The Premier referenced an article written by the British media house BBC, stating the rise in inflation has caused the UK’s government interest payment on public debt to be increased by £1.6 billion or 36 percent in comparison to last year.
Fahie said forces here in the Virgin Islands and abroad tried to pressure his government in signing the loan guarantee regardless of the terms and conditions. However, he said the size of the package and projects were beyond what he considered prudent, given the dynamics of the ratios outlined in the protocols for effect finance management.
“Some of the terms and conditions needed adjusting and we proposed a more manageable number of projects for less money with more favourable terms,” Fahie said.
The Premier, who is also the Minister of Finance, said up until recently, persons were still saying that the government should have taken the money and he said he still stands by his decision.
“When you look at what is happening with other economies, and with the global developments and this includes developments that were not foreseen at the time such as COVID-19 and now the war that is unfolding in Europe — which is already having a global economic impact such as rise in oil and natural gas prices — which have the potential to disrupt global trade and also the climatic risk in this region.”
“I am sure you would agree that your government’s position on the loan guarantee was wise. Could you imagine if we had leveraged these Virgin Islands and then with the sudden and unforeseen spikes in the global economy, we had exceeded the ratios and protocols for effective financial management and the terms we had concerns about engaged?” the Premier questioned.
Fahie said the outcome would have several financial ramifications on the territory and its efforts to properly manage its own funds.
“If we had been short-sighted and hasty as those persons who were pushing us to agree, the Virgin Islands people would possibly have lost their hard-fought right to manage their own finances. With the guidance of God, your government has been making the correct decision to protect the Virgin Islands. Your government has been prudent, and your government has been responsible, and we continue to be and the record bears this out. Please. Don’t mistake the absence of noise for the lack of activity,” the Minister of Finance said.
Earlier this month, Opposition legislator Julian Fraser said the Fahie-led administration made a gamble when they refused the loan guarantee from the UK when it entered office, just a year removed from hurricanes Maria and Irma.
According to the Third District Representative, the decision to forego the offer from the UK government may have backfired given the unanticipated blow taken by the BVI’s economy because of COVID-19.
The legislator expressed that the administration, led by Premier Andrew Fahie, could have later accepted the UK’s offer and avoided embarrassment, but declined to do so.