January 18, 2010

The cash flow problems now being experienced by government of the Turks and Caicos Islands will be eased somewhat by the end of the month as the United Kingdom Government has given the green light to secure an $85 million loan from an international lending agency.
The announcement was made by Governor Gordon Wetherell, while speaking at the Advisory Council’s first news conference in Providenciales on Friday, January 9, 2010.

The funds are to go towards evaporating part of government debt.
While the terms and conditions are being finalized between Government and the lending agency, debate of the intended loan is expected to take place in the Consultative Forum on Tuesday, January 12, and will be debated in the form of a Supplementary Appropriation Bill. The Governor said the debate would help in finalizing the loan as well as to iron out any shortfalls in expenditure that may arise before the end of the financial year.

TCI owes millions of dollars to both local and overseas companies and individuals.

Permanent Secretary in the Ministry of Finance and Government’s Chief Economist and member of the Advisory Council, Delton Jones, said so far the terms and the conditions of loan suggested that it would not be expensive to service. He hinted that the local businesses will be priority for the disbursement, saying that such a move could enhance business in the Turks and Caicos Islands.

“We in the Ministry of Finance have been taking stock of the debt that we have, and in some instances we have discussions and agreements with persons to defer those debt on a phased payment basis. A high priority is to settle most a lot of the small debt that we have on island because that will assist businesses that have challenges,” Jones said.

Jones acknowledged that a number of local establishments which had done business with Government went to the bank for loans to do so, and such bank loans were still outstanding, saying that Government would consider paying those companies with the interests charged by the banks.

In the meantime, Governor Wetherell has indicated that the decline in economic standard now being experienced in the Turks and Caicos would continue for sometime until the Government figures out a way to iron out the anomalies it encountered after taking over the reins of power from the local Government.

“The Turks and Caicos, like many other countries around the world are experiencing difficult economic time, and that is just the fact of the current situation, and there is no great point in hiding that. Belt-tightening has been part of the experience for this and other countries, including the UK for sometime. What we have been seeking to do – and it has been a long and an arduous process since August – to try and get the public finances of the TCI back into shape.

“And one of the principle ways to do this has been to negotiate a consolidated loan, which would enable us to – if you like – translate the larger portfolio of unpaid bills which inherited, and which continues to accumulate to some extent, into a loan which in example, would allow us to pay off the smaller creditors that the Government has. And that in itself would be a way of pumping some money back into the economy,” the Governor noted.

Governor Wetherell noted that the first draft of a revenue study that was commissioned in November of last year has been completed and would now be the subject of further consultation with a view to find a more effective mechanism to get more revenues into the kitty, assuring the public that it was not design to burden the populace with taxes.

The Governor said the hardship of the people has not eluded his observation, but since resources have dwindled over the past year, it was difficult to readily address the matter, and since the TCI was out of the UK financial assistance realm, funds from that source would be difficult to acquire.

The Governor pointed out however, that the £5 million donated by the United Kingdom for Hurricane Ike relief effort, is to be spent shortly, as priority areas have been identified towards which to channel the funds.

Vivian Tyson