Long-anticipated stimulus measures to boost the economy and mitigate the financial effects of the Covid-19 pandemic were unveiled last week in the form of a $62.9 million package funded mostly by grants from the Social Security Board.
“The soft rebooting of our economy was the first phase of your government’s economic strategy,” Premier Andrew Fahie explained. “This allowed for those businesses that could sustain some activity to do so and to put some persons back into employment. Phase two of the economic response plan is to the tune of $62.9 million.”
The bulk of the package falls under a $40 million grant from the SSB, which will fund various initiatives: $10 million for a new unemployment fund; $9 million to repair homes damaged by the 2017 storms; $6.5 million in business grants; $7.5 million to support the National Health Insurance programme; and a few $1-2 million allocations targeting industries including hospitality, daycare, fishing and farming.
Also included in the larger package is a revival of a pre-Hurricane Irma $17 million SSB-funded programme to build affordable homes at Joes Hill, as well as $2 million to build infrastructure and $3.9 million for elected representatives to spend as they see fit.
Opposition members welcomed the government’s effort to launch a stimulus package, but raised various concerns about the plan’s details, criticising the delay in presenting a strategy that they said partly resembles a “laundry list” of government initiatives that haven’t been completed because of government’s failure to properly manage its finances.
“After more than 10 weeks of posturing, I thought we would have by now a concise list of initiatives that were properly costed, accompanied by an implementation plan and clear policy document for our citizens to follow,” Opposition Leader Marlon Penn said.
$40m grant
The most costly measure under the $40 million SSB grant is a $10 million Covid-19 Unemployment Relief Fund, which will support residents affected by the pandemic for a period of up to three months. Application forms for assistance were made available at the SSB on Tuesday and residents were encouraged to call the agency at 852-7800 for more information.
Mr. Fahie did not disclose when the benefits would start being distributed, but he did say that compensation would be provided on a case-by-case basis.
The SSB will administer and monitor the initiative, he added, promising that more information would be provided by June 15. Yesterday, the SSB posted details on Facebook highlighting eligibility requirements and the cap on benefits.
Those applying must have paid at least 13 out of 20 weeks of SSB contributions before March 30, 2020; be financially impacted by Covid-19; and be actively seeking employment.
The benefit “will be calculated at a rate of 50 percent of insurable earnings up to a maximum of $1,000 and a minimum of $500 a month,” the statement read.
Government also allocated $6.5 million to help businesses that have been affected by the Covid-19 pandemic and government-enforced closures. Businesses can apply for a grant, Mr. Fahie said, but he did not mention any cap on grants or explain eligibility requirements.
The grants are aimed to help businesses “keep their heads above water,” and recipients are expected to make a “genuine effort to keep their staff employed,” he said, though he did not say they would be required to avoid layoffs. Application forms will be available on June 15 at the Department of Trade and Consumer Affairs and the government website, he said.
Also from the $40 million SSB grant, $9 million will be used to continue an existing programme to repair homes damaged in the 2017 hurricanes by making them watertight in preparation for the ongoing storm season, Mr. Fahie said.
“It was calculated that it would cost $45 million to help primary homeowners and apartment dwellers to return to their dry, covered, comfortable accommodation [after Irma],” he said. “Government records reveal that over the years before Covid-19, $15 million was secured for housing development, with $5 million for administrative costs through the Recovery and Development Agency. While some homes were repaired and rebuilt, there is a requirement for a further $25 million to assist with homeowners’ construction of social homes and housing construction and repairs to other facilities.”
The $40 million SSB grant also includes $7.5 million for the NHI programme, which has been struggling with funding concerns for years. Last year, the Canadian human resources consulting firm Mourneau Shepell projected that the programme’s deficit would reach $34.1 million by 2022 under the current system.
Mr. Fahie admitted that “from its inception, the NHI was never properly funded.” Therefore, he continued, “It is important that all medical providers, pharmacies and other entities, regardless of the size of the business, benefit from this $7.5 million.”
He added that he would keep a “vigilant” eye on this initiative.
Another $1 million of the $40 million grant was allocated for the hospitality industry, which Mr. Fahie called an “integral part of our economy.”
With the re-opening of borders to nationals and permanent residents on Tuesday, the premier encouraged businesses to help government house quarantined individuals returning from abroad.
“There will be a need to provide quarantine facilities for some persons,” he said. “This has been accomplished by entering into contracts with hotels, guesthouses, inns, villas and private accommodations.”
Mr. Fahie added that participating businesses will need to be in a “state of readiness” to handle staycations and visitors once the borders open for tourism. He urged interested properties to contact the SSB to register.
Another $1 million will be allocated for daycare centres, private schools, churches and other organisations, he said, adding that application details will be published on June 15.
Additionally, $1 million will assist residents with “social needs” through a programme monitored by the Social Development Department, the premier said. He did not explain further.
A further $1 million will be used to address traffic congestion in Road Town, provide a “park-and-ride” system, and assist taxi operators, Mr. Fahie said. Transportation, Works and Utilities Minister Kye Rymer will meet with taxi operators to arrange a shuttle service to transport returning nationals and permanent residents to quarantine facilities, the premier explained. Other similar transportation initiatives will be launched in the sister is- lands in June, he added.
Fishing and farming
Additionally, $2 million will go into a fishing and farming initiative, which Mr. Fahie said will provide an opportunity to “finally make farming and fishing another one of our economic pillars.”
A “Rapid Response Farming and Fishing Initiative” was first announced in late March, when officials explained that it would receive $2 million to help farmers and fishers acquire the materials and equipment needed to ramp up production and supply the territory with fresh food.
Registration for farmers and fishers will reopen tomorrow, Mr. Fahie said, but it is unclear whether or not this spending is the same $2 million in funding that was already announced for the programme — a question Mr. Penn raised in his response.
The premier also announced an amnesty from electricity payments for the months of May, June, and July for residents who need it. The amount of funding for the BVI Electricity Corporation amnesty for affected businesses and individuals was not specified, though Mr. Fahie said there would be a cap and that applicants would have to show proof of their need.
Opposition response
In his Friday response to the stimulus package, Mr. Penn stressed the importance of implementing the programmes transparently and quickly.
“I want to say to the premier that timely, if not immediate, implementation, is critical for these measures to work,” he said. “In this vein, I want to encourage the implementing agencies to work with haste, be clear, transparent, fair, and efficient in your implementation because our small businesses, workers and families are depending on a timely disbursement to preserve their livelihoods.”
Mr. Penn added that he is concerned that the great majority of the funding for the package is coming from the SSB in the form of grants instead of loans. He urged the premier to adopt a model that would allow government to “recoup” any money used for unemployment benefits.
He also accused the government of dishing out a “laundry list” of government initiatives funded by the SSB “because of [the government’s] failure to properly manage our over $350 million budget.”
Mr. Fahie, however, described the use of funds from the SSB as a “last option” that allows the territory to protect reserves needed in case of other catastrophic events.
“Your government has been trying to avoid touching our government’s taxpayers’ piggy-bank, because we understand that the hurricane season is upon us, seismic activity in the area is continuing, and Covid-19 has not been eliminated. Hence, we have to leave room in case, God forbid, the BVI is struck by a disaster,” he said last Thursday. “Left with no alternative, your government reached out to the SSB.”
According to Mr. Fahie, a study conducted by certified actuary Derek Osborne from the human resources consulting firm Mourneau Shepell found that the SSB “has the financial strength to support a well-designed targeted income support programme to workers.”
More details?
Mr. Penn also requested more details on how the various programmes would work, and he asked whether or not the government has a plan to open tourism.
“Getting tourism back on track is a must, for the survival of our economy and our people hangs in the balance,” Mr. Penn said.
The day before the premier unveiled the government’s package, opposition members published a 16-page document titled “Covid-19: A Strategic Economic Recovery Plan for the Virgin Islands” (see end of article).
This document built on an initial plan presented by the opposition on May 17, which was published in a three-part series that addressed the importance of boosting financial services and tourism, along with other industries.
The premier responded strongly against opposition members at the time, accusing them of misleading the public with a “magic-potion” plan that was neither realistic nor affordable.
On Tuesday afternoon, in response to Mr. Penn’s statements regarding the SSB grant, Natural Resources, Labour, and Immigration Minister Vincent Wheatley said it is not “unusual” for the SSB to donate toward public projects.
He pointed out that the SSB donated $500,000 in April to the BVI Health Services Authority to purchase pharmaceuticals, treatments, and testing kits. He added that Mr. Penn had made “frivolous statements” to “create tension in our society” and described his commentary as “reckless, inflammatory politicking.”
“The SSB grant is consistent with precedent and is being done with full transparency,” Mr. Wheatley said. “The SSB did not act on a whim or by guess. … And may I remind you that your government’s economic response plan is being informed by the work of the Coronavirus Economic and Fiscal Stability Task Force.”
Efforts to reach SSB Director Antoinette Skelton were not immediately successful.
Housing
Separate from the $40 million SSB grant, the largest initiative in Mr. Fahie’s stimulus package is the revival of a $17 million project funded by another SSB grant approved before Hurricane Irma.
“[This] project had been in the works for some time,” and has now been given “the push to bring it forward,” Mr. Fahie said last Thursday.
Earlier that day in a closed- door ceremony, a $17 million contract to reinstate the Joes Hill Housing Development was signed with James Todman Construction Ltd.
The development will consist of 43 residential units for first-time homeowners, and it will be part of the SSB’s “First-Time Homeowners Initiative,” a press release stated. A total of 25 buildings will sit on seven acres of land, with residential units varying be- tween one-bedroom to three- bedrooms complemented by some commercial space, according to the release.
“The project was initially intended to begin in 2017 but was put on hold due to the hurricanes Irma and Maria,” the release explained. “Hundreds of applications were already received in 2016 and 2017 from interested persons.”
In April 2017, ground broke on what Mr. Todman called “Joes Hill Manor” and officials promised that four homes would be fully ready for December of that year. At the time, about 400 people had registered for the initiative, including non-belongers who have lived in the territory for the past 20 years, officials said. The site was originally to include 52 units across 25 buildings including condominiums, town houses, and homes.
In his statement last Thursday, Mr. Fahie also explained that various construction projects have begun in the territory outside of the economic response plan.
He said that the projects will bring job creation and put money back into the economy as well.
He noted that the Recovery and Development Agency aims to inject $20 million this year into projects, and that “major construction projects” have already launched in Virgin Gorda and Tortola.
“We realigned the Caribbean Development Bank loan, and renegotiated portions so that local contractors, for the most part, could do the projects,” he said. “What we didn’t know is that we would recover from Covid-19 and the hurricanes at the same time.”
Mr. Fahie added that the next development of affordable homes would be built in Virgin Gorda.
District grants
Also as part of the stimulus programme, another $3.9 million will be “made available” from central government to “allow each elected member to respond to needy cases directly and swiftly,” the premier said, though he did not specify where the money would come from.
Under the initiative, the nine district representatives and four at-large representatives will receive $300,000 each to distribute as they see fit, Mr. Fahie said, urging residents seeking help to contact their representatives directly.
Loading ...Though the premier said that “transparency still applies” and that he “expects that favouritism and political allegiance be put aside,” Mr. Penn pointed out areas of concern in this initiative as well.
“We must be absolutely careful not to create a slush fund that is fraught with abuse,” he said.
Mr. Penn also proposed that this money be used for a “Work for Pay Programme” instead of being given out freely.
Last Thursday, Mr. Fahie said the $3.9 million funds would be audited monthly, but did not say whether the audits would be made public.
Mr. Fahie also mentioned that $2 million will be used for the sewerage system in East End and Long Look, but he did not disclose the source of that funding.
Earlier in his statement, Mr. Fahie said $2 million would be used for infrastructure, but it’s unclear if he meant the sewerage system.
Attempts to contact the Premier’s Office to clarify whether the two initiatives are separate were unsuccessful.
WHAT THE OPPOSITION WANTS
A 16-page stimulus proposal was unveiled by members of the opposition on May 27, listing six sets of policies totalling $126.25 million and proposing funding sources for each policy.
- – $6 million to restart tourism, funded by government reallocations
- – $23 million to support and sustain small businesses, funded by government reserves, bank loans repayable by businesses, and forgone government revenue
- – $18.25 million to develop agriculture and fishing, funded by government budget reallocation, government loan funding, and government reserves
- – $19 million to support workers and families, funded by government reserves, social security, and government budget reallocation
- – $60 million to facilitate construction through funding already secured through the Caribbean Development Bank loan and the Social Security Board
- – Minimal costs to support financial services, funded by government
Sections of the plan include an introduction, overview of the policy areas, targeted outcomes, details of each policy, and a conclusion.
UNEMPLOYED?
Have you been laid off due to the pandemic and need help? Application forms for unemployment benefits can be downloaded from the Social Security Board’s website.
Forms can also be picked up at the board’s office in the Joshua J. Smith Building. Compensation will be granted on a case-by-case basis, and will not exceed a period of three months. For more information, contact the Social Security Board at 852-7800 or go to https://www.vissb.vg/.