A section of the September 2011 letter sent by Mr. Henry Bellingham, the then United Kingdom Minister for the Overseas Territories to former Premier and Minister for Finance, Hon. Ralph T. ONeal.
Photo Credit: BVI Platinum News
A letter from the Foreign and Commonwealth Office (FCO) sent to the former Virgin Islands Party (VIP) administration called for the implementation of specific agreements with the United Kingdom Government before approval could be granted for the Territory to access a $15.7 million Caribbean Development Bank (CDB) loan.
Approval was eventually granted by the UK in May of this year, a few months after the National Democratic Party (NDP) returned to Government and after the Protocols For Effective Financial Management were signed between the two Governments.
In an exclusive interview with BVI Platinum News late last year, Premier Hon. Orlando Smith revealed that the UK was concerned over the borrowing capability of the Territory and as such did not initially approve the loan.
"I think they [UK] were concerned with our fiscal situation and our capability to borrow, but we [NDP Government & UK] had some good discussions and I am sure it will be reviewed and hopefully we get a positive response...," the Premier had told BVI Platinum News.
In September, 2011, Mr. Henry Bellingham, the then United Kingdom Minister for the Overseas Territories wrote to the then Premier and Minister for Finance, Hon. Ralph T. O'Neal outlining what the United Kingdom needed to have in place before the approval was given for the loan funding.
Mr. Bellingham's letter was in response to a letter sent by Hon. O'Neal on July 25, 2011 to Colin Roberts, Director of the Overseas Territories Directorate, requesting permission to borrow US$15.6 million from the CDB to assist with financing the rehabilitation and reconstruction of damage to infrastructure resulting from the impact of Tropical Storm Otto in 2010.
In the response, Mr. Bellingham stated that he understood the importance of completing the infrastructure repairs in the BVI and in principle, was in favour of Government making use of the concessionary loan offered by the CDB. However, Mr. Bellingham stated that he was also conscious that important reforms to the management of public finances in the BVI were not progressing as fast as they might.
"We are still waiting for a final version of the Action Plan to address the weaknesses identified in the UK Government's Economic Update Report; and it is time we reached agreement on the Framework for Fiscal Responsibility (FFR). These are both vital opportunities to strengthen the performance and resilience of public finances in your Territory and are greatly in the interests of the people of BVI," Mr. Bellingham had outlined in the letter.
He had further stated that he is minded to approve the request subject to two conditions.
According to the missive, the first request was for the BVI Government to adopt a rigorous, prioritised action plan to implement the improvements in public financial management recommended in the Economic Update Report sent to the Government. Mr. Bellingham also noted that there had been ongoing works at an official level to develop such an Action Plan.
The second request from was for discussions between the two Governments on the FFR, so it could be brought to a rapid and satisfactory conclusion.
"I welcome your engagement on the FFR and for agreeing to permit one of my officials to address Cabinet in June. I look forward to your promised letter to finalise any outstanding issues to allow us quickly to reach a mutually acceptable outcome on the FFR," Mr. Bellingham stated.
Following discussions with the UK and NDP administration, the FFR document was shelved, but instead a new document, the Protocols for Effective Financial Management emerged and was subsequently signed between the two Governments.
Former Communications and Works Minister, Hon. Julian Fraser helped to negotiate the CDB loan. During the recent debate on the amendments to the Public Finance Management Act as stipulated by the protocols, Hon. Fraser shared the view that the BVI was held hostage.
"It seems to me as if the BVI was held hostage and the ransom was the $15.7 million CDB loan by the UK Government. That is my opinion on this. And this protocol, Madam Speaker, we had no choice but to enter into it. If we wanted that $15.7 million Madam Speaker; here you go, dive right into the pool; don't check to see whether it's the deep end or the short end and there you were. I understand that the $15.7M was crucial to the Government and the Territory as far as development is concerned. We don't have the cash and it was a place for us to get the money to rehabilitate our infrastructure," Hon. Fraser stated.
Hon. Fraser pointed out that the letter was about the CDB loan, but Mr. Bellingham "locked in" the agreements. The Third District Representative has called on Government to have a conversation with the Opposition to enlighten the Members of the Opposition on what has taken place.