In his budget address on Monday, Premier Dr. Orlando Smith reiterated his commitment to the sound fiscal reforms that his government launched shortly after taking office in 2011.
In the coming year, we hope government will make every effort to meet its financial goals in spite of certain challenges.
Happily, recent reforms have proceeded as promised after Dr. Smith signed the Protocols for Effective Financial Management in April 2012.
A key initiative is the Virgin Islands’ first Medium Term Fiscal Plan, which was released last month as the initial step in the government’s new three-part budget process.
The MTFP, which looks ahead three years, contains many laudable goals, including building the Reserve Fund, changing the deficit to a surplus by 2016, and maintaining the borrowing ratios outlined in the Protocols.
The plan comes on the heels of important amendments to the Public Finance Management Act and badly needed reforms in the Treasury.
In the budget address, Dr. Smith said such steps have enabled government to get a “bird’s-eye view” of its financial situation well into the future. We don’t doubt it.
And this perspective is exactly what is needed in a territory where fiscal irresponsibility has too often been the order of the day.
Laying plans, however, is not enough — particularly since keeping them likely will require sacrifice.
The MTFP, for example, calls for revenue-raising measures including a seven percent hotel tax for charter boats docked in the territory. This levy could be a good idea, but the yachting industry seems to have been taken by surprise.
Extensive public consultations, then, will be needed. Likewise with other revenue measures listed in the plan, which include raising alcohol import duties; implementing a tourist arrival levy; and evaluating the payroll tax regime, among others.
These are just a few of the challenges inherent in the ongoing fiscal reforms. In the coming year, then, the government will need to work overtime to achieve its goals, and the public should do its best support the endeavour.
The opposition, too, should make a more concerted effort to come onboard. We have been disheartened in recent months by some opposition members’ tendency to imply that fiscal reforms are responsible for the territory’s economic woes. This suggestion is misleading at best.
On the contrary, when it comes to improving financial management, everyone stands to benefit. This is why collaboration is in order.
Though we were pleased with the fiscal strategy outlined in the budget address, there was a troubling omission: The premier didn’t detail any specific plans for comprehensive civil service reform.
The former government commissioned a $300,000 human resources analysis, which recommended specific steps to improve efficiency in the civil service. However, the report has not been made public, and the conversation seems to have quieted.
This is unfortunate. There is significant inefficiency in much of the civil service, and belt-tightening is needed — especially at a time the public is being asked to sacrifice.
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