(Photo Credit: GIS)
Following a promise that his government will not be adding any new taxes Premier and Minister for Finance Hon. Andrew Fahie delivered his second budget since taking office in February.
The BVI Leader painted a picture of a government weathering storms as he declared that the projected revenue is $414M, while the recurrent expenditure is expected to be $327M. Capital expenditure is projected to be $65M, six million dollars would be contributed to the funds; while the Government hopes to use $14M towards its principle repayment on debt.
Looking at the two major economical pillars of the Territory, the Premier announced that the tourism sector is facing immense regional competition and he gave some examples of how countries in the Caribbean are planning to add to their tourism economies in 2020.
The Premier also noted that things are not rosy with the main economic pillar of financial services.
“Our financial service industry has been exposed to shocks as well the likely implementation of a publicly accessible of beneficial ownership and the requirement for economic substance will change the landscape in this sector,” he said.
“Prior to our taking office there were already projection that clearly stated that in the coming years the financial services industry will be faced with some serious and unprecedented,” the Premier further added.
Therefore, Hon. Fahie switched tone to announce that his government believes that “the time is now, and the place is here” to diversify the economy. He demonstrated this plan by unveiling a series of initiatives geared at adding revenue to the Territory’s economy and in the process decrease the blow from the challenged industries.
Looking deeper at the figures, the Premier noted that at the end of 2019 the Ministry of Finance projects that the total size of the BVI economy measured by gross domestic product (GDP) in nominal terms should reach $1.303b. This he said reflects an increase of growth of between one and two percent from 2018
Hon. Fahie further mentioned that the sum approved in the 2019 budget for recurrent expenditure was $331M. While, the total recurrent expenditure based on estimates is $293M. However, the BVI Leader noted that mechanisms that were put in place by his then new government constrained unnecessary and wasteful spending resulting in potential savings for the people of the Virgin Islands. This he said was despite the significant decline in revenues from incorporations of companies
In noting this point Hon. Fahie announced: “It is estimated that $350.3M of the $361.8M budget revenues were realized under your government’s astute and prudent management. The projections are for ending the year with a recurrent surplus; despite having to deposit $26.9 M to the Reserve Fund in 2019 to bring our Territory into compliance with the ratio under the Protocols for Effective Financial Management.”
Reporting further on fiscal performance the Premier stated that income taxes surpassed expectations -- drawing and estimate of $51.8M, which he noted is $1.3M more than the amount projected in the 2019 budget. “This is a sign of employment growth, which is an indication of our recovery economy,” Hon. Fahie declared.
For this budget the Minister for Finance stated that his government’s budgetary strategy incorporates fiscal buffers for potential risks; and will be utilizing a three pronged approach to balance and manage.
Following his extensive list of plans to diversify the economy such as entrepreneurial investments, and new funding sources such as a new medical marijuana industry the Premier said that government expects to increase its revenue.
“The strategy incorporates increase in income from new revenue generating initiative which include collections … from the licensing fee etc from privately run medical schools, improved collection of taxes from a myriad of areas including from our shipping registry and collection from our statutory bodies and state owned enterprises just to name a few,” he pointed.
The Premier closed his budget presentation with a prayer during which he described the budget as ambitious.