The Virgin Islands will accept the United Kingdom’s offer to guarantee up to £300 million in loan funding for the territory’s recovery.

House of Assembly members decided that on Tuesday night by voting 10-2 in favour of passing the Recovery and Development Agency Act, which establishes the independent recovery-fund-controlling body required by the UK for the guarantee.

The bill’s passage came after a contentious public and backroom debate that cut across party lines and appeared to split government’s frontbench and backbench into two disparate factions.

In the end, however, only government backbencher Mitch Turnbull (R-D2) and opposition member Julian Fraser (R-D3) voted against the bill. Mr. Turnbull’s fellow backbencher, Delores Christopher (R-D5), spoke passionately against the bill during the debate but was absent for the roll call.

The loan guarantee means the UK will assume the VI’s recovery-related debt obligations should the territory default.

While no lawmaker appeared to doubt the usefulness of such assistance, both the bill’s initial and final opponents argued that the conditions set out by the UK were insulting and represented a retrograde level of colonial control.

“Because we were hit by two hurricanes, all of the sudden [the UK] sees an opportunity now to take an advantage of our vulnerability,” said Health and Social Development Minister Ronnie Skelton (R-at large), who ended up voting for the bill. “Instead of trying to help us, all of these rules are coming down. … If they are taking my constitutional rights away from me as a minister to give to anybody else, I have a problem.”

During the debate, many more lawmakers expressed that sentiment than the final tally reflected: Prior to the bill’s committee stage, it was unclear whether it had the votes necessary to pass. In addition to Mr. Skelton, who did express an openness to considering amendments, four out of six backbenchers spoke out strongly against the bill; another, Marlon Penn (R-D8), voiced his qualms with certain aspects of it; and both opposition members raised concerns as well, leaving open the possibility that a seven-member majority could have come together to reject the act.

Refusing to sign it into law this week could have had serious ramifications: The UK government expected the territory to have the legislation in place by the beginning of its financial year on Sunday, according to Governor Gus Jaspert.

In the end, however, Premier Dr. Orlando Smith and some of his fellow ministers managed to sway the majority of the legislation’s detractors into supporting it, though the amendments the lawmakers made to the 20-page bill during committee stage had not been made public by this edition’s press deadline yesterday. It remains unclear if these amendments will change the UK’s perspective on the guarantee.

Arguments for

Dr. Smith has argued numerous times that the Recovery and Development Agency’s conditions are standard procedure for loan guarantees and fall in line with international best practices.

The loan guarantee would also allow the VI to borrow with interest rates of less than one percent instead of the 3.5 percent that would be required otherwise, according to the premier.

And even accessing higher-interest loans without the guarantee could be difficult: In HOA last week, Dr. Smith noted that government had already reached out to Rothschild, FirstCaribbean International Bank, Banco Popular, Lloyds Bank, the Caribbean Development Bank and the Royal Bank of Scotland.

“Almost without exception, these financial institutions have required some indication as to the tenor of the UK guarantee,” he explained. “We have not had any direct offers of financing except in the case of CDB.”

Even the CDB’s initial $65 million financing offer only covered a slim percentage of the roughly $500 million that government requested in November. The bank did, however, announce a new $50 million loan to the territory last week (see sidebar).


During the debate, several lawmakers criticised the premier for what they perceived as a lack of transparency regarding the vote.

In January, a government document surfaced titled “High Level Framework for UK Support to BVI Hurricane Recovery.” It indicated that Great Britain was requesting a raft of good-governance and financial-planning measures to ensure that its loan guarantee and £10 million grant to the VI would be used wisely.

Among those measures: the immediate establishment of an independent recovery agency that would not only handle loans guaranteed by the UK government, but all recovery-related investments.

Though government made active progress on some of the listed conditions and Dr. Smith was questioned about them multiple times at press conferences, he never made the framework document public.

Even when Mr. Fraser requested it during the question-and-answer portion of HOA last week, the premier refused, saying it was “confidential communication” between him and UK government officials. He did note that no partnership agreement had yet been signed with the UK.

Several lawmakers from both government and the opposition hammered Dr. Smith for that lack of transparency during the debate.

“Let it be known that the information we need to make an informed decision has not been presented to us in totality,” Mr. Turnbull said. “We have not been able to have a proper discussion about what is supposed to take place.”

While closing the debate, the premier countered by reading out the letter that preceded the UK framework document and discussing a number of the measures listed. The necessary information for the vote was always provided to HOA members, he argued.


Opposition Leader Andrew Fahie (R-D1) — who also ended up voting for the bill — noted that accepting loan funding on a level anywhere close to the guarantee total would put the VI in violation of the 2012 Protocols for Effective Financial Management.

The Protocols instruct the government to keep the territory’s net debt within 80 percent of its recurrent revenue and its annual debt payments within 10 percent of recurrent revenue.

“Substantive non-compliance” with the Protocols would give the UK leave to take a far greater role in the day-to-day financial affairs of the territory.

During the debate, Mr. Fahie argued that Great Britain could use the loan guarantee as a “backdoor” way to reassert more significant control by putting the VI in violation of the Protocols.

Before supporting the RDA Act, the opposition leader said, he would need to see a written commitment from the UK agreeing to revise them.

While closing the debate, Dr. Smith assured him and the other HOA members that it wouldn’t be a problem.

“The UK has told us — and I spoke again and confirmed this today — they’re very clear that the borrowing guideline ratios will be relaxed, will be changed to accommodate the level of funding required to accommodate this loan,” he said.

RDA details

The agency’s board would consist of seven to nine people, with a chairman and deputy chairman appointed by the governor in consultation with the premier, according the draft of the bill that was Gazetted earlier this month.

The Cabinet would appoint the rest of the members, including one chosen by the governor; one chosen by the premier; one chosen by the UK government; one civil society representative; one donor organisation representative; and one private-sector representative.

The board would select a CEO — who would be subject to approval from Cabinet — to run its day-to-day operations. The board would also appoint a chief financial officer and any other staff deemed necessary for the agency’s operations.

The CFO would be required to submit account details and budget estimates to the board, which would then be required to submit these documents to Cabinet. Cabinet, in turn, would be required to lay them before the House of Assembly, according to the bill.

The agency — which has a five-year lifecycle — would also be required to set up a charitable trust to receive all recovery and development contributions and channel them to the appropriate projects and programmes laid out in the territory’s official recovery plan.

Past research

Dr. Smith’s argument that the recovery agency follows international best practice appears to echo past research.

In 2015, McKinsey & Company, a global management consulting firm, issued a report titled, “Improving disaster recovery: Lessons learned in the United States.”

In the report, the firm published several post-disaster governance suggestions for local and state governments in the US based off its previous work with disaster-battered jurisdictions across the globe.

One of the company’s main suggestions was the implementation of a multi-disciplinary, independent recovery board to “coordinate and deliver” recovery programmes.

“Making the recovery organisation independent from any one executive agency can help to ensure that no single agency’s functional agenda inadvertently oversteers the recovery, and that recovery priorities and funding allocations are based on a whole-of-government perspective,” the report reads.