23 September, 2009

Green Light

Anguilla still waits for the green light to increase borrowing.  A collective sigh of relief
went through the civil service today.  Salaries were paid.  At last week's press conference the Hon Chief Minister had mentioned that there was some doubt that government would be able to meet salaries unless the British FCO permitted the Ministry of Finance to increase borrowing.  However, salaries were paid today. 

We will all recall that Anguilla is at the maximum permitted limit of its borrowing.  We need permission from the FCO to borrow more.  Osborne Fleming, speaking in his capacity as Chief Minister, assured us last week that he was certain that the local banks would not have any problem in lending to his government, regardless of whether or not the British approved the borrowing.  Of course, as active, serving Chairman of the Board of Directors of Anguilla’s oldest indigenous bank, the Caribbean Commercial Bank, he should know.

It was back in the month of July when the Chief Minister took a high-powered delegation to London to try to persuade the British to permit him to borrow more than was allowed.  He did not tell us what he put in his presentation to the British.  It was all highly classified.  No one in the public domain in Anguilla has ever seen the application to borrow.  Most importantly, we do not know what proposals he made to assure the British that we would be able to raise the additional revenue to repay the extra borrowing.

In the event, the British refused to permit the borrowing on the basis of the application presented to them.  As Hubert Hughes, senior opposition member of the Anguilla House of Assembly, pointed out, the reason the British refused our application to borrow more was that government had no plan for repayment.  We cannot be sure as neither the local government nor the British have published what it was they responded to the Anguillian government.

The likelihood is that they are not objecting to Anguilla borrowing.  There is not likely to be any suggestion that Anguilla is not entitled to borrow.  The British are probably only asking the reasonable question, “Show us how you propose to pay back the borrowing.”  It is noticeable that the government of Anguilla has singularly failed to show us the application they made to the British to permit the extension in Anguillla’s borrowing powers.  Nor have they shown us the British response asking for more information.  They ask us to believe that the British are being unreasonable.  Sorry, I do not accept such a request for blind allegiance.  I consider it more likely that the British are being very sensible and cautious.  “Show us how you intend to reduce expenditure, and to increase revenue to repay the increased borrowing, and you will have our permission.”  That is all it is likely to be about.

It was only in April of last year that the Anguillian Newspaper warned that we must be careful how we borrow. 

There is however reason for caution. The fact that Britain has responsibility for Anguilla serves as a safeguard for money lenders in addition to the island’s own financial resources, but there is always the danger of over-extending one’s capacity to the extent that difficulties could arise if due care is not taken. Anguilla must avoid ever finding itself in a debt-ridden situation where, although the economy is buoyant, there is still a heavy burden on the national purse to meet the requirements of the Government’s loan commitments with ease.

So, when earlier this month, the Minister of Finance proposed in the House of Assembly a motion to approve the borrowing that had been rejected by the British, all ears were open to hear what his answer to the British was.  Would he announce how he was going to reduce expenditure in this election year?  Was he going to explain how he proposed to increase government revenue by increasing taxation in this pre-election year?  Well, we were all disappointed.  To this date he has not published one word on what the British are asking him to do, nor one syllable of his answer to them on what he will do to ensure that Anguilla is able to repay the increased borrowing.  Government ministers, being a majority of the House of Assembly, easily approved the motion to borrow.  This motion was rushed to London with a renewed application to increase borrowing.  London’s response, if any, has been concealed from us.

We are a short six months maximum from the next general elections.

What is the betting there will be no budget as usual in December of this year?  The explanation will be that it is not appropriate for the outgoing government to tie the hands of the government that will take office in March or April of next year.  As an apparent act of generosity and fairness, it will be left to the new government to decide on their budget. 

The reality is that Victor will not dare to publish to the Anguillian public what it was that the British were demanding of him, nor will he dare to publish what exactly were the new taxes he proposed to collect to pay off the borrowing.

It is a matter of local politics.  It is nothing to do with British incalcitrance and unreasonableness.  It is simply a matter of unwillingness to publish and admit the need for new taxes in the run-up to the general elections.

Two questions arise:

Have the British responded to government's request for an increase in borrowing?

And, if the British have approved the borrowing, how long will it take for Victor to tell us what undertakings he gave the British to secure their approval.  We have a right to know.  After all, it will have been a promise to increase our taxes.

That is the only way he is going to get their approval.    


  1. One way to ensure money is coming to the treasury is by putting a stop to work permit weavers.

  2. Extracts from today's Guardian article by Chris Bryant (FCO):

    "It is clearly in the interests of all the overseas territories to have open, transparent fiscal arrangements and a sustainable revenue from a wide and diverse tax base. Mere tax haven status will not pay the bills, nor will an over-reliance on indirect taxation."

    "The overseas territories need a strategy for reining in their public expenditure and/or raising revenue to start paying off their debts. That is precisely what the G20 countries, including the UK, are doing. I have made these points in recent discussions with the Cayman Islands and Anguilla when they sought permission to extend their borrowing without showing how they intended to drive down borrowing in the short to medium term. I am sure these discussions will continue for some time but I am determined to continue working with the territories to ensure that their public finances are resilient enough in the long term to handle economic shocks.

    Of course fiscal policy, on both taxation and expenditure, is a matter for the territories themselves but the UK government is right to put restrictions on their ability to borrow unless and until they can come forward with a clear strategy for cutting that debt. And if we want to promote action on regulating tax havens worldwide, it is essential that Britain be in a position to lead by example."


  3. Time for the British to GO! Let them mind their own damned business.

  4. "Thank God for the British."
    --Teacher George


Note: only a member of this blog may post a comment.