Montserrat’s realities, says ECCB – Governor Antoine
By Bennette Roach
As the week of busy budgetary and economic updates, seminars, discussions, negotiations and workshops on border security and control ended in Montserrat, there could no doubt that what stands out and expected to be developed as a firm message or a request to HMG/DFID can be found in the words delivered by the East Caribbean Central Bank (ECCB) Governor.
Only moments later following after the media who had a sitting with the ECCB Governor Timothy Antoine and his team, the Premier and the DFID Financial Aid Mission (FAM) team told us that there were absolutely no discussions on capital projects for Montserrat.
At a formal opening of the FAM briefing the Premier told senior public servants and media, et al, “recurrent budget funding on its own will never get us out of dependency. In addition, I would like to see urgent action and real progress made around future proofing of Montserrat with regards to our resilience to hurricanes and other threats, we know too well how it has affected our neighbors, this is an urgent request.”
Head of the Mission, Senior Governors’ Advisor, Senior Responsible Owner for Financial Aid Alex Stevens, at the press briefing stuck to his script as he explained: “There were no substantive discussions on capital projects. This is a discussion about the recurring budget and the UK’s contribution to the recurring budget.”
On the question about the ‘capital projects’ side as anticipated of the budget, he said: “That’s not to say that discussions about capital projects won’t occur in the coming weeks and they definitely will, but this is not the purpose of the Financial Aid Mission.” He added, “…obviously we heard from the ministers and we heard the importance to them and reflected the importance to us and making sure there is a capital project a capital budget in this coming eighteen nineteen (2018/19) year.”
The Premier for his part expressed his own disappointment but also said they were unable to mention any outcomes from the talks, reporting that they will have to wait for some weeks after the team goes back and hold discussions with their superiors. (See editorial this week).
The background to questions regarding the capital budget discussion came in light of the suggestion and the hope raised at the FAM talks opening by the Premier; and also in light of recent expressions from DFID requiring the government to seek Private Public Partnerships (PPP) arrangements on the development (capital) projects, even those previously agreed and approved for funding.
It was in light of this that ECCB Governor responded during his two-day country visit mission concluded on Friday, during which time he noted that Montserrat’s economy would show growth after it fell last year. But that his support team had pointed out was due to the UK support in the very budgetary aid, they provide. The position was noted to them as to the lack of real or meaningful growth and the position being taken by DFID/HMG. It was then the Governor who seemed not at all surprised, responded as follows, hoping that the position should be clear.
“The Caribbean has an infrastructure deficit and that is particularly profound magnified in Montserrat on account of the volcano. It therefore means that Montserrat requires grant financing, not debt, because it will not be able to repay that debt given the small population size and revenue base,” he said.
He clarified: “It needs grant financing for some key infrastructure projects whether those are in the area of ports, whether that’s in the area of energy or in fact in a number of other parts of the economy. (BR – such as our communication) Very important fibre-optic – telecommunication – that’s critical, so that has to be clearly understood.”
The Governor explained more fully: “In other countries in the region we look for grants and soft loans, but they have bigger populations, and even there they’re challenged.
“In the case of Montserrat, it’s a no brainer, grants are required. In some cases, private sector participation is possible but even then, there will need to be appropriate arrangements to incentivize the private sector, to reduce the risk for the private sector because the recovery or payback period is likely to be a lot longer because of the small size and the population or domestic market. Those are Montserrat’s realities; there’s no question about that.”
The Central Bank Governor Antoine was earlier blunt saying investors would not be easily interested in Montserrat as it would take far too long for recovery of their investment. His message then: “So, what I want to encourage is a concerted effort by, of course the Government of Montserrat working with the UK Government and other development partners, and the people of Montserrat, to push forward on some key projects, have them implemented, and give Montserrat the chance to then grow and potentially double the population and of course the economy.”
In is final words driving home the reality and support of his message: “My colleague pointed out to me that the Montserrat economy is still less than half of what it was before the volcano. That’s significant and that needs to change and has to change through investments and of course an increase in the population.”
The Governor also suggested that his argument may not be new while offering the Central Bank’s support in the discussion and as a partner. “… I suspect I am saying what you already know because you live here and you know this place far better than I do. But, I just want to encourage these investments and to say the Central Bank, our role we see is to also support as a development partner.”
