Premier's Office
Ministry of Finance
Release Date:
Tuesday, 6 December 2016 - 5:30pm

Address To The Territory
Premier And Minister Of Finance
Dr. The Honourable D. Orlando Smith, OBE
December 6, 2016

“A Message Of Confidence And Hope

My fellow BVIslanders and Residents:

As we begin the last month of the year, it is essential that I update you on the state our Territory, our economy and our public finances.

This is a time of challenge not just here in the BVI, but all around the world.

We are living through what can best be described as the new normal – the evidence of which we see all around us.

From the Brexit vote in the United the election in the United States….

To the ongoing turmoil in Syria and across the Middle East…

To persistent global economic weakness eight years after the financial crisis of 2008…

Our global political and economic systems and institutions are under greater stress today than at any period since the end of World War II.

Yet despite these uncertainties and challenges, tonight I remain as confident for the future of our beloved BVI as I have ever been.

I am confident and hopeful because the people of the BVI are resilient and strong.

I am confident and hopeful because our economy rests on strong pillars that have been built to stand the test of time.

And I am confident and hopeful because your Government is operating according to a clear vision and detailed plans all aimed at delivering on our most basic promise to you: Shared and Sustainable Growth.

So I want to talk tonight about the challenges we face and the steps your Government have taken and are taking to overcome those challenges and secure our shared future.

Let me start by addressing two current issues, which are the timing of the Government’s submission of the 2017 budget, and timely payments to vendors for services rendered to government

This year, we will be submitting our budget somewhat later than is customary – likely in January.   While a December budget is ideal, budgets may be submitted after that time and indeed have been submitted by both sides of the aisle as late as April.

We want to take our time in reviewing the allocations to the various programs that are carried on to ensure the most efficient use of Government resources.

And this includes developing our capital programme. There are a number of critical decisions that have to be made on this front and we don’t want to make hasty judgments.

Timely payments to vendors for services rendered is an issue which is largely related to the manner in which revenue is received by government; we have now put systems in place so that Vendors can be assured of timely payments for services rendered,  that they too can meet their obligations.

On the wider matter of the challenges to the economy, the roots of this year’s issues stretch back to 2008 when the financial crisis set off the worst global recession since the Great Depression.

Financial services institutions that do business here in the BVI were particularly hard hit as the global flow of investment slowed down sharply.

Then as the global economy began to recover, a new shock to the system was felt as regulators in the United States of America, United Kingdom and European Union all began to crack down hard on banks and other financial institutions.

Billions of dollars in fines were imposed upon these companies.

Suddenly, the banks that do business here in the BVI were concerned not just about serving their customers and clients but also about “de-risking” their operations – which is another way of saying they wanted to make sure they do nothing to offend their regulators.

In this context, banks began reconsidering how they do business here in the BVI and in other jurisdictions and some banks began exiting the region entirely.

That situation became significantly more difficult with the publication of the so-called “Panama Papers.”

Despite the fact that these papers were illegally hacked from a law firm;

Despite the fact that these papers produced much smoke, but little fire;

Still, the media sensation they caused, coupled with the fierce attacks of certain NGOs and politicians have created even more fear among the banks and other businesses that support the BVI financial industry.

All of this is having an impact.

Indeed, these trends as they relate to derisking are so serious that the Deputy Chairman of the World Bank was moved to issue a warning that they threaten the stability of the entire Caribbean region.

And so the bottom line is simply this – As a result of these challenges to the sector, in 2016 the revenue our Territory has taken in from our financial services industry has declined somewhat

But in the face of these challenges, we are not standing still – we are responding on all fronts.

And that starts by fighting with all of our might to protect our financial services industry and to put it on course for sustainable growth long into the future.

First, we are defending the reputation of our industry against all those who would besmirch it.

Let me say to you clearly – the financial industry of the BVI is among the world’s best regulated and most transparent.

And it is an industry that provides an essential and valuable service to the entire global economy.

I realise that in this address to the Territory I am preaching to the choir.

But we cannot say it often enough or loudly enough – our financial services sector is a force for good in the world.

Here in the BVI, we help investors from around the world pool their resources together; incorporate them into companies governed by impartial law; and then deploy that capital to productive purposes like building roads, hospitals, power plants and all manner of developments around the globe.

Earlier this year we commissioned a Study by Capital Economics out of the UK to determine the contribution that BVI financial services make to the global economy.  The results of that study will be ready for inclusion in my next Budget address.  I thank industry practitioners for their participation in the ongoing surveys and information gathering that is needed to complete this work.

No system is perfect. Indeed no jurisdiction in the world could make that claim.

But certainly there is nothing in our industry that deserves unique sanction or attack.

So the second thing we are doing is taking that message to London, to Brussels, to Berlin, to Washington, to Hong Kong, to Beijing and every other major political and economic centre around the world.

I wish to commend the leadership and staff of my Ministry, that of BVI Finance, along with all the other stakeholders in our industry who have served as our ambassadors in these efforts.

I am pleased to report that this outreach has paid off.

For example, the EU is currently undertaking a process to creating its third country listing. Although the outcome of their deliberations is still uncertain the important thing is that as a country we are directly engaged with the various Committees, making the case for a favorable outcome for the BVI.

Recently, a trade mission that I was pleased to head up enjoyed great success in a trip to the world’s fastest growing economy - China.

There, we built relationships with leaders in the public and private sector and planted the seeds for future ventures and partnerships that we will benefit from for years to come.

The third part of our strategy is working to broaden and enhance the value of our financial services offering.

Just last month, we launched our new International Arbitration Centre, which will help investors from around the globe settle issues and disputes in an efficient, fair and transparent fashion.

Much like our Commercial Court, the Arbitration Centre will further cement the BVI’s place as a jurisdiction where capital from around the world can be pooled together with confidence.

We are also working with industry to expand the scope of services on offer in the BVI.

In these efforts, our coordination with local industry is aided by this Government’s long-running efforts to foster a productive partnership.

As many of you will recall, a couple of  years ago we commissioned a study with the world-leading consultancy McKinsey out of which we formed a public-private task force to lead the implementation of the study’s recommendations.

That working group created a highly effective framework for partnership and we have been able to use it to good effect to coordinate our response to the current crisis.

I am proud of the fact that all the stakeholders in the success of the BVI’s financial services sector – Government, Regulators, public institutions and private industry – have rallied together like never before.

Ladies and Gentlemen: It is in that same spirit of common purpose that we are pursuing the full development programme this Government has put before the people of the BVI in our Manifesto.

When the people of the BVI put their trust in this government, we made a commitment to you that we would put the resources of our Territory to work on behalf of all the people.

We promised to plan for the future, and not just spend for the day.

And nowhere is that more visible than in the work we are doing to make our tourism industry as strong as possible.

While our financial services industry will always be subject to the decisions made in faraway capitals, our waters, our natural beauty, our welcoming spirit – those are ours and ours alone.

And it is our duty to develop these God-given blessings for the benefit of our people.

That is why we have taken a proactive and strategic approach to our tourism sector.

In that spirit, we opened the new cruise pier and park facility, which has significantly broadened the foundation of our tourism industry.

With our recently signed agreements with Disney and Norwegian Cruises, thousands of additional visitors are arriving on our shores – and when they come here they must experience the world-class services and amenities they expect. 

We are therefore working hard to improve these amenities - for instance in Road Town we opened the Prison Museum just today and as you would have observed we are working hard to complete improvements to Brandywine Beach.

Visitors to our shores translate to opportunities for our taxi and tour operators, our local businesses and restaurants – and it also improves the likelihood of those guests returning one day to our hotels and resorts as overnight visitors.

This same long-term thinking stands behind our efforts related to air travel to the BVI.

We have begun a programme to subsidize connecting flights by one of our own companies,  from Antigua to make air access to the Territory more convenient and affordable.

We are continuing to move forward with plans to launch BVI Airways, which will for the first time in recent history offer direct flights from the U.S. mainland to the BVI.  Many of you would have observed that the planes have already been in the BVI for testing by ASSI and other authorities.

And, of course, our ongoing effort to extend the runway at T.B. Lettsome International Airport will enable major airlines to expand services to the BVI from even further afield, which will mean competition, choice and convenience for travelers from around the world.

In addition to our investments in air service, we are also working with our local industry to enhance the quality and diversity of our hotel and resort offerings.

Today, thanks to many years of work, the BVI is home to a greater number of outstanding, world-class hotel and resort properties than we have ever had.

And we are not stopping now.

Working with the ownership of Biras Creek and their legal team, we have resolved  that property’s challenges and I am expecting that it will soon reopen, fully restored to its former glory as one of the Territory’s premier hotels.

The work at Yacht Club Costa Smeralda (YCCS) as promised will be completed by the end of this year. A new and expanded facility on Virgin Gorda will open in January of next year. 

The decision by Rosewood Little Dix Bay to close for renovations earlier this year was a tough one which obviously impacted the staff.

However, we ensured that as many of them as possible were redeployed and I am pleased to report that work on the renovations is well underway. 

When Little Dix reopens in 2018, as a refurbished Rosewood property – one of the world’s most esteemed high-end destination brands –it will truly reflect the best of the BVI.

And we are upgrading many of our Territory’s other amenities and attractions.

In addition to the Prison Museum and Brandywine beach mentioned previously we worked with the private sector and local supporters to develop attractions such as the QE2 Park, The Kingston Church, Fisherman's Wharf on Anegada, amongst others.

This Government stands behind each and every one of these investments because together they promise to bolster this crucial pillar in our economy and reduce the impact of any possible decline in our financial services sector.

Had we listened to the naysayers and declined to build the new cruise pier; or if we had shied away from taking on the difficult task of expanding the airport; or if we had neglected to bring to our shores more hotel developments – then today we would be facing an uncertain future for our tourism sector, one of the two pillars on which this economy stands .

That would have boded ill for our economy and for all who depend upon tourism.

So I stand before you tonight more convinced than ever that the investments we made were sound, strategic and absolutely necessary.

And it is with the same confidence that we are taking on the tough but crucial work of strengthening the foundation of our prosperity – our infrastructure, our educational system and our basic public services.

We continue to invest in our Territory’s most precious asset – our young people.

And to make sure we are preparing our people for the most in-demand jobs in the BVI, we have created an expedited hospitality training programme to give our people the chance to get the tools to excel in our most important industry. I was pleased to hear that one of our leading hotels had our students last month participating in an important culinary event. This practical experience is just what they need to excel.

On the infrastructure front, we have invested in resurfacing many of our roads throughout the Territory and we continue to install the sewerage system on the eastern end of Tortola.

And in terms of public services, this year we introduced the National Health Insurance scheme.

Despite some growing pains, this bold programme is working well for us. 

A nation's wealth depends on its health.  And so we are proud of the fact that, as promised, today every BVIslander, every resident now has access to the peace of mind and security that comes with having health insurance.

Ladies and Gentlemen: In order to fulfill and sustain all the programmes and plans that I have described for you tonight, it is essential that our public finances be in sound shape.

We will not allow our investments today to come at the expense of future generations of BVIslanders.

The promise we made was to deliver growth that is Shared and Sustainable – and that can only happen if we are using our public dollars carefully, borrowing prudently and living within our means.

It is always much easier to make good on that pledge when the economy is growing quickly and the financial services industry is pouring money into the public coffers. It gets harder in a year like this one when the industry is challenged.

We will focus on making our Government operate as efficiently as possible. We will ensure that every dollar we spend is directed toward areas that will deliver the greatest future returns.

And we will look for other ways to increase Government revenues without placing undue burdens on the people of the Territory.

But rest assured, whatever belt-tightening we must do it will not come at the expense of the common man or woman.

We will not be cutting core services or reducing our investment in your children’s schools, in your healthcare, in your roads or infrastructure, or in helping grow your businesses and your economy.

And we will continue to work hard to protect our environment that is so critical to our on going development

We will sustain those investments because they are the essential building blocks for our future.

My fellow BVIslanders, let me conclude tonight with this thought.

We must exercise care in our spending:

But we are not alone is this – virtually every nation on Earth is facing some version of fiscal challenge.

But not every nation will respond as I know we shall respond.

In some nations, the people are turning against one another and attacking each other on the basis of their race, or their religion, or their nationality.

In other nations, they are seeking to cut themselves off from the rest of the world, building walls and fences.

In other nations, they are simply paralyzed by indecision and failing to act.

Here in the BVI, we decline to take any of these self-defeating and self-destructive paths.

Here, we will go the other way.

We will not divide – we will unite.

We will not cast blame – we will take responsibility.

We will not isolate ourselves from the world – we will engage with the world.

And we will not stand still – we will act with boldness and purpose.

We will be able to do so because fundamentally our finances are sound. Our investments are strategic. Our Government is focused.

But above all, we will do all this because we are a family.

Yes, we are a family that will sometimes bicker and quarrel as all families must do.

But in the end, we are pulled together by the powerful ties that bind.

As we end this year we must remain steadfast and in the weeks and months to come seek strength where we know we can find it – in the love and care of our Father in heaven who does watch over us all.

So I ask you all to join me in offering your prayers and your work for the further development of our beloved country in these trying times.

Together, we will secure the prosperous future we have earned.

Thank you and may God bless the British Virgin Islands.