Caribbean News Now
By Global News Correspondent
PROVIDENCIALES, Turks and Caicos Islands — A $260 million dollar loan to the Turks and Caicos Islands (TCI), guaranteed by Britain, has now been finalised, having reached its final approval on Thursday. Funds can be immediately drawn down by the TCI government against the loan.
This was announced in a press release by Governor Gordon Wetherell.
One key condition of the loan is the recruitment of a chief financial officer, to be appointed by the governor. Currently that role is being filled by Caroline Gardiner from Britain.
Clayton Greene, the leader of the Progressive National Party (PNP), in a recently issued public statement spoke against the loan, saying the TCI did not need any additional debt.
However, it appears the loan is not additional debt but a rescheduling of current debt.
The necessity for the loan stems from the seemingly reckless lack of financial management that took place under the supervision of finance minister Floyd Hall during the last PNP administration.
This new loan is needed to reschedule debt and provide financial breathing space for the interim government to work towards a balanced budget.
When questioned on Thursday about his current view of the new loan, Peoples Democratic Movement (PDM) leader Douglas Parnell said, “Now that the loan funds are available we can start to see government creditors, contractors, landlords, and current and retired government workers being paid on time. Additionally, persons who are owed for work such as Lois MacIntosh in Bottle Creek can be paid their back pay. This will cause an immediate stimulus of some $45 million dollars into the local economy. Large contractors such as Herzog should be encouraged by TCIG to look for ways to reinvest in the TCI economy.”
The loan, which is being facilitated by Scotia Bank, will enjoy a very low interest rate and this reduction in interest rate will also reduce the current debt service from the cost of $14 million per year possibly to as little as $2 million.
In a recent press statement Parnell had indicated the loan, which is guaranteed by Britain, ought to have a rate of 2 percent or less.
This loan is one of the important milestones which will lead the TCI back to elected government, the Governor said.
In addressing the current $365 million debt load, the interim administration is looking at raising revenue (taxes) through adjustments to existing taxes and possible imposition of new ones.
The possibility of imposing a property tax is now off the table according to financial adviser Brian Titley. With real estate sales very slow and many empty units on the market, the introduction of a property tax has been deemed counterproductive to recovery.
During the last budget hearings under the PNP administration finance minister Hall was heard in the House of Assembly predicting the need for property taxes and income tax as the financial meltdown of that administration was well underway.
According to the new press statement, cutting the costs of the public service by 25 percent is another goal, although it appears the news loan may have the effect of saving civil service jobs.
Ways to cut the cost of government are to be reviewed and sought carefully. Attrition through retirement, reassignments and resignations are anticipated as one method. Statutory bodies are also due for review and cost readjustments.
Again, this was an issue brought up in a press conference several weeks back by Parnell.
A targeted system of student support will be employed. The previous administration assigned scholarships not on merit but on political patronage.
Cutting of government rents by 25 percent by next year will be another required goal. The previous administration had a policy of not building infrastructure but contracting high rents with political cronies. On glaring example of this was agreeing to pay $1,800 per month each for small one bedroom apartments proposed for police barracks.
All future purchase orders over $5,000 must now be approved by the CFO said Wetherell.
The governor also alluded to the need for measures to stimulate the economy.
When questioned on the loan terms, Parnell said he agreed with the provision for a CFO as long as Britain pays the associated costs. Parnell went on to say that obtaining the loan, for which he had petitioned, was a positive step and he felt that any cutbacks that must be employed would now be of a surgical nature and employ a scalpel not a machete
