The Valley , Anguilla (January 22nd 2016):- There has been a new development, dashing the hopes of the Government and people of Anguilla in that the British Government and the Governor have declined to approve the two Banking Acts – and the Appropriation Act embodying the 2016 budget – while matters relating to the banking resolution remain under active discussion.
The following is a press release issued on Wednesday, January 13, by Governor Christina Scott.
“Following a number of questions and concerns raised with the Governor’s Office in recent days, I thought it would be helpful to clarify the situation with respect to seven pieces of legislation passed by the House of Assembly during December 2015.
Four of these Acts, which give the Government of Anguilla power to raise certain taxes have received assent, and are now enacted in law. These are the Interim Stabilisation Levy (Amendment) Act 2015, the Control of Employment (Amendment) Act 2015; the Vehicles and Road Traffic (Amendment) Act 2015; and the Property Tax Act 2015. As a result, from the 1 January 2016, the Government of Anguilla has had the legal power to collect taxes as set out by the legislation. These Acts, together with other tax raising measures, together support the Government’s revenue forecasts anticipated by the Budget.
The 2016 Appropriation Act 2015 (the ‘Appropriation Act’) is the legislation that allows the Government of Anguilla to spend money it has collected to provide services for the public. Essentially, the legislation sets out the total amount of money that the Government plans to spend in 2016. It gives the Accountant General the authorisation to spend up to a certain amount of money in each Ministry, on recurrent expenditure (e.g. salaries), on capital expenditure (e.g. infrastructure) and on repaying any interest on the Government’s loans.
HE Governor Christina Scott
The Banking Act 2015 provides for the regulation of banking business in Anguilla, and repeals the existing Banking Act. Its sister legislation, the Eastern Caribbean Asset Management Corporation Act 2015 gives legal effect to the Agreement establishing the Eastern Caribbean Asset Management Corporation (ECAMC). Together, these ‘Banking Acts’, give powers to the Eastern Caribbean Central Bank and the Government of Anguilla to take the steps necessary to resolve the issues in relation to Anguilla’s domestic banks, with the aim of ensuring a resilient banking sector for Anguilla.
As the Chief Minister has explained, the proposals he wishes to adopt for resolving the current banking difficulties require the Government of Anguilla to borrow more money from the Caribbean Development Bank. They may also result in additional costs to the Government of Anguilla in starting to repay loans that would begin to fall due in 2016. As a result, it is clear that the Appropriation Act and the Banking Acts are closely related.
I have not yet given my assent to either the two Banking Acts or the Appropriation Act. Discussions continue between the Government of Anguilla and the UK Government on a number of areas of important detail likely to affect Anguilla for at least a generation. This is resulting in a delay to the assent of the legislation, but it is a delay of necessity. UK Ministers and I want to be satisfied that the resolution plan that is implemented is both affordable to the Government of Anguilla (and hence the Anguillian tax-payer who must pay for it now and in the future) and sustainable (so that banks in Anguilla do not get into difficulties in the future).
Let me give a few examples of the sorts of issues being discussed:
- the UK Government has asked for more information relating to the appointment, accountability and governance of the organisations implementing the resolution, such as the new bank and the proposed Asset Management Corporation. This is important because these organisations need to operate at the highest levels of expertise and accountability to ensure that a resolution is successful and stable;
- following conversations the Chief Minister had with Minister Duddridge in London in December, consideration is also being given as to how to ensure that suitable arrangements are in place to strengthen public financial management in order to help manage the challenges of an increased level of debt. The UK continues to work closely with the Government of Anguilla on what arrangements will be necessary and achievable; and
- the UK Government has asked that before agreeing to the additional borrowing required, the Government of Anguilla sets out how it intends to return to compliance by 2025 with the borrowing limits set out in the Fiscal Responsibility Act 2013. This matters not just because it is the law, but because it is important that future generations are not burdened with unsustainable debt and Anguilla is able to invest for growth in the future.
Whilst these discussions continue, I appreciate that the delay may be causing some concern, as well as posing some practical difficulties in terms of spending on public services.
Fortunately, the Financial Administration and Audit Act 2010 (the ‘FAA Act’) enables the Finance Minister to issue a provisional warrant that allows for the Government to continue to spend up to the levels it did in the previous year, for up to four months of the current financial year. Additionally, the FAA Act makes allowance for Executive Council to approve an amount above this in order to cover additional expenditure if the situation requires it. Hence, whilst the time taken before assent is not ideal, there exists in law practical and effective mechanisms to ensure that the Government of Anguilla can continue to function whilst these important discussions continue.
Finally, I do recognise that there are strongly held views and concerns on all sides. May I therefore take this opportunity to assure the people of Anguilla that the UK Government and my office will continue to work with the Chief Minister and his colleagues as he seeks to implement a resolution to the banks which is in the best interests of the people of Anguilla.”
Governor of Anguilla
13 January 2016
Chief Minister and Minister of Finance, Mr. Victor Banks, responded to the decision during the Radio Anguilla Talk Anguilla Show presented by Mr. Keith ‘Stone’ Greaves.
The Chief Minister said the decision “does not allay our concerns about moving forward expeditiously with the banking resolution and all those other issues, but at least it points to the fact that the British Government is looking closely at the issue; and that it is going through whatever processes they believe that at the end of the day they assume that it is important for them to be satisfied that the resolution is in the best interest of the people of Anguilla. That is the position they have taken.
“I have already determined that the resolution is in the best interest of the people of Anguilla. Of course because of their contingent liability/responsibility I would imagine that they want to make assurance doubly sure. They are talking about the viability of the new bank going in place. It is difficult to sit back and look at the situation and predict what turn an economy may take. You can have a disaster within a couple of months and all the effort that you put into making those assurances doubly sure, at the end they come to naught.
“The fact is that I continue to say sometimes when you are waiting for perfection you can find yourself in a situation which is so disastrous that you have wasted a lot of time. Perfection should not be an enemy of the good. If there is something that is good you should not delay it for perfection when it is so critical to come up with a solution. I think that we are on the right track and I hope that the British Government responds in the spirit of the release I have just received from Her Excellency the Governor…”