In a statement issued today by H.E Governor on the Turks and Caicos Islands (TCI) financial support package his statements reads:
The UK Government-backed financial support package which is now in place buys us the time we need to tackle the dire fiscal legacy the Interim Government inherited. The package provides enough money to refinance TCIG’s high level of debt and the monthly deficits that will continue for two more years even with new budget measures. It does not provide any money to reverse previous spending cuts or fund significant new
expenditure; instead we need to use the breathing space it provides to bring revenue and spending into line. Tackling the severe and structural fiscal problems and achieving a fiscal surplus in the FY 2012/13 will be tough, but getting on course to do so is a key
milestone.
There are three elements to the $260m package:
*A bridge loan of $170m at 0.25% over LIBOR, to be replaced by a bond, syndicated bank loan, or other funding in the next few months. This has allowed
TCIG to repay its core debt – the existing and much more expensive Consolidated Loan, which was priced at 5% above LIBOR, along with other bank debt and the recent loans provided by DFID, and to pay the large backlog of unpaid non- financial creditors.
*A five year term loan of $30m at 0.75% over LIBOR. This is available if desired to repay other more expensive debts of TCIG.
A five year revolving bank facility of $60m, at 0.25% over LIBOR, which will fund the projected deficits over the next two years.
The budget will set out in detail the measures that are needed to set us on the road to fiscal surplus. The measures will include: raising revenues through the introduction of new revenue streams, changes to existing streams, plus improved collection and enforcement; cutting the cost of the public service by 25% by 2013/14, while building capacity in the most important services; reducing the costs of statutory bodies by 25% by 2012/13; introducing a new, more targeted and more fairly applied system of student support; cutting Government expenditure on rents by 25% by 2012/13; eliminating all non-essential expenditure and improving financial management and reporting; and, requiring all purchase orders and contracts over $5000, and all new leases, to be approved by the CFO and Permanent Secretary, Finance.
H.E further explains that, ‘None of this is easy work and it will require some tough decisions.’ I recognise that not everyone will be comfortable with the short term impact of some of these decisions. But we are set firmly on a clear course to establishing a strong financial foundation on which
TCI and future governments can build with confidence as the economy recovers.
Mr. Wetherell concludes his statements by saying to locals: Let us work together to help make TCI what we would all like it to be – an outstanding
place to live and work with equal opportunities for all and an attractive, welcoming destination for tourism, the central pillar of our economy.
GORDON WETHERELL
