Govt using FSC as its ‘piggy bank’ – Hon Fraser tells constituents
This was raised as one of several concerns of the Third District Representative Honourable Julian Fraser RA, which he highlighted to members of his constituency last evening May 22, 2014 at one of his scheduled twice yearly community meetings.
The meeting was held before a packed audience at the Valarie O. Thomas Community Centre in Sea Cow’s Bay as he took residents through a microscopic journey of the financial affairs of the NDP government.
“The financial affairs of the government are unhealthy or at best disturbing. And this I credit to a failed policy rife with economic mismanagement. This government’s continued practice of austerity cannot sustain if they intend to see jobs, production and economic growth,” he said.
Hon Fraser pointed out that as at April 14, 2014 government owed its vendors $18,225,000 which consisted of vouchers dating back as far as January 21, 2014. “And I want you to note the cutoff date of the 14th of the month, which means that the figure does not include employee salary which came due on the 15th and represents another $4+million which then brings that total up to $22,225,000,” he said.
He said that at the same period April 14th, government had only $5,193,107 in its Consolidated Fund and was literally in no position to make good on its debt.
“This bothers me,” he said, adding that because as recently as December last year, a deposit of $9,000,000 was placed in the Reserve Fund, which as of April 14th stood at $36,885,829. “What is happening here is that Government has taken the decision to use monies owed to you the citizens of the Territory and put it in a bank account for themselves, and make you wait until they are good and ready to pay you.”
According to Hon Fraser, the method of putting the people through this level of hardship (holding the people’s money for their own investments), “is without conscience, is insensitive, and it must stop. It is taking austerity to a completely new level.”
“When I first charged the government of practicing the economic model ‘austerity’, I was focusing solely on their lack of vision evidenced by their failure to stimulate the economy through capital injection, instead of padding the Reserves,” he noted.
“I am now aware that the very money, (up to half of it, $18million that is) already belongs to you for work done or goods and services delivered. Government’s finances are so poorly managed from a point of policy that Central Government has resorted to using the Financial Services Commission as its piggybank,” said the Third District Representative.
The frequency of their draw downs and their relatively small sizes suggest that the Government is strapped for cash, and is doing something wrong, noted Hon Fraser.
“One thing for sure, we know that their Consolidated Fund is incapable of servicing Government’s payables. How we know is because we are told that for the first three months of 2014 the average daily bank overdraft was $1,530,000, and for one of those three months the average was as high as $2million,” he said.
The Protocols For Effective Financial Management is a bad deal for the Virgin Islands asserted Hon Fraser as he claims that this was his position the day it was signed on April 23, 2012, and it is still his position today. “Our Government was literally outfoxed by their parent Government in the United Kingdom.”
He said the Protocol requires all projects to be subject to the tendering and procurement process, “but yet this government continues to execute projects through petty contracts which by-the-way was perfectly legit before the Protocols.”
He said that the Protocols require written approval from the Secretary of State before implementing any project over $12million. But yet government has signed a contract for the construction of the Tortola Pier Park Project; they have paid out over $1.2million to consultants, and has since broken ground, but still cannot present the House of Assembly with the written approval from the Secretary of State.
“Speaking of a bad deal for the Territory under the Protocols, it is required that we have not less than an equivalent 25% of our recurrent revenue (referred to as liquid assets) in reserve in order to be compliant with the borrowing limits. It means that we have to get the reserves to $75,000,000 and this must happen by 2015.”
He claimed that significantly terrible about this, is that the definition of liquid assets which was before the protocols broadened to include all the cash in all the Funds consisting of among others, the Consolidated Fund, the Disaster Fund and any other government Fund including the Reserve Fund, has now been narrowed to just the Reserve Fund.
“Essentially, had the definition not change, our liquid assets would have on April 14th been $48,051,380, instead of the $36,885,829 as it is strictly limited to the Reserve Fund.”
Hon Fraser noted that before the Protocols, Government could borrow up to 30% of the Social Security Pension Fund (that is up to $150,000,000) without having to seek approval from the Foreign and Commonwealth Office. With the Protocols in place now, we must get permission from the Foreign and Commonwealth Office to borrow even a cent of that money.
“And lest anyone’s bowel get in an uproar about government borrowing Social Security’s money, let me inform that the provision is a part of the Social Security’s mandate by legislation,” Hon Fraser said at his meeting.
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24 Responses to “Govt using FSC as its ‘piggy bank’ – Hon Fraser tells constituents”
By the way, the economic downturn and cash flow problem is not specific to BVI. It is worldwide. There is no magic wand to eliminate it. We need qualified economist to walk us through this trough. The economy is cyclical and takes lots of stimulating to take it pack to its peak. This takes serious strategizing, not complaining or pointing figures. He should assume a bipartisan spirit and share his knowledge with the current government for the sake of the country and not treat this as a govenmental problem.