fp Turks and Caicos

The U.K. Department for International Development has informed Parliament of its intention to provide a loan guarantee of up to $260 million to the Turks and Caicos Islands for five years, His Excellency the Gov. Gordon Wetherell announced today (Feb.3). Parliament will have until Feb. 17 to consider the matter.

On 1 July 2010, as an urgent initial response to Turks and Caicos Islands’ worsening financial difficulties, the UK’s Secretary of State for International Development published a Written Ministerial Statement announcing that through his department, the UK Government would work to put in place a package of financial support together with commercial lenders as well as providing immediate short term lending.

Since then, while seeking commercial bank proposals on the package of financial support, the UK Government has provided short-term financing totalling £27.3 million - approximately $44 million. This vital support has allowed the TCI Government to meet unavoidable commitments including continuing to pay for public sector salaries for essential health, education and policing services.

As UK Ministers said in their joint Written Ministerial Statement dated 9th December 2010 ‘It has become clear to UK Ministers that the fiscal picture in Turks and Caicos Islands represents an unacceptable collapse in the fiscal governance of the Territory, which needs urgently to be addressed.  Whilst funding the immediate unavoidable costs of the Turks and Caicos Islands Government, the Department for International Development has provided a Chief Financial Officer to the Turks and Caicos Islands Government, to meet the urgent task of addressing its structural deficit and putting it on a course towards a sustainable fiscal surplus in the financial year 2012/13’. 

The UK’s Department for International Development has now informed Parliament of its intention to provide a loan guarantee to the TCI Government.  This would enable us to secure a new commercial bank lending that will refinance existing debt and cover further projected deficits before we achieve a fiscal surplus in the financial year ending March 2013.  Proposals for commercial lending have been received from a number of banks. The details of the package are still to be finalised. The lending will be for an amount of up to $260m for up to five years.  Parliament will have until 17 February to consider the minute.

Securing commercial lending would be a vital step for the Turks and Caicos Islands.  It would provide the time we need to rebuild financial stability and balance the budget.  This guarantee would form an important step in our financial plan, and will help the achievement of key milestones that need to be reached before a date for elections can be set.

GORDON WETHERELL

It is normal practice to provide 14 parliamentary sitting days notice before taking on contingent liabilities.  However, due to the need to provide sufficient time to take all the steps required to allow the TCI Government to have a budget, with its much needed fiscal measures, in place for the financial year starting 1 April 2011 the period of notice will end on 17 February.  These steps include:  completion of the commercial negotiations and legal documentation of the loan and guarantee arrangements; finalising a budget on the basis of the certainty that the loan and guarantee arrangements provide; and TCI Government approval of the budget.   

If the liability is called, provision for any payment will be sought through the normal Supply procedure.  

The Treasury has approved the proposal in principle. If, during the period of parliamentary notice beginning on the date on which this Minute was laid before Parliament, a Member signifies an objection by giving notice of a Parliamentary Question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.

Department for International Development
1 Palace Street
London SW1E 5HE
January 2011