| U.K. commits to TCI loan | | Print | |
| Written by Richard Green/richard@fptci.com | |||
| Thursday, 10 February 2011 12:41 | |||
 The much anticipated long-term loan commitment from the U.K. for the Turks and Caicos Islands appears to be in hand, pending Parliament’s approval, but all the pieces have yet to fall into place to turn around government finances within three years. That’s how long the Department for International Development (DFID) is giving the TCI government to turn its deficit spending into a surplus, which is a requirement of the loan guarantee of up to $260 million for as long as five years. If any member of Parliament objects to or questions the loan guarantee before Feb. 17, it will not go forward until the objection is examined, DFID said. In the TCI to make sure the government achieves a balanced budget by March 2013 is Caroline Gardner, the country’s new chief financial officer appointed by DFID in September. She is responsible for all financial decisions of the interim government under the authority of His Excellency the Gov. Gordon Wetherell. The governor says the new loan guarantee is “interlinked” with an ongoing revenue study that is examining the possibility of new valued added taxes, property taxes and excise taxes. Also under study will be work permit and national insurance collection systems, and government fees and charges. The governor said the study is expected to be unveiled this month and go before the Consultative Forum and Advisory Council for comment. “We would like to have a package in place in time for the budget, which is also due by the end of March,” the governor has said. Achieving government financial stability is one of the eight milestones set by Parliamentary Under Secretary of State for Foreign and Commonwealth Affairs Henry Bellingham before elections will be allowed. When the Constitution was suspended in August 2009 after allegations of government corruption, the country had a national debt of $135 million, including $56 million in unpaid bills and $19 million in short-term overdrafts. Strict spending controls were put in place, including a 10-percent pay cut for all government employees. Negotiations had been going on between the interim government and local lending institutions, but those fell apart in February 2010 when it became apparent that no lenders would extend credit to the TCI unless the U.K. would back it up. By April, the debt had increased to $159 million when the interim government passed its first budget of $221 million with a projected $26.6 million deficit. In July, after a change of government in the U.K., DFID said it would put together a lending package that now appears to have materialized. Government finances continued to nosedive, and the Advisory Council was told in December that the project budget deficit had more than double to $60 million. Meanwhile, the U.K. government has provided more than $44 million in short-term financing to keep the government running.
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