Amid growing calls for a comprehensive economic stimulus package to help the territory weather the coronavirus pandemic, Premier Andrew Fahie has blamed the delays largely on the restrictions included in a 2012 agreement with the United Kingdom known as the Protocols for Effective Financial Management.
But Governor Gus Jaspert painted a different picture last week, explaining in a May 8 interview that the protocols are designed to ensure financial prudence and that they don’t preclude the Virgin Islands from launching a stimulus package like other overseas territories bound by similar agreements.
In an April 15 statement, Mr. Fahie said his government planned to petition the UK secretary of state to ease restrictions in the protocols, which penalise breaches of certain borrowing guidelines by temporarily strengthening UK oversight of the territory’s financial affairs.
The request, he said, was designed to remove the protocols’ “impediment conditions” and enable the VI “to secure the funding necessary to respond to catastrophic events such as the Covid-19 pandemic.”
On Friday, Mr. Jaspert acknowledged that discussions about the protocols are ongoing, but he explained that the territory has been in compliance with the agreement’s borrowing guidelines since last year and has “considerable headroom” to borrow more without breaching the required ratios.
“The protocols also say if you need to go outside of these ratios, spend your reserves, or borrow more …, all the UK wants to know is that you have a plan to get back in a position to paying the money back and building the reserves back up,” Mr. Jaspert said.
Some $80 million in the reserve fund, which he called a “healthy amount,” also could be used to support economic stimulus initiatives, he said.
The protocols, he added, are designed to help ensure transparency and good value for taxpayer money.
“If I was a taxpaying, voting member of the public, I would want to ensure my government has its protocols for how they manage their financials and to have it at an international standard,” he said. “What the protocols say is when there are sunny days, put some money in reserves. Don’t build up debt. Have an economic plan, and when you spend public money, spend it in a transparent and economic way.”
In fact, he said, the protocols have helped the VI reach its current financial standing. Similar agreements in other Caribbean overseas territories, he added, have done the same.
“Where we are now has allowed us to be in a strong position,” he said. “The British overseas territories, when faced with this kind of disaster, they are able to support their residents. [The Turks and Caicos Islands and the Cayman Islands] have opened their reserves that they built up. Those things, we can do now. … [The] protocols give the territory strength to do that.”
Mr. Fahie, however, has told a different story, arguing that the protocols are overly restrictive and blaming them for the delays in sourcing funding not only for the economic stimulus package but also for the recovery from the 2017 hurricanes.
The government, he added on April 16, has asked Financial Secretary Glenroy Forbes to lead technical discussions with a UK financial team in petitioning for changes in sections 25, 27 and 28 of the protocols.
Sections 25 and 27 require the territory to obtain approval from the UK secretary of state for certain decisions, and section 28 states that breaching the protocols’ borrowing guidelines constitutes a breach of the agreement itself.
Those discussions are ongoing, but Mr. Fahie did not mention them during his Tuesday afternoon press conference. He did, however, promise again that an economic stimulus package will be unveiled soon.
Freeman Rogers contributed to this report.