

The financial position will temporarily improve with a grant of approximately EC$16 million expected from European Development Fund (EDF 9 4^th Tranche). These funds will be used to repay a short-term loan of $12m from Eastern Caribbean Central Bank which is due and payable by April 1, 2010.

The Caribbean Technical Assistance Centre (CARTAC) has been providing ongoing support to the Government of Anguilla in a number of consultative and training initiatives. As part of this support the government is benefiting significantly from the expertise of Economic Consultant Dr. Eliahu S. Kreis who has been in Anguilla from 28 February, and leaves on 18 March 2010. He has been working with technical staff in the Ministry of Finance assisting with GDP and Fiscal projections for the period 2010 to 2014.

As a result based on the data compiled it is projected that revenue for 2010 will be approximately $148M while expenditure is expected to be around $237M. This will result in a recurrent deficit of over $89m. Therefore, the Government of Anguilla will have to limit its Capital Expenditure significantly which is normally funded by a recurrent surplus.

With this revelation the Government of Anguilla will have to find ways and means to narrow the gap between expenditure and revenue as the Ministry of Finance puts together the budget for 2010. The Government of Anguilla has been operating on a Provisional Budget in the absence of an Approved Budget for 2010. This arrangement cannot continue beyond 31 April 2010. However, the Ministry is confident that a budget will be finalized before the deadline. The gloomy position that government has find itself in means that serious measures will have to be implemented in order to stabilize the deteriorating financial position of the government.

Both Permanent Secretaries in the Ministry of Finance have been mandated along with other technical staff to put together a recovery plan that will assist the Government of Anguilla in closing the Gap identified. This will be completed in a short period of time in order to be reflected in the 2010 budget. When the recovery plan is completed the General Public will have an opportunity to review it.

One of the main revenue generators Customs Duty has experienced a leakage of over $ 113 million for the period 2005 – 2009. Government has therefore committed to the implementation of a new policy to address this practice.

Every effort will be made to cut out all wastage. In addition, the following areas have been identified and are being considered for review.

• 
  
  Rental agreements for office accommodation


• 
  
  Allowances


• 
  
  Freeze on hiring of new Staff


• 
  
  Redeployment of staff as oppose to hiring of new staff


• 
  
  Reduction in Electricity usage


• 
  
  Limiting the use of Governments vehicles after working hours


• 
  
  Training


• 
  
  Duty free concessions


• 
  
  Overseas travel not funded


• 
  
  Restructuring of Boards and Committees


• 
  
  Contributions


• 
  
  Roadside cleaning


• 
  
  Temporary staff


• 
  
  Contracts


• 
  
  Restructuring Debt

At this time an immediate cost saving initiative has been implemented with the retrenchment of Special Assistants, Advisers and Consultants that will result in savings of over $2m dollars. However, in the future consideration will only be given if absolutely necessary to persons with the technical expertise to contribute to the development of Anguilla in a meaningful way.

The new administration has committed to a consultative and an open approach in a spirit of cooperation with ministries and the general public. As a result the Ministry of Finance, welcomes any suggestions and ideas that the General Public can contribute that can positively impact the development of Anguilla.”

Borrowing $89 million to bridge the gap is clearly out of the question. No one would be so stupid to lend us that kind of money. Raising $89 million in additional revenue is impossible. We can't grow our economy before the end of the year, with the best intentions in the world. With the inevitable litigation that will follow, it could be two years before any compulsory acquisition of Flag could result in new funds flowing. Saving a few dollars by cutting Boards and rent is essential, but is not going to carry us far.

It seems to me to be inevitable. There will have to be major cuts in the establishment, and all public servants will have to accept major salary reductions.

Taxing

The big question is, will Alan Roe’s visit to Anguilla result in increased taxation?  The short answer is that, if it does, it will have to be imposed by us, implemented by us, and paid by us.  Of course, he might well make recommendations for removing some taxes, as well as bringing in others.  Hopefully, we will get to see his report at some early point, ie, if the Government of Anguilla puts it on its website, like the Turks & Caicos government already did.  I believe that Governor Harrison has the right ideas about transparency.  Hopefully, it will be up to him whether the GoA goes public with the draft report.

Even then, Mr Roe’s output will only be a set of recommendations.  They will not be binding.  It will be for the politicians and their technical staff to decide whether his report should be implemented. 

Whatever changes he recommends, would it not be better to collect what is out there first?  We know that many residents, local as well as non-local, have been evading existing taxes for years.  Over the past 25 years, the preferred way of doing business in Anguilla has been to encourage the employment of local fronters to negotiate exemptions from taxes on the basis that they were “local” businesses.  Every sort of enterprise in Anguilla was available, if the price was right and so long as the privileged few got their share of commissions and the famous “ten percent”.  Social Security contributions, accommodation tax, property tax, customs duties, planning prohibitions, hospital bills, electricity bills, and water bills, were all ignored with impunity on the basis that the Anguilla Government would not “criminalise” the ordinary Anguillian.  Who knows, but there may be tens, perhaps hundreds, of millions of dollars in uncollected revenue out there waiting for an efficient collector to come along.

Whatever new taxes are proposed, they better be cost-efficient.  No point in proposing to raise $100 if it costs $200.00, or even $50.00, to collect.  Income tax and company tax would be subject to the problems of all small-island economies.  The tax inspector and tax collector would be a family member or friend of the tax payer.  With no audits required in this economy, everyone will lie.  Those who can shift their income overseas will do it.  Less cash will circulate, and the economy will shrink. 

What about rationalising revenue heads?  Out of the 150 existing ones, only about 5 of them bring in 90% of all GoA revenue.

Will imposing a Value Added Tax really encourage Anguillians, as has been suggested, to go to St Maarten and buy there in order to bring in the stuff duty-free?  Given that merchants will have lower landing costs (if Customs Duty is removed at the time VAT is introduced), there should not be such a major increase in the sale price of goods as to make overseas purchasing worthwhile for the average household.  Of course, we cannot see the guys selling BBQ food in The Valley charging 17.5% tax, nor the fishermen. 

If our revenue depended on taxing businesses like those we would be in really serious trouble. 

Revenue

Anguilla Revenue Study.  This is the point at which we Anguillians have to pay for our government's excesses over the past couple of years.  I understand that our public debt now exceeds EC$200 million.  Now, it has been revealed that one Mr Alan Roe, an Oxford Management Policy Consultant, is coming to Anguilla to study our economy and finances and to make recommendations as to how we are to improve our revenue to meet our bills.  Our agreeing to this exercise, you will remember, was a condition that Minister Chris Bryan laid down for permitting our Ministry of Finance to borrow more money.  Mr Roe is a former World Bank economist, and a lecturer in economics at Warwick University.

I see from his Itinerary that Mr Roe is arriving on 29 February.  I hope the relevant officers of the Ministry of Finance do not do all their counting in this way!

The most scandalous situation exists in the area of property tax and hotel accommodation tax.  Will Mr Roe be successful in impressing on us our need to pay our taxes?  Or will we continue our historic path of habitual tax evasion?  Would someone please remind Hubert what he is supposed to do now that he is in government?  There is no excuse for his continuing to refuse to pay his property tax.

My contributions to Mr Roe's exercise are as follows.  Now that the accounts are all computerized, and since government does not have to pay for postage, would it be such a problem for the various government departments that collect revenue to send out a reminder or bill to all taxpaying citizens at regular intervals?  I know that governments do not usually remind people of their obligation to pay, but is it so difficult to organize?  I never remember that I have not paid my property tax until later in the year when I am writing up my accounts and find that column empty.

       Can I suggest that he recommend that we begin to move to a value added tax system?  It would be relatively easy to introduce VAT for services.  All of the major service providers in Anguilla have computerized accounts.  We do not pay income tax.  It would be comparatively easy to introduce and to enforce a 20% tax on all services.  Small tradesmen will be able to evade the tax comparatively easily, but not the major ones whose accounts are computerized.  We could continue for the present to pay customs duties on imported goods until we have developed the expertise to replace customs duties with the VAT.

Anyway, now we know that Victor did sign an agreement with the British to engage in this study in exchange for them permitting him to borrow for the elections!  That is how he was able to pay some of our bills last month.

Related posts:

Approvals –           4 September 2009

Green light -          23 September 2009

Income tax -          27 September 2009

FCO Response -      2 October 2009

Borrowing still

Did Anguilla really need to make this borrowing?  There is an interesting question and answer exchange in the House of Lords concerning Anguilla in this morning’s sitting.  Lord Jones of Cheltenham, a Liberal Democrat peer, had posed the following written question to the British Labour Government:

To ask Her Majesty's Government why the Government of Anguilla have not received their European Development Fund tranche 3 payment, due by 31 December 2009; and what steps they are taking to ensure it is paid.

Baroness Kinnock of Holyhead, a Labour peer, responded:

The European Commission has authorised the disbursement of funds for Anguilla's third tranche of budget support under European Development Fund (EDF) 9 for €2.31 million. Anguilla should receive the funds shortly. There is no set timetable for the disbursement of EDF. Overseas Territories can request disbursement of each tranche of funding once they have implemented the conditions set out in the financing agreement between the European Commission and the territory. Although Anguilla's original request was sent in April 2009, the Commission did not receive all the associated paperwork from Anguilla until early January 2010.

The Minister for the Overseas Territories wrote to the Commission in July 2009 noting the delays in the disbursement of funds under EDF and urging the Commission to expedite their assessment of funding requests. Officials remain in regular touch with the Commission about the disbursement of funds.

Personally, I find this response very revealing.  It would appear that we had applied for this third tranche of €2.31 million in April 2009.  That is nearly a year ago.  It then appears that we failed to complete the associated paperwork until early January of this year! 

That extraordinary delay suggests to me that there is perhaps nothing urgent about this borrowing.  However, I did a search of The Anguillian to see if there was a recent reference to an EDF loan.  I came across an article in the issue of 14 September last.  It appears to explain what this loan is all about.  It reads in part:

Perin Bradley, Trade and Investment Officer, who spoke on the Government’s financial options on Friday, said the loan of 49 million dollars which was being sought, was intended to pay the Government’s overdraft of 20 million dollars, take care of some other debts, top up the reserve fund and pay outstanding loans owed to CCB and NBA to the tune of 7.4 million. He said a 20 million dollar loan from the Eastern Caribbean Financial Holdings would be used to finance the required safety end at the airport and the balance of 24 million, from the European Development Fund, would go towards the Government’s reserves.

The article does not explain which institution is granting us a loan of EC$49 million.  However, it is clear that the EDF loan is intended to go towards the Government’s reserves.  That is very vague, so vague as to be meaningless to a mere layman like me.

There is an interesting little side play here.  A British Liberal Democrat peer living in England is not likely to have such familiarity with Anguilla’s financial affairs to be able to ask such a question on his own initiative.  I surmise that some Anguillian politician who has become acquainted with Lord Jones prevailed on him to ask the question in an attempt to embarrass the Europeans into hurrying up the funding.  The reply of the Labour Peeress ensured, ever so politely, that the embarrassment fell squarely where it belonged: on the Anguilla Ministry of Finance which had apparently failed to send off the required paperwork to comply with the EDF requirements for disbursement.

Are you, look a wuk!

Releases

 The battle of the press releases?  The controversy highlighted in my post of yesterday continues in the press and on the airwaves.  The Minister of Finance of Anguilla was on Radio Anguilla at 9:00 pm and again at 10:00 pm last night attempting to explain away his embarrassment.  What appears to be indisputable is that the Eastern Caribbean Central Bank has lent the Government of Anguilla the princely sum of EC$12 million.  That should be just sufficient to restore the recent cuts made to public servants salaries, and to pay a double salary in time for Christmas.  The doubt lies in the circumstances in which the loan was made. 

According to the GoA press release, the government of Anguilla has never approached the government of Dominica for a loan or gift at any time.  That blanket denial would include a refutation that the GoA ever asked the GoD to extend some of its credit with the ECCB to Anguilla.  Our position is that the PM of Dominica has made an unfortunate claim.  Chief Minister Osbourne Fleming has contacted the Governor of the Central Bank, Sir Dwight Venner, and requested that he ask PM Skerrit to retract his statement.  Here is the Anguilla press release in full

Dominica has issued a press release attempting to clear up any misunderstanding over what PM Skerrit said.  It has explained that Dominica has not borrowed any funds from the ECCB for the past 5 years.  Dominica therefore has a credit with the ECCB to the tune of EC$89 million.  Anguilla, by contrast, had utilized all of its credit with the ECCB and could not borrow any more.  Dominica, therefore, last week gave Anguilla $12 million worth of Dominica’s credit.  The Dominica Minister of Finance, presumable at the request of the Anguilla Minister of Finance, had to give his consent in writing to this transaction.  So, the PM was not incorrect in stating that Dominica had helped its sister island of Anguilla.  He was merely speaking off the cuff, and may have used the wrong technical jargon.

Here is part of the Dominica press release:

Now, it will be obvious to a child that these two press releases cannot both be correct.  Either Anguilla went cap in hand to Dominica to extend some of its credit to Anguilla, or that is a complete falsehood. 

It will be interesting to see who has to apologise to whom.

Dominica

Just last week Dominica gave $12 million to Anguilla?  It is general elections time in the Commonwealth of Dominica.  So, you cannot believe everything you read in the Dominica newspapers at this time.  What I read with a degree of astonishment and disbelief in the Dominica News Online was that Dominica, one of the poorest countries of the Commonwealth Caribbean, has just “given” Anguilla $12 million out of its hard-earned savings and out of the goodness of Prime Minister Roosevelt’s Skerrit’s heart.  Dominica in 2006 is reported to have had a GDP per capita of $4,758, while Anguilla’s was $8,310.00.  You would not easily have concluded that Anguilla could be helped financially by Dominica.

These reverse alms from the poor man to the rich man would be an outrage against common decency, if the story were true.  The people of Dominica need schools, hospitals, roads, and libraries.  Would the outgoing Dominica government, struggling to be re-elected, take its hard-earned savings and loan them to Anguilla, with a significantly higher per capita GDP?  The Chief Minister not long ago was boasting that he was the highest paid head of government in the OECS.  Why would poor little Dominica do such a thing for Anguilla?  Would their government, going into a general election, draw down funds from the ECCB, that it could well use for the development of Dominica, to bail out the government of Anguilla?  I cannot readily believe the story to be true.

PM Skerrit jokingly says that he “gave” the $12 million to Anguilla.  He must be very confident of his support by the electorate in Dominica to have made such an irresponsible assertion.  We have to assume that he is conspiring with the government of Anguilla to hide from the Central Bank the fact that he is merely loaning, not giving, the money to Anguilla, a country that has exceeded its borrowing powers, and is unable itself to make this borrowing.  It is amazing that he can be so confident that the people of Dominica will really be happy about such a state of affairs.

Yet, you can listen to an audio recording of PM Skerrit making just that claim right here:

As usual, it was a pleasure to tune in to Haydn Hughes’ call-in radio programme On the Spot last night, which dealt with this news.  Independent candidate Sutcliff Hodge was one of his guests.  Their discussion was pretty thorough, but I thought they missed raising a couple of important points.

If this was a loan, was it authorized by a Resolution of the Anguilla House of Assembly, as provided for in the Financial Administration and Audit Act?  Why is this Resolution important?  Because this is the mechanism designed by law to ensure transparency in public borrowing.  This is how the people consent to government borrowing money that we, the people, will have to repay one day.  The government of Anguilla is prohibited by law from borrowing any money that has not been authorized by the House of Assembly.  This is what section 38 says:

Authorisation of debt

38. No money shall be raised on the credit of the Government except under the authority of this or another Act of the Legislature or of a resolution of the House of Assembly.

If this loan was not authorized by law or by a Resolution, is it not an illegal loan?  If it is illegal, who committed the offence?  Will there be any repercussions?  Will the auditor take it up for comment within the next five or six years, as is par for the course up to now.  And, if and when he does, will it not then be too late to make anything of it, as is usual, since by the time the audit report is published another administration will be in office?

I always had my suspicions that the famous British contingent liability was a figment of some bureaucrat’s fevered imagination.  Is this scorning by Anguilla of the long breached guidelines, put in place precisely to safeguard Britain’s contingent liability, further evidence of the spurious nature of this alleged liability?  Or, is it just evidence of hubris on the part of our Minister of Finance?  Does he believe that he has become all-powerful, and can do as he wishes with the public purse?

For what purpose would the money be borrowed?  The standard answer is to meet government’s commitments, of course!  Elections in Anguilla are around the corner.  Could the thinking be that a Christmas bonus must be paid, despite the economic downturn, if the public servants are to be kept mollified in order to ensure their support when the day for voting comes?  Never mind the piling up of public debt upon debt, that will be for someone else to sort out, after the general elections.

If true, the further fear must be that this unauthorized borrowing may just be the tip of the iceberg.  Are there other secret borrowings and commitments that our out-going government has obligated our new administration to settle in the new year?

May I wish everyone a Super Solstice!

Credit rating

The announcement on Caribbean 360 appears devastating for Anguilla.  Word was out yesterday that the regional credit rating agency had downgraded Anguilla’s sovereign debt.

Caribbean Information and Credit Ratings Services Limited is allegedly the regional credit rating agency. 

Basically, they tell investors whether or not to buy bonds and other sovereign debt issued by a government.  

So, I rushed to the company’s website to find out what the alleged crisis in Anguilla was all about. 

See it for yourself.  It turns out that there has been absolutely no change in Anguilla’s credit rating since the last published rating.  We have long had an AA rating. That is where we remain today, at any rate according to their own website.

Unless the company is so incredibly inefficient that its website does not reflect in real time the ratings allocated by the company!  In which case, what credibility do they have a right to?

IMHO the story on Caribbean 360 is complete fiction.

FCO Response

Minister Chris Bryant has responded.  Over the past six months we have been looking at our Government’s response to the international financial crisis that we find ourselves embroiled in.  Common sense dictates that we should be doing two things. 

One, Government should be seriously reducing expenses, not increasing them.  

Second, Government should be enabling and enforcing its tax collection. 

The first is a given.  The second is the problem.  Most taxes in Anguilla are treated by politicians, business persons and the general citizenry as optional or voluntary.  Smuggling is rife.  Payment of tax is generally considered a favour to government, not an obligation.  Avoidance and outright evasion is not just a citizen’s right, but a national sport. 

The question has frequently been asked why is the government so hesitant to prosecute delinquent tax payers and enforce the law.  The answer has always been that the government has no desire to ‘criminalise’ citizens for such activities.  In the case of water bills, it has been publicly stated that up to 70% of the water is either being lost through breaks in the pipes or it is being stolen through illegal connections.  Up to this date, never in the history of Anguilla has any water thief ever been prosecuted.  There are a score of other examples that could be given of our lax attitude to tax collection. 

In conclusion, tax collection in Anguilla is inconceivably lax.

Over the past year, government has used up all of its credit balances at the banks.  The public accounts now stand overdrawn and over spent to an extent that exceeds our borrowing guidelines agreed with the Foreign and Commonwealth Office some years ago. 

During that time, Government has repeatedly applied to the FCO for a relaxing of the guidelines to permit us to borrow and spend our way out of the crisis.  The FCO has been digging in its heels.  They have responded to Government that they cannot give an open-ended consent to permit us to increase borrowing in three or four different specific loan amounts to an aggregate of nearly $100 million.  One of the proposed loans has been for an amount of $49 million.  Another is for an amount of about $10 million to extend the airport. 

The British have responded that they will agree to relax the borrowing guidelines only if the Government of Anguilla meets two conditions: 

One, Government must present a plan for reducing expenditure to meet revenue. 

Two, Government must indicate how it proposes to increase revenue to meet the increased proposed borrowing. 

From what I understand, Government has been pretending not to understand these two conditions.  In each renewed application it has merely repeated its request with more and more reasons why it needs the money. 

Then, two weeks ago, Government made gave the FCO an ultimatum, either let us borrow or else!  We have not been shown the contents of this letter.  We have been waiting with baited breath to see what the FCO response will be.  Now, a correspondent has sent me a transcript of yesterday’s letter from the Foreign and Commonwealth Office to the Government of Anguilla in response to our request to relax the borrowing guidelines.  It reads [I don’t guarantee the accuracy of the re-typing]:

Foreign and Commonwealth Office

Hon Chief Minister
Anguilla

ANGUILLA: PUBLIC FINANCES

Thank you for your letters of 14 September and 21 September which followed up your telephone conversation with Colin Roberts.

I appreciate the efforts your government is making to address the issues I outlined in my letter of 27 July. I assure you that I consider each Territory's requests very much on an individual and case by case basis. However, I must act prudently when considering your request for additional borrowing at this time when Anguilla is already in breach of the agreed UK/Anguilla borrowing guidelines.

I welcome the commitment you have made towards cutting public expenditure, including a Public Service pay cut. However, there has been less progress in plans to broaden Anguilla's revenue base. Is the absence of such plans, including details on how existing and any further debt will be paid back over the next 3-5 years and your planned changes to Anguilla's taxation policy, I cannot agree to your entire borrowing request.

I am however, prepared to agree, exceptionally, to the government of Anguilla borrowing EC$20m to cover the recurrent deficit over the next six months, providing that you commit now to the introduction of new revenue measures, no later than the beginning of FY 2010-2011, to broaden your revenue base as identified by an independent study to analyse the impact on public finances of a range of new taxes and/or initiatives. This study will be funded by the FCO with the Terms of Reference agreed jointly by the Government of Anguilla and the FCO with a view to having consultants in Anguilla as soon as possible.

I am ready to consider further borrowing requests once we have discussed the findings of this study.

However, given the particular circumstances of your requests to include provision to finance a proposed runway extension at Wallblake Airport I would be happy to consider that separately, once I have received a comprehensive business case which makes clear the impact of the reduction in the declared runway length and any consequent loss of revenue to Anguilla.

I look forward to your confirmation that these conditions are acceptable to your Government.

Yours sincerely

Chris Bryant

What do we take away from a reading of this letter? 

One, the application to borrow the full amount of $49 million is turned down. 

Two, only an amount of $20 million will be permitted, and only if we can meet the condition imposed.  That condition is that the government commit now to new revenue measures to be imposed on the Anguillian taxpayer no later than in the upcoming financial year.  That is, starting in January, three months from now.  That is, three months before the constitutionally due general elections.  Further, these new tax measures will not be decided on by the Anguilla government or House of Assembly. They will be decided on by an independent consultant who has the unlimited power to identify the new revenue measures. 

Three, even the application to borrow a sum of money to extend the airport is refused for the time being.  We will remember that we are required to have the airport extended by some 500 feet.  This has been laid down by new safety regulations imposed by the new regulatory body headquartered in Tortola.  Many private jets land in Anguilla during the Christmas season.  The movie stars arrive for their vacations.  Without this extension, jets will be prevented from landing, thus delivering a blow to Anguilla’s tourism industry.  The letter says that the proposed borrowing will be permitted only if Government presents a comprehensive business case making clear the impact of the reduction in the airport length and the consequent loss of revenue to Anguilla.

One would have thought that the need to include such basic information in the application to borrow would have been apparent to Government from the beginning.  Can you imagine going to your bank with an application to borrow millions of dollars without presenting the bank with your business plan showing the state of the business and how you propose to use the additional money?

Somebody calling himself “Anguilla Express” claims this is a major victory for the Government Ministers.

In my humble opinion, all these fellows are jokers.

Approvals

Governor Writes Speaker Agreeing to House of Assembly Debate on Motion to Borrow. The Speaker read out a letter from the Governor indicating that he did not object to the debate on the motions to borrow some $60 million, but that it was still up to London whether they agreed. The debate today went ahead. No constitutional crisis there, and the speeches went ahead along predictable lines.

It would appear that what some persons have been saying all along may be right. The British have no objection to Anguilla borrowing money to get us over the present financial crisis. Nor do they have any objection to Cayman Islands increasing its borrowing. They only object to us going to London completely unprepared to explain how we are going to pay back any borrowing. Especially, when we are giving away large chunks of existing revenue.

The big crisis the Chief Minister and Minister of Finance told us to expect at the press conference on Tuesday appears to be a non-issue. This is what the Chief said then, among other things:

If when we go to the House of Assembly on Friday to borrow the EC$49 million... we have asked the Governor to send this to London immediately. If London comes back and say no... that is when the showdown will come. I told the Governor if they (British government) says no to it tell them to come for their country... because how are we going to pay civil servants at the end of October, where are we going to get money from?" Fleming said.

The government leader said if there is no approval by the British government, once his administration can find an institution that will give us the money "we borrow the money, let them do what they want to do, they can arrest us, no problem."

It was all apparently a smoke screen to cover up our incompetence in having gone to London last month completely unprepared, resulting in an embarrassing British refusal to permit us to increase our borrowing. What I draw from the debate in the House of Assembly today is that the planned borrowing is necessary to get us through the year. It is not likely the British would have disagreed with that conclusion. It was just that, when we made the application to change the borrowing guidelines, we had no convincing explanation how we intended to pay off any additional borrowing.

All the posturing by our Ministers was just for show. Hopefully, they have spent the time preparing to make a proper presentation. Expect to hear about new travel plans in the next couple of weeks at the latest. If I am wrong and, despite all the last-minute preparation and improved presentation, our application to borrow more is refused, at least we will get to blame the evil British for all the consequences.

Both the Chief Minister and the Minister of Finance complained that the Opposition made no substantial suggestions during the debate for correcting the present deficit in income over expenditure. With humility, these are some personal suggestions for increasing Anguilla’s revenue in this time of financial crisis:

- Collect property tax from all the 1,000’s of householders who refuse to pay it;

- Disconnect the 100's - or maybe 1,000's - of illegal water connections;

- Hire an animal control officer, enforce dog licenses;

- Ticket every driver with no car-seat for child;

double for child in front seat;

triple for child standing on front seat;

and four times for kid sitting on driver’s lap steering the car!

- On the spot fines for speeding – or car gets towed;

ditto littering (if no car, impound something else);

ditto untethered goats and other farm animals;

- Enact and enforce seatbelt laws;

ditto use of cellphones while driving;

- Enforce noise and environmental pollution fines;

- Legalise marijuana use [preferred by all Anguillian youths above the age of 13], and tax it like cigarettes.

Maybe now, after having had a further month to prepare ourselves properly, and including the above suggestions, we will go back to London with a more professional presentation.

Once we have such a clearly thought out plan to repay any borrowing, I do not expect any objections from London.

One last immortal thought:

"It's like a blocked toilet. You have to flush all the shit out to get it working properly again." --Gary Lightbourne, Michael Misick's former bodyguard