12 March, 2010


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.
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 2008A 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 2009The 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 4th 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.


  1. The first step in recovery is admitting you have a problem. The government has taken the first step. AUM is already doing well. I feel a bit better already.

    I just hope they fix the problem with spending cuts and not tax increases. At least not increasing my taxes.

  2. I hope everyone agrees that taxing income is not acceptable, especially at the lowest levels of income. Anguilla can be as expensive as NYC but incomes are 1/4 of those earned there.
    Yet someone is going to have to suffer. In addition to government cutting its budgets across the board, I would suggest a blanket property tax. If you own property, chances are you are better off than someone who doesn't. Lets say we assess a general value for all land at EC$50,000 per acre and impose a 5% land tax on all landowners, weather there is a dwelling house on the property or not. Lets further assume that this tax is due by Dec 31,2010 but for this first year if it is received by June 30,2010 only 2.5% will be levied. This should rather quickly solve our immediate cash crunch and restore the deficit to manageable proportions. Just do the math.See how many non government acres of land are in Anguilla and multiply each by EC$1,250 (2.5%) and you will see the realized relief.
    Of course there will be lots of protesting, and some people will face hardship in trying to pay for it, but I think it will be more equitable and fair than a VAT or income tax that will adversely affect the less fortunate of us in Anguilla.

  3. Landlords pass the cost of property taxes on to the renters. So it is naive to think that people who don't own land don't have to pay property taxes, they do.

    Anguilla already has a property tax based on the square footage of the buildings. This is an objective measure. Any tax based on a percentage of the value will end up being subjective. Most houses have not sold in a long time so the current value is not really known, it can only be estimated subjectively. In this case a bribe to the person estimating the value of your property can reduce your taxes greatly. Nobody could really say he had estimated incorrectly or that it was done because of a bribe, since it is subjective. That is a recipe for corruption. What we have has much less risk of corruption. I think the rate about doubled from last year.

  4. Step 1 -- Anguilla repudiates any and all extradition treaties it has with other nations.

    Step 2 -- Anguilla creates a new category of non-native citizen called "Special Resident." Special Residency costs EC $5,000,000, payable to a private trust tasked with paying down the national debt and improving the island's infrastructure.

    Step 3 -- Since Special Residency will draw the scum of the earth to Anguilla, the government will have to enact laws that cruelly punish any Special Resident who violates even the slightest Anguillian law.

    Step 4 -- Profit.

  5. As an immediate measure how about selling off all the government purchased and funded vehicles being driven about by politicians and others ? We need to wake up in Anguilla and get into the real world about taxes and how we fund our country !!

  6. To the previous comment: I would really rather not sell my country out to the kind of person who has enough money to vanish to the Caribbean for some crime. We have more dignity than that.

    To the main post: I'm just glad to see the Government being open about this.

  7. As the Greeks said, "Αμαρτία 'ξομολογημένη, η μισή συγχωρεμένη."

    * "A confessed sin is half a sin."

  8. As with the previous comment, the first step is admitting the problem, to those I would add

    (2) The economy must be diversified in order to achieve long-term stability.

    (3) As important as the above is, the government must keep expenditures to the bare bones, and this means each Anguillian must do their part to stand on their own and stop looking to the government for things beyond necessities.

    (4) The government must implement alternative energy sources, such as wind and solar. How many million EC can be saved from cutting the ANGLEC fuel demand by 10%?

    (5) The government must implement fair wages for civil servants and house itself in its own buildings (renting is long-term not in the governments best interest).

    (6) The government must implement a trash-recycling program to reduce landfill volume and costs with the added benefit of social awareness and pride.

    (7) Lastly their must pass a law, that current yrs expenditures will not exceed 85% of prior year’s revenues. Which will force the government to save money for these rainy days….and there is not end in sight for the rain.

  9. When you look closely at the problem, cutting civil servants salaries will help somewhat but not significantly. In January Government's expenditure was 17 Million, and lets say 7 million went to pay salaries, 3 million to pay pensions etc and 7 million for other recurrent expenses. If you cut the civil service by half you will be saving about 3 million a month times 12 which would equal to 36 million per year. This would be still short of the 70 million deficit. Cut the salaries by 10% and we would only be saving 8.4 million for the year.

    For the Government to close the deficit there will have to be significant cuts across the board. And we are speaking about the recurrent budget alone, it does not take into account Capital projects.

    The only way I see us getting out of this mess is a mix of borrowing and expenditure cuts across the board, followed by new tax measures in 2011.

  10. AUF government had the same meeting the AUM government had on Thursday LAST year in the library! Ask the current Permanent Secretaries, they were there doing a slide show! AUM just mimicking AUF!

    People just want to remember what they want to remember!

  11. 22000 (acres) x 2500(EC$)= EC$55 million, if you factor in the ocean frint acreage then the figure rises to more than EC$60 Million.

    The solution is staring everyone in the eye. This DOGMA of no taxes for land must be discarded for a more enlightened PAY OUR OWN WAY view.

    10% income tax or VAT will cost people more than EC2500 per year. The myth that people will loose their land is just that, a myth. Let people with little or NO income proove that they cannot afford the tax and get some relief. They won't have a choice if 10% is taken out of their earnings before they get their paycheck.

    Make the tax of oceanfront land even higher, that is the land that mostly foreigners covet and want, so say oceanfront will be 10% of 100,000 and you can even raise more taxes.

    Only Anguillians that own many acres of oceanront land would object to this, and they have probably sold a lot of it already and profited from it, so no one should feel bad if they have to pay for it. How did they get it in the first place? Land didn't belong to anyone a few hundred years ago, so how they come to claim so much land to begin with should also be looked in to. How fair is it that some families own hundreds of acres while others have none. Were these lands given, taken or paid for in the beginning.


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