September 18, 2020

Statement by Premier and Minister of Finance Dr. the Honourable D. Orlando Smith, OBE


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Statement by Premier and Minister of Finance Dr. the Honourable D. Orlando Smith, OBE on behalf of: the British Virgin Islands, Anguilla, the Cayman Islands, Montserrat and the Turks and Caicos Islands 42nd annual meeting of the board of governors of the CDB

Dr. the Honourable D. Orlando Smith, OBE

Mr. Chairman, Fellow Governors, Directors, Mr. President, Advisers and Officers of the Bank, Distinguished Ladies and Gentlemen, please accept best wishes from the five British Overseas Territories of, Anguilla, The Cayman Islands, The British Virgin Islands, Montserrat and the Turks and Caicos Islands.

I also convey a special thank you to the Government and people of Cayman Islands for their hospitality and generosity. The constant downpours were quite a dramatic welcome, and one, which I am sure none of us will forget. The Overseas Territories of the United Kingdom, as some of the smaller individual economies that are members of the Caribbean Development bank are faced with many of the challenges posed by our other borrowing members, but on a smaller scale in some areas, and in areas of vulnerability on a much more pronounced scale.

The events in the global economy in the last two to three years have made it even more critical that we reduce the vulnerabilities that result from our small size by having very robust risk management, and governance practices. In this regard the Caribbean Development Bank has been able to assist us in providing for our people in the present and preparing our societies for them in the future. First among these, is that of enhancing our fiscal space.

As you know Mr. Chairman, the British Overseas Territories are not able to sustain their economies with even moderate manufacturing; land based agricultural products, nor have they yet been able to develop their sea based endowments to a level that would allow them to derive significant economic benefit from such pursuits. As a result therefore, we have had to depend very heavily on the service based industries of tourism and financial services for our livelihood.

With a reliance on these industries whose success depend on a multitude of factors, including among other things our ability to differentiate ourselves from our competitors who have usually have bigger and more diversified economies, this makes us especially susceptible to the sometimes fickle nature of global economics. The Caribbean Development bank has been a stabilizing factor for us over the time that we have been members, and an important intellectual and fiscal resource, with which we have been able to offset many of the challenges we face in our respective countries.

The approval of an Infrastructural Rehabilitation loan, by CDB last year for example will now allow the Virgin Islands to not only repair and improve our transportation and drainage infrastructure in the Virgin Islands to the benefit of residents and visitors alike, but will also serve as a useful economic tool that will help mitigate current employment challenges in the construction sector.

In July 2010 Anguilla was the recipient of a US$55 million Policy Based Loan (PBL), which enabled the territory to restructure its debt to have a longer maturity date and at a lower interest rate. This has contributed significantly to efforts aimed at fiscal consolidation and rebalancing. As OTs we support the on-going efforts of the CDB to improve the effectiveness of the PBLs and to continue to have them available to BMCs as a tool to address the fallout from the global fiscal crisis.

We trust that the review of the facility will soon be finalized and the consideration of applications restarted. At the moment Anguilla is also in the process of applying for two small loans which would total EC$10 million through CDB’s SDF 7 facility in the area of Community College development and Road Development. We trust that they will receive the support of Anguilla’s governing member state as, among other things, they would serve to generate some much needed economic activity.

We are especially pleased with the noticeably improved responsiveness of the bank and would like to take this opportunity to convey collectively our deepest appreciation and gratitude for a job well done in the past year. Notwithstanding, it is important that we highlight the need for continuous improvement in internal governance and auditing processes of the bank to meet and hopefully exceed those of your contemporaries in the region and farther afield.

The recent downgrade of the bank’s risk rating is a tangible indicator that there is much work to be done here. As a result, we pledge our full support to the president and his staff as they develop the internal systems of the bank to treat with the shortfalls identified by the Moody’s rating agency.

Although we hold the view that the report submitted by Moody’s does not necessarily support the consequential rating received, we hold the position that with a continued demonstration of sound management practices across the entire spectrum of financial risk management which should include an improved borrowing policy framework, the bank will emerge from this challenge as a better institution than it was before. I am thus especially pleased to hear from the President of the Bank this morning in his address, that he is pursuing an aggressive programme of risk management reform in the bank.

On a regional level, we continue to recognize the need for the Caribbean region to operate as an economic block, realizing that together, we can do much more to promote our survivability as individual member states in an increasingly complex global environment. We believe that our futures are intertwined, and on the issues that affect us all, we should always, without exception, strive to approach them with a regional response.

Yet in saying this we should also recognize that as states in various degrees of constitutional maturity, the sovereignty of each state must be respected and maintained. Foremost among the problems we face as a region is that of climate change, and a natural response to that has been the need to promote the use of renewable energy in the region. This is a subject that the bank should continue to pursue in an effort to position the region to develop its ability to be self reliant.

We believe that the priorities of the bank remain relevant and especially so in relation to its strategy on the reduction of poverty in the region. As a result the Special Development Fund continues to be an acceptable vehicle through which to pursue this goal. This fund is not only important in our fight to improve the standard of living of the people of the region, but is also a significant tool in our goal towards improving the security of its citizens.

Despite this unwavering support, we share the concerns of some of the other members in respect to whether or not we should focus more doing a few interventions very well, as opposed to trying to cover a wide spectrum of interventions all at once, the risk being that there is no significant progress in any one area.

We urge the bank to continue to forge ahead in its poverty reduction strategy, but along the way let us step back and determine what would be in the best interest of the people we are trying to help. In the interest of brevity I will close Mr. Chairman, by recognizing that there are many problems in the region which we must face, ranging from human resource constraints, health issues and economic challenges.

Though while these challenges stand before us, I remain confident that the bank is an important part of the arsenal we have to face our challenges. I urge you to continue to strive towards improved excellence.

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