The
Development Planning Unit
Government of the British Virgin Islands

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LEGISLATIVE COUNCIL
BUDGET ADDRESS 2001

by the
Honourable Ralph T. O'Neal
Chief Minister and Minister of Finance

Delivered on: 21 December ,2000

"Gateway to the Future"

INTRODUCTION

Mr. Speaker, I move that the Appropriation Bill, 2001 be read a second time, and in so doing, I seek your indulgence to allow me to read my Budget Address.

2. It has become customary that the Annual Estimates be laid timely in recent years. It takes a great deal of effort to produce this document, even though it may be considered a mere routine exercise. This document reflects the past budgetary provisions and calculates the revenue and expenditure for the current year as a base to forecast future revenue and expenditure. Such a forecast reflects the Government's financial viability and thus the financial viability of the Territory. It is therefore imperative that this exercise be done accurately and timely to ensure that the financial engine of the Territory keeps stoking and providing momentum for all within our shorelines. This exercise, Sir, suffers from a lack of support by senior civil servants in completing their tasks timely. This then impacts on the scheduling of events in the process to ensure closure.

3. Mr. Speaker, I take pride in the fact that I have maintained the provisions of the Constitution and Finance Act, which mandate that Annual Budget Estimates be laid and debated by this Honourable House on or before 31 December of the current year for the following year. This year, we all know, was regarded as one of great joy and possible tragedy. We, for all intent and purposes, avoided the pitfalls associated with the Y2K dilemma, and actually enjoyed the prosperity the year could have afforded. There was, however, tremendous pressure on the Government to implement and coordinate projects of both a major and minor perspective. During the address, I will speak to this matter in more detail, but the path to this point has been arduous. This is thus my sixth consecutive address and fourth consecutive year in which the Estimates were laid before year's end.

4. Mr. Speaker, for the past few years, I have raised my concerns about the poor implementation rate of project execution within the Government. This problem is now at the stage of Category 5, if calculated within the context of the hurricane season. In other words, it is as bad as it could conceivably be. This may be contrary to popular belief because works are being executed, such as the Beef Island Airport Expansion and Beef Island Bridge projects, etc. Projects that are over ten (10) years old being currently executed is not a standard I wish to associate myself with indefinitely. Things must and will change. The concerns as regards human resources I have raised briefly with His Excellency, the Governor and I intend to do so more aggressively as the year turns. The assistance that needs to be forthcoming to Ministries and Departments has been sought from the Ministry of Finance in the form of the Finance Officer Programme and now the Project Cycle Management Unit. I have noted the lack of proper utilization of the Finance Officer Programme, and I have instructions for the Financial Secretary on that matter for the coming year. The Project Cycle Management Unit I will detail more substantially later, but it is clear that my undertone for this address is "Planning and Execution".

5. As we move into a new millennium the demands on the Service will be greater. This, I think,is the principal purpose for the public Sector Reform initiative, championed by His Excellency, the Governor, in conjunction with the Deputy Governor's Office. This initiative must be coupled with the concerns raised about planning and execution to advance the Territory and foster more support for economic growth.

6. Mr. Speaker, last week we celebrated the 50th Anniversary of the Legislative Council of the British Virgin Islands. On that auspicious occasion, Sir, we highlighted the achievements by four (4) of our national heroes and former legislators. The dedication of these heroes and others like them, established for generations to come a foundation of constitutional rule within a democratic framework, from which our Country has developed in the face of oppression. This legacy must be championed into the new millennium with the same, if not greater, intensity and passion that our forefathers had. We owe it to them not to just maintain the integrity of these islands but to channel new avenues for greater prosperity, and in so doing elevate our people in the process, as our greatest resources lie in our people and the natural beauty of our islands.

7. The economic future of this Territory has remained a constant concern of mine, my Government, and I am sure, the people of this Territory. Challenges are before us in the areas of financial services and tourism. These challenges are not insurmountable and with the continued efforts of the various Ministries and Departments concerned, we will develop and implement the strategies to ensure continued financial viability. Some of these strategies will be addressed as I move on.

8. Sir, In recent months, we have seen that the Government has been able to address some of the ministerial struggles by finally introducing a fifth ministry and thus splitting the former Ministry of Health, Education and Welfare. This did not come without its challenges, but once again, we weathered the storm and I trust that we are in the recovery stage charting a new path and not in the eye of the storm. These ministerial changes I expect will create an environment that will enable greater attention to be placed on our education system, health system and social services. These areas, along with a recognition of our culture and cultural differences need greater attention. My ministerial colleagues, now in office, have assured me that only greater things are to come for this Territory. Let me again record my thanks to His Excellency, the Governor and the Parliamentary Under Secretary, Baroness Scotland for their assistance in this regard.

9. Mr. Speaker, I am in no way saying that we have not come far as a people, and we have done so as a people for the most part. What is now needed is greater introspection, professionalism, and national pride to set this Territory apart. History has taught us within the Caribbean region and internationally that prosperity that is not well managed will lead to downfall. We must avoid such a path by putting our trust and faith in the hands of Father Almighty for guidance and strength.

10. In this light, Mr. Speaker, I would encourage all Honourable Members who now have the Appropriation Bill 2001 and Draft Budget Estimates to peruse them diligently. As we move towards Standing Finance Committee, we do so with open minds and honest and genuine intentions for the advancement of this Bill and its supporting documentation.

GLOBAL PERSPECTIVE

                Mr. Speaker, complete and total control of the global economy will never be possible. At best, Government's attempt to monitor and forecast the economic and political changes, which may impact our often fragile, financial bases. The greater difficulty, however, is not in the misguided attempt at economic management, but in the one thing that seems to continually escape us, economic planning. For to have a plan is to have a foundation for purposeful execution and achievement of the desired goal.

2. Circumstances within the context of the global economy can change so dramatically in the course of a fiscal year, Mr. Speaker, that we must forecast, strategise, and organise ourselves in response to any and every deterrent.

3. Inflation and all its attendant ills are again a hot political issue in Europe and the increase in oil prices that are seemingly imminent will only make matters worse for interest rates, which will more than likely increase. The gap of economic stability between the countries of core Europe, such as Germany and France, and those on the economic periphery, including Ireland and Spain is growing wider. It appears that continued interest rate hikes by the European Community Bank (ECB) are unlikely to strengthen the euro, and forestall further inflation to the eastern nations.

4. The financial markets in Europe have been inconsistent over the past twelve months with the German Dax up, the United Kingdom FTSE down and the Japan Nikkei down, in comparison to the same period last year. For this Territory, such figures may impact our European travel visitors more so than anything else and thus we have to continue to monitor these trends. Positively speaking, all indications support that the Asian Crisis is no longer a significant potential threat to other world economies.

5. In the United States, Mr. Speaker, the yet to be determined presidential election tells a tale of political discontentment, against the backdrop of that country's longest run in recent times of economic stability and productive growth. Such contradictions and volatile fluctuations on international capital underscore the unpredictability of forces outside the control of those charged with the obligation of leadership. Political stability can never be underestimated as an ingredient for economic prosperity.

6. The Dow Jones Industrial Average, though consistent, is down for the same twelve (12) month period. The consistency and growth of the United States economy over the past ten (10) years is nothing less than extraordinary. The growth patterns are expected to continue except for the potential for energy related prices to impact inflation. The overall impact, however, should be rather negligible on our economy, though investors may want to take stock and re-strategise their portfolios, and mortgage holders may opt to refinance at this time.

7. Mr. Speaker, North America and Europe are our main markets for tourism and financial services. In the Global arena, we are all connected and all affected by the changes that dictate the rise or fall of nations. The British Virgin Islands is yet unsure how the continued economic volatility within these countries will impact our strategies in pursuit of global investors and local commerce. A small economy such as our own may be easily weakened by the domino effect of strategic changes by the super powers of the world. We must accept the responsibility to secure and maintain our national accomplishments.

REGIONAL PERSPECTIVE 2000

            Mr. Speaker, the Caribbean Region faces as many as, or more challenges than our global partners. The inability for the Caribbean to unify as an economic force to lobby its position internationally continues to be but one of our greatest shortcomings. Whether the North American Free Trade Agreement (NAFTA) and the European Commission (EC) have been totally successful or not, they have changed the way business is done and the Caribbean must adapt to this change in a timely manner or face the consequences.

2. The threats before us in the arena of financial services, tourism and trade will not go away. Strategies must be devised and implemented to mediate the threats and overcome the challenges. Efforts already undertaken in the area of financial services in the form of the KPMG Report (on Financial Services) is a good indication of Caribbean unity, in collaboration with our international partners to preserve our economies through mutual effort and understanding. The trade and tourism areas need such efforts to help combat the pressures of the threats facing the Region.

3. The European Union has attempted to formulate a new partnership arrangement with the Overseas Territories that, frankly, leaves a lot to be desired. More so, for my Caribbean countrymen in the trade industries that depend on the European market, the future seems dim. These trade pressures must be clearly understood and we must work immediately on alternate strategies in the intermediate term to reopen the markets for the mutual benefit of our international and regional partners. The window for grant and concessionary funding seems to be steadily closing. This means even greater pressures on the Caribbean economies to generate monies to fund capital programmes within the Territories. The existing financial pressures in no way help the situation.

4. The Caribbean Development Bank also faces its share of challenges from its non member borrowing countries. The same international partners are now ceasing contributions to new financial packages to inject funds into the Bank. If this is done, the budgetary pressures the Bank will face are immense and thus, the availability of funding at concessionary rates will be limited, if not eliminated. I must encourage our international partners to try and work out the differences they may have with this Institution for the greater good of the Caribbean. The issues are not impossible to overcome and the infusion of funding is needed as the challenges the Caribbean faces continue to grow.

REFLECTIONS
(Where have we been – Where are we going)

            Amidst all of the uncertainties that directly and indirectly impact our economic foundation, we have persevered and achieved much in which we can take pride. With the grace of the Good Lord we have been spared the ravages of natural disasters to our shores during t e past year.

2. Let us for a moment look back at the pledges and commitments of my Administration indicated in previous budget addresses. The Territory and its people have moved "pass the dawn and into the break of the morning". A new morning, Mr. Speaker, a morning bright with the promise of realization and achievement.

3. In 1997, Mr. Speaker, we polled the populace and were told of the areas where improvement was most needed:

• Upgrading and expansion of our sewerage systems
  

• Upgrading and expansion of our airport and health services
  

• Allocation of greater resources for education
  

• Greater capital injections to our highways, bridges and drainage systems
  

• Protective barriers for our mountain roads and sea walls
  

• Increase in recreational facilities and social services
  

• Increased road access for agricultural purposes and greater assistance to our farmers
  

• Increased enforcement in the protection of our beaches, fishing zones, and coastal development

4. In 1998, Mr. Speaker, we answered the cries of duty laid down from the previous year:

• We commissioned a sewage treatment plant in Cane Garden Bay
  

• We purchased land at Beef Island to expand the airport facilities
  

• We added classrooms and expanded curricula activities in schools
  

• We completed major road widening and other road works
  

• We improved our national parks and revitalized our festival celebrations

5. In 1999, we extended our vigil beyond the call:

• Commissioned an Educational Review
  

• Commenced construction for the expansion of the Peebles Hospital
  

• Completed the Cruise Pier extension
  

• Commenced the Electricity Expansion Project Phase III
  

• Contracted for the Beef Island Airport Expansion Protect (Terminal & Civil Works)
  

• Completed Y2K preparations
  

• Introduced the Postal Development Project
  

• Commenced construction of the H. Lavity Stoutt Community College (HLSCC) Learning Resource Center
  

• Initiated planning & design of H. Lavity Stoutt Community College Marine Center
  

• Commenced the Public Sector Development Programme (PSDP)

6. During the year 2000, Mr. Speaker, my administration diligently applied the resources of this Government in response to the future of the Territory and its people:

• Beginning 2000, we highlighted our culture and gave thanks for the blessings bestowed upon our shores at celebrations which were hosted on Tortola, Anegada, Virgin Gorda, and Jost Van Dyke.
  

• Upgraded the Royal Virgin Islands Police Sub-Station on Virgin Gorda and made provisions for substantially increasing the complement of officers within the police force.
  

• Renovated the office of His Excellency, The Governor to provide additional space and greater opportunity for the utilization of the facility. As well, plans were finalized to advance the construction of a new Governor's residence.
  

• Launched the Public Sector Development Programme and commenced a Service wide programme of operational improvement.
  

• Finalized the tender process for the provision of architectural drawings for the new General Post Office, to be located at Port Purcell, and finalized architectural briefs for new or upgraded postal facilities at Road Town, West End, East End/Long Look, North Sound and the Valley, Virgin Gorda.
  

• Prepared the Terms of Reference to facilitate the invitation of architectural designs for the new Government Financial Complex.
  

• Introduced the Customs Reform and Modernisation Programme, and commenced implementation on recommendations to improve, enhance, and modernise the Department.
  

• Procured and launched a new patrol vessel to be used by the Customs Department in its enforcement responsibilities. As well, we identified a site for the construction of a Customs Mobile Task Force Marine Base.
  

• Executed the relevant contracts and software licencing agreement for the initiation of the Standardised Integrated Government Tax Administration computerisation system within the Inland Revenue Department, to begin in the coming year.
  

• Commenced plans for the computerisation of records within the Immigration Department, which will include consolidation of the Tourism Statistical System, housed within the Development Planning Unit.
  

• Completed the public tender process for the computerisation of the Attorney General's Chambers.
  

• Upgraded school facilities, including the replacement of the roof of the Anegada Primary School, constructed a second floor and classrooms to the Willard Wheatley Primary School, and demolished Block A of the British Virgin Islands High School in keeping with the master plan for the development of the Institution.
  

• Commenced cutting of roads within the Nibbs Land Subdivision in preparation for the issuance of land titles to those persons who have been allocated lots.
  

• Conducted improvements to fishermen's landing sites at Cleaning Hole, Carrot Bay and Virgin Gorda to provide better access to fishermen and boaters.
  

• Initiated plans to appoint a consultant to assist with establishing a Pelagic Fishing Programme.
  

• Constructed a telecommunication sub-station on Virgin Gorda to meet the needs of providing access to telecommunications on the island.
  

• Implemented the new 1999 Building Regulations to ensure the appropriate standards of buildings throughout the Territory.
  

• Installed sea defense armory in the Sea Cows Bay, West End and Carrot Bay areas as an ongoing project to protect the shorelines against storm surges.
  

• Maintained a programme of ghut draining, correction, and cleaning in areas such as the Valley, Virgin Gorda; Road Town, Parham Town, and Duffs Bottom, Tortola.
  

• Continued the provision of community centres throughout the Territory, including:

                                        - The East End/Long Look Community Centre

                                        - Cane Garden Bay and Valerie Thomas Community Centres

                                        - Fifth District Community Centre

• Purchased land for the provision of beach facilities at Cane Garden Bay.
  

• Continued maintenance and provision of new roads, including resurfacing and road-widening in areas including:

                                    - Paraquita/Port Purcell Road

                                    - Parham Town/Ridge Road

                                    - King Road on Jost Van Dyke

                                    - North South, Virgin Gorda 

                                    - Cooten Bay 

                                    - Hannah 

                                    - Pleasant Valley 

                                    - Butu Mountain 

                                    - Zion Hill 

                                    - Lower Butu Mountain 

                                    - Brewers Bay Road 

                                    - Anegada 

                                    - Long Trench/Purcell access road 

                                    - Sabbath Hill 

                                    - Manuel

                                    - Duffs Bottom

                                    - Great Mountain 

                                    - Porter Ghut Road

                                    - Paraquita Bay

• Conducted major civil works mitigation throughout the Territory, in particular the completion of a retaining wall at Windy Hill (resulting from erosion due to the ravages of Hurricane Lenny).
  

• Continued a programme of providing road protective barriers on Jost Van Dyke, Virgin Gorda and Tortola in keeping with Government's policy to make roads throughout the Territory safe for vehicular and pedestrian usage.
  

• Completed the construction of the North Sound Jetty. Provided a rock armour for the Baughers Bay Jetty, rehabilitated Red Bay Jetty and Garner Bay Jetty. 
  

• Implemented the construction of the Beef Island Bridge, which will result in  two lanes of traffic and two pedestrian lanes connecting Beef Island to Tortola.
  

• Initiated work on the relocation of the Public Works Department on Virgin Gorda.
  

• Commenced all primary phases of construction on the Beef Island Airport 
  Expansion Project. 
  

• Secured the requisite services to initiate the New Hospital Project.

FISCAL DOMESTIC PERFORMANCE 2000

                Mr. Speaker, the performance of the Territory's economy continues to reflect positive growth. Once again our performance has exceeded our expectations; a resulting mixture of activities, including operational reform to sustain economic diversification, and exploitation of niche markets within the financial services and tourism industries.

2. The Gross Domestic Product (GDP) for 2000 is approximately six hundred and eighty two million, eight hundred and thirty thousand dollars, ($682,830,000). This reflects a growth of twenty eight million, seven hundred and seventy three thousand dollars ($28,773,000) or 4.4% over that of 1999. The annual rate of inflation for 1999 stood at 2.3%. The estimated rate of inflation for 2000, as at the end of the third quarter was 3.4%, an increase over last year.

3. Mr. Speaker, while we have recognized consistent growth to our Gross Domestic Product, there has been moderate decline in the percentage of growth between 1999 and 2000. Sir, despite this decline, our economy is healthy, but there is no room for complacency. We cannot rest on the laurels of past accomplishments. In the face of the pressures against financial services jurisdictions, we must advance our Government's policy of economic diversification and strengthen our capacity for growth in our tourism trade and new industries, such as the Marine and Fishing Industry and Electronic Commerce. I remain concerned about the development of trade and commerce within the Territory. This is part of the rationale for the establishment of a Fiscal Review Committee to enable Government and Private Sector resources to collaborate and advance the economic affairs of the Territory.

4. The estimates have been structured deliberately and practically to meet certain necessary short-term programme-related objectives, which if not properly addressed, can frustrate the achievement of the longer term objectives, in respect of our natural economic progression.

5. It has been said that the collective memory of Legislators extends no further in the past than the previous assembly and certainly no further in the future than the next elections. We must not allow this lack of foresight to be our claim to fame. We must not allow the Country's capital resources to be managed based on snap judgements and guess work. We must aggressively organize our resources and advance our goals within the scope of a national policy of planning and project management.

6. Mr. Speaker, in this regard, the Ministry of Finance has initiated the establishment of a Project Cycle Management Unit, to address the appropriate monitoring of Government's capital projects. It is our intent to promote a holistic view of investment goals and opportunities within the framework of a Public Sector Investment Programme. The conceptualization and planning to support capital investments will be provided in conjunction with the Development Planning Unit. A Consultant, formerly of the Caribbean Development Bank, has been hired to assist in providing the oversight and systemic review requisite for successful project management. Mr. Speaker, in order to realize the true benefits of sustained and meaningful economic development, a number of crucial challenges must now be addressed. We are well positioned to create the conditions for the maintenance of our economic stability through a combination of fiscal prudence, investment planning and operational accountability. With careful preparation and responsible execution, we all can enjoy the benefits of our growth, and further, ensure that it is automatically passed on in ten-ns of improved benefits to our future generations.

Tourism

In the area of Tourism, Mr. Speaker, we are reaping the benefits of almost a decade of global integrated tourism marketing aimed at an upscale clientele. We have refrained intentionally from targeting the British Virgin Islands as a mass tourism destination, but instead, maintained steady growth based on niche marketing of the Territory's unique offerings to discerning travelers.

2. Consumer expectations have changed to reflect value as the critical factor in most purchasing decisions. People are taking more frequent trips of shorter duration. This is reflected in the reduction of the stated number of overnight hotel bookings, which declined slightly in 1999. Family vacations and travel for health purposes will continue, and I am pleased to note that more properties in the Territory now provide spa and other health services for the benefit of their guests.

3. The power of the Internet is well known, as well as its heavy usage by intended travellers. It is reported that the online travel industry is likely to be worth 12.4 billion dollars by the end of 2000, and is predicated to reach an estimated value of 25.2 billion dollars by the year 2003. The Tourist Board plans to complete the construction of its dedicated website, www.bvitoursitboard.com and will launch a cooperative effort with select British Virgin Islands hotels to showcase the Territory via the United States largest online travel bookings site, "Travelocity.com."

4. The work of the Tourist Board is not without challenges, Mr. Speaker. We lack the brand name hotels that appeal to many North American travelers, and given the limited tourism attractions available to day visitors, a problem of crowding has been noted at some of our better known sites. Competition within the tourism industry is always present and is a prevailing factor in our future short term strategy, which will be directed at:

1. increasing visitors to the Territory during the summer period through a programme of enhancement and further aesthetic development, in particular to the capital city Road Town;
   

2. promoting the diversity of a British Virgin Islands vacation by encouraging visits to Anegada, Virgin Gorda, Jost Van Dyke, and our other less frequented sister islands;
   

3. establishing partnerships with locally owned inns and villas, matching the opportunities for vacation activities to unique and relevant locations and service accommodations;
   

4. continuing a programme of overall Territorial infrastructure development, and service enhancement.

5. Projections indicate that the travel and tourism industry will flourish in 2001 and beyond. It is reported that in 1998 visitors' spending totalled 210.8 million dollars. In 1999 and 2000, the Tourist Board's entire budget was six (6) million dollars, approximately, two (2) million of which was expended totally on advertising. If the country is to continue to optimize the benefits from tourism there is the need for a greater injection of capital in promotion and product enhancement. I propose to increase the allotment to the Tourist Board by some one million, nine hundred thousand dollars ($1.9), to a total annual subvention of seven million, nine hundred thousand dollars ($7.9). To realize the true potential of this area we must invest in the requisite infrastructure, human resources, financial and other support services.

6. The appointment of the Financial Secretary to the Tourist Board is but only one of the commitments I have and intend to make to the Board and this economy. I expect that the contributions made to the Tourist Board will help diversify the industry, and thus the economy. The relationship will also be reciprocal as valuable information from the industry will help with economic and budgetary planning.

Financial Services

                Mr. Speaker, I turn now to the financial services industry. For the financial services industry everywhere, the year 2000 was an eventful one. It was a year of mixed blessings as the industry continued to operate within an environment of intense global scrutiny as a result of a sea of initiatives targeting offshore financial centres.

2. Mr. Speaker, conservatively, at least eight (8) such initiatives are current. Included in these initiatives are the Organisation for Economic Co-operation and Development (OECD) Harmful Tax Competition Initiative; the Financial Action Task Force (FATF) Non-Cooperating Countries and Territories (NCCT) Initiative; the Financial Stability Forum's (FSF's) Three-items Categorisation of Offshore Financial Centres and the United Nations Global Anti-Money Laundering Programme. Among them, the initiatives cover all the areas which are of strategic concern to the major countries of the industrialised world. Viz:-

• taxation
  

• financial regulation
  

• international cooperation
  

• anti-money laundering

3. Mr. Speaker, notwithstanding the anxieties and uncertainties caused by the implementation 
and execution of these initiatives, preliminary indications suggest that the out turn from the Territory's financial sector activities in 2000 will be at least consistent with that from our record year
1999. Significant growth and increased activity being recorded in all segments of the industry is testimony to the maturation of the industry.

4. New International Business Companies' (IBCs') incorporation in the year are expected to approach new levels. Our attempts to diversify the industry are also showing positive results. In 1999 more new captive insurance companies were formed and licenced to operate from within the British Virgin Islands than in any other captive domicile. Preliminary indications suggest that we are on course to match last year's performance of 50 new captives. Mr. Speaker, I have been advised that the market for captive insurance companies is expected to harden in 2001 and I have every confidence that British Virgin Islands will continue to attract its fair share of the market. In the Mutual Funds subsector, the British Virgin Islands continue to be one of the most attractive jurisdictions for offshore collective investment schemes. Since implementation of the Mutual Funds Act, 1996, over 2,000 mutual funds have been placed on the Mutual Funds Register. At the end of the third (3d) quarter, some new funds had been registered or recognized.

5. Overall, the level of new Mutual Funds business has been at around forty (40) new applications per month, representing an annual growth rate of twenty percent (20%). As the KPMG Report points out, as the ongoing supervisory work increases, additional staffing will be necessary. This will become more evident later in the New Year when the Mutual Funds Code of Practice is issued and the domain is charged with onsite supervision as well as oversight of investment business and investments intermediaries.

6. The Department is intensifying its efforts to make the British Virgin Islands more attractive as a site for mega growth. The much awaited Merchant Shipping Act should be brought to this House shortly, thus fulfilling one of the essential prerequisites for this goal to be realised. A system of annual ship registration licences to replace the antiquated current system is presently being considered by Government for implementation during the course of the New Year.

7. The Government and the Industry remain resolved to doing whatsoever is necessary to preserve, protect and enhance the international competitiveness of our financial services sector activities. In so doing, we will ensure that all financial sector related programmes, legislation, regulatory and supervisory practices, fully comply with established international standards of prudential supervision and industry best practices.

8. Mr. Speaker, dealing with the plethora of international initiatives has been a daunting, taxing and time consuming process. It has caused us to re-examine the relevance and probity of all our industry related policies, programmes and legislation with a view to refining, updating and reengineering where necessary. Already the Financial Services Department, acting through its consultative committees (the Mutual Funds Advisory Committee, the Financial Services Legislation Advisory Committee, and the Harmful Tax Competition Task Force) has been collaborating with the British Virgin Islands Society of Trust & Estate Practitioners, the Association of Registered Agents and the British Virgin Islands Bar Association on diversification of the Industry to make it more internationally competitive. In this regard, I expect a raft of legislative amendments being brought to the House during the course of the New Year.

9. Mr. Speaker, Honourable Members ought to be aware that Her Majesty's Government intends to use the recently published KPMG Independent Review of Financial Services Sectors in Bermuda and the Caribbean Overseas Territories as the blueprint for charting the way forward. Thus, just as the Edwards Report was for the Channel Islands and the Isle of Man, the Comprehensive KPMG Report, must be considered the watershed for the British Virgin Islands financial services industry. The Report which contains positive endorsements of our success in achieving international regulatory standards also contains a large number of detailed suggestions for legislative and regulatory change. Many of these recommendations have been under active consideration by the Government and the local industry for some time. Accordingly, this Government is poised to act expeditiously on the implementation of some of the recommendations and others will entail a longer time scale for implementation to facilitate an industry/government concensus on the way forward. The three (3) priorities recommendations of the Report, and which require immediate action are:

• the establishment of an independent regulatory authority
  

• enhancement to laws and systems for combating money laundering 
  

• the enactment of compulsory investigative powers legislation to enable regulators to obtain and to share vital information with overseas regulators.

10. We here in the British Virgin Islands have technically satisfied the latter two (2) recommendations. Substantial work, however, will have to be done before a properly resourced independent regulatory authority (The Financial Services Commission) can be established by September 2001. I am sure that all Honourable Members share my concern that the public purse should not be adversely impacted by the setting up of an independent regulatory organisation.

11. At present, Government depends on the financial services industry for approximately fifty percent (50%) of the total revenue. It is my intention to establish formulae and appropriate mechanisms to ensure that the interests of both the public purse and the regulator are optimised. I shall revert to the House in this regard later. 

12. A Bill to establish the Financial Services Commission is presently being worked on by the Attorney General's Chambers and is expected to be brought to the House during the course of next year. Similarly, work is currently in progress on the OECD Harmful Tax Competition Initiative with a view to keeping the Territory off the OECD blacklist. This Government is prepared to play a full and meaningful role in the process towards greater transparency. We intend to engage in constructive dialogue with the OECD which has raised concerns about the ring-fencing of International Business Companies from taxation and other measures applicable to the domestic companies.

13. Strategies aimed at reconciling the differences are presently being developed with the Ministry of Finance and the Financial Services Department. The Government is conscious that the strategy selected must be incorporated by the end of year 2001 and year 2002 deadlines specified by the OECD for standstill and rollback measures. There is too much at stake for us not to act expeditiously to safeguard the integrity of our financial services sector and public revenue. 

14. The year 2001 will therefore be one of consolidation, re-engineering and development for the industry with a number of amended legislation being introduced to refine, update and modernise financial services legislation. The over-riding object of the process will be keeping our programmes, practices and laws at the cutting edge of the provision of cross border financial services.

15. To ensure that the financial industry remains internationally competitive, we are determined ensure that the resources necessary to safeguard our interests are efficiently and effectively and utilised for the benefit of us all. As well, we will continue to seek out new markets to new growth. In this regard, the Government intends to spearhead a mission to Asian some time in the coming year. The delegation would be comprised of public servants and of the private sector to determine existing opportunities for future business.

16. Mr. Speaker, Honourable Members will note the provision of one million and seven hundred thousand dollars ($1,700,000) in local resources and three million, seven hundred and fifty dollars ($3,750,000) as loan funding for a total of five million, four hundred and fifty dollars ($5,450,000) in the Capital Budget to commence work on the Government's Financial Complex. Already the Department of Financial Services is housed in three buildings and is in dire need of additional accommodations. With the increased workload occasioned by the KPMG Report, the Department may have to acquire additional rental premises for the integrity of its regulatory purpose.

Banking & Related Financial Sectors

                Mr. Speaker, this Territory has always pursued a conservative banking policy and I have every intention of staying on the course. As at the end of the third quarter, total bank deposits stood at two billion, six hundred and forty five million, five hundred and sixty two thousand dollars ($2,645,562,000) with local deposits at one billion, fifty five million, five hundred and forty six thousand dollars ($1,055,546,000). Total loans and advances for the corresponding period were five hundred and ninety three million, one hundred and thirty seven hundred thousand dollars ($593,137,000) with domestic loans and advances at five hundred, twenty million, one hundred and ten thousand dollars ($520,110,000).

2. Mr. Speaker, it would be remiss of me not to mention at this juncture, my concern over a growing trend of persons coming into the Territory and offering investment advice, collecting deposits from British Virgin Islands residents and investing these funds aboard. I am advised that a number of locals have benefitted from this type of investment business. I am concerned, however, that this type of activity is entirely unregulated and a number of our people could very well lose their hard earned money with no recourse for action. Honourable Members will agree that something should be done to protect the unsuspecting from the unregulated and potentially unscrupulous. Accordingly, Mr. Speaker, as a matter of top priority, I have directed the Director of Financial Services to immediately start working on the regulation of investment intermediaries, investment brokers, investment advisers, etc. I hope therefore, to bring a Bill for an Investment Intermediaries Act to the House sometime next year.

Central Government

The recurrent revenue for 2000 is expected to exceed a total of one hundred and seventy-five million dollars, ($175M), which is an increase of approximately eighteen million dollars ($18M), over that of 1999, by some eleven percent (11%).

2. Mr. Speaker, the increase in the Government's finances reflects continued growth of our economy. Contributions to the reserves are ongoing and ensure our viability and ability to effect contingency plans when needed. The automated platform of Government's accounts now provides for "Electronic Budgeting", which was introduced at the onset of this year's budget exercise. The technology allows departments to enter their budget directly into the JD Edwards system, eliminating the need for manually presented estimates to the Ministry of Finance. We are in transition and I am sure that the rewards of greater efficiency will be fully returned in future budget exercises.

3. While a great percentage of the Territory's budget is contributed to the payment of salaries, the efficient and effective delivery of Government services requires greater financial investment in order to support various programmes of reform underway within the Public Service. We are charged with the very real need to upgrade and increase the level of qualifications and skills inherent within our pool of human resources. Such an obligation cannot be met at a cheap cost.

4. The Government has supported the construction industry for the past few years. This trend, though not incapacitating, cannot be sustained indefinitely. As the Territory advances and the focus of funding is directed in the areas of social services, education, welfare, culture, environment and maintenance of facilities, the melting pot syndrome will affect future sustainability.

5. It is, therefore, imperative that the private sector be given a jump start within the short term, and thus as funding is redirected, there will be limited impact on this industry. This, Mr. Speaker, is a matter that is still two to three (2-3) years out; however, in contingency planning one does not wait until the last minute to effect strategy, and at that, multiple strategies. Plans must be put in place now to ensure a stable future for this industry because the strength of this Territory remains in its people and their ability to survive and prosper.

Public Debt

For the period ending 31 December 2000, the Public Debt (Central Government) is estimated to be thirty seven million, nine hundred and fifty nine thousand, one hundred and twenty eight dollars ($37,959,128) and the National Debt (including contingent liabilities) is estimated to be eighty four million, six hundred and twenty thousand, seven hundred and ninety four dollars ($84,620,794). National Debt for 2000 has increased over that of 1999 by some nine million, seven hundred and fifty six thousand, three hundred and ninety two dollars ($9,756,392) or twelve percent (12%). Contingent Liabilities total forty six million, six hundred and sixty one thousand, six hundred and sixty six dollars ($46,661,666).

2. Public Debt to Revenue ratio is thirteen percent (13%) and Public Debt repayments as a percentage of Revenue is three percent (3%). Public Debt to Gross Domestic Product (GDP) ratio is five percent (5%). As regards the potential international borrowing criteria, the British Virgin Islands is at seventy percent (70%) of its borrowing capacity, including envisaged borrowing. The envisaged borrowing includes all approved borrowing by the Legislative Council, whether in final format or in principle, (this also includes pending, in principle approval by the Legislative Council for the Health Sector financing).

3. Mr. Speaker, the increase in debt, both nationally and publicly, is a result of much needed improvements to the Territory's infrastructure and general services which impact the quality of life. As the Territory tries to bring our social, physical, and operational infrastructure up-to-date with the rapid growth our economy has witnessed, it has become necessary to advance simultaneously, a number of major projects and programmes. I give this Honourable House the assurance that we will be conscious of the need to be sensible in how we phase these desired investments, and conscious of the need to reconcile programme delivery with our domestic capacity.

4. Her Majesty's Government recently approved the crucial financial loans for the Beef Island Airport Expansion Project. The sum of which is significant in relation to alternate financing options that had to be engaged to keep work on the project progressing. This, Mr. Speaker, is not the way I prefer to do business and I would like to make those views known publicly. It is imperative that the procedures utilised for obtaining approval be forwarded by the United Kingdom Government immediately to ensure that attempts at future borrowing can be executed more timely. I am concerned that in the absence of such guidelines, we will continue with an ad hoc exercise that hampers such projects as the Hospital, Post Office, Government Financial Center, Law Block, National Sewerage, etc. Though I am pleased that we have overcome some hurdles, this is not the optimum scenario and in this case my intent according to "Maslow's Hierarchy of Needs" would be to self actualize.

Recurrent Budget Estimates of Revenue and Expenditure

Mr. Speaker, I take this opportunity to share the Budget Estimates for 2001 in brief, highlighting some key initiatives.

2. In 2001, we project that Government will collect one hundred and eighty five million, six hundred thousand dollars ($185.6M) in revenue.

3. The revenue estimates reflect projected growth of over fifty four percent (54%) in six (6) years. Recurrent Expenditure is estimated at one hundred and forty five million, three hundred and twenty eight thousand, three hundred dollars ($145,328,300). Contributions to the Capital Fund will total thirty five million, eight hundred and twenty six thousand, and forty five dollars ($35,826,045) and contributions to the Disaster Relief Fund will be one million dollars ($l M). The estimated contribution to the reserves will be three million, four hundred and forty five thousand, six hundred and fifty five dollars ($3,445,655). Mr. Speaker, the continued growth in recurrent and capital expenditure at this time prohibits a larger contribution to the reserves, even in light of the increased projected revenue earnings.

4. Mr. Speaker, the road to the point has been very trying. I have complained time and time again about the lack of compliance by senior officers to budgetary schedules to ensure timely completion. This in turn puts tremendous pressure on the Ministry of Finance to maintain deadlines and in so doing, work extremely long hours. This is the last year this will occur, for in the 2002 budget exercise, deadlines that lapse will mean forfeiture of monies and/or opportunities; and those Ministries and/or Departments that are adhering to the rules and policies will reap the benefits.

5. The figures I quote are, for the first in a long time, a truly forecasted budget. Traditionally, the revenue figures of the current year were used as the basis for forecasting the upcoming year on a conservative basis. This year, due to all the demands for funding, including the massive capital funding, it was impossible to be conservative. By stretching the latitude of the "modus operandi", it means that the all too customary Supplementary Provision may well be a thing of the past and is certainly not anticipated to be at levels of the year 2000. This means that planning not properly done will hamper the advancement of some projects and we will have to be creative in trying to manage our affairs whilst remaining prudent. I must say, Sir, that such a scenario has been upcoming for sometime and warning signals that have not been heeded will prove to be a problem.

6. Mr. Speaker, the level of comprehension of certain financial rules, procedures and policies remains far too inconsistent within the service. This may be attributed to staff turnover and/or inexperience. The problem is that it exists at very senior levels and handicaps the ability of Ministries and/or Departments to function within the context of appropriate and relevant policy in their service delivery to the public. This I intend to alleviate by commissioning a training seminar for senior civil servants in the first instance on financial management, and to then extend similar training to the entire civil service. The seminar, I expect to be well attended and the opportunity granted to be fully utilized by public officers for their own development and benefit.

Capital Budget Estimates of Revenue and Expenditure

Mr. Speaker, in the 2001 Annual Budget Estimates, I have made provisions for funding of capital projects as follows:

Aid Funds Approved                                                                               $ -0- 
Loan Funds Approved                                                                             $ 71,050,000
Contribution from Recurrent Budget                                                           $ 35,826,045
Contribution from the Transportation Network 
(Land, Air and Sea) Improvement Fund                                                       $ 2,550,000 
Contribution from the Disaster Relief Fund                                                   $ -0- 
                                                                                                                                           ___________ 
                                       TOTAL                                                         $109,426,045 

2. Mr. Speaker, of these funds, thirty eight million, three hundred and seventy six thousand and forty five dollars ($38,376,045) are from local sources and seventy one million and fifty thousand dollars ($71,050,000) are from external sources.


STATUTORY BOARDS

            I want the word to go forward, Mr. Speaker, that Government's statutory institutions have to exercise every precaution and institute every measure to give the public a cost effective quality of service. Statutory Boards are still not complying with the tender policy concurred by the Executive Council during the last budget exercise. Similarly, Ministries and Departments are not adhering to timely submission for tender requests, and this arbitrary approach has significant implications for the execution of projects, some resulting in legal and financial problems. In particular, the lack of compliance by Statutory Boards is inevitably reflected in their financial standing, the end result of which requires greater involvement by Central Government in the exercise of operational clean up. A case in point is readily seen in the post financial management required of the Ministry of Finance on behalf of the British Virgin Islands Electricity Corporation, and the need to hire consultants to establish a strategic operation and financial plan for the Development Bank of the Virgin Islands. The Government is now also required to inject additional contributions into both institutions, in order to safeguard their overall financial positions and operational cash flow. As well, ex-officio officers, who serve as members to the various boards, are compelled to work more diligently as board members to manage internal operations. It's a classic exercise in micro management to the highest degree, which was and is not the intent of the establishment of Statutory organisations.

Social Security Board

Mr. Speaker, the Social Security Board celebrated twenty (20) years of providing benefits to the people of these islands. Total assets within the Social Security Board scheme will stand at approximately one hundred and forty five million dollars ($145M), of which approximately nine million and five hundred thousand dollars ($9.5M) is anticipated interest income for the year 2000. The Social Security Board will initiate its Fourth Actuarial Review during the year 2001 and has advanced several amendments to the existing legislation under which the scheme is administered. One resulting benefit in particular will be an increase to pensions by five percent (5%) and ten percent (10%), depending on the year awarded. Other changes provide more relaxed deadlines for filing and claiming earned benefits.

2. Sir, the Social Security Board has proven itself over the years to be a prudent and responsible manager of the people's money. The Board has also shown itself to be a good corporate citizen. The Government recently signed a loan provided by Social Security Board in the amount of four million, four hundred and seventy thousand ($4,470,000) United States Dollars, to fund Phase 1A (landside infrastructure) of the Beef Island Airport Expansion Project. Funds were disbursed in August 2000 and interest payments are already being received on the financing.

H. Lavity Stoutt Community College

The H. Lavity Stoutt Community College celebrated its 10th Anniversary. Total enrollment for the school year 1999 to 2000 increased to 985, an approximate nine percent (9%) increase above enrollment for the previous year. The institution has continued to expand educational opportunities to British Virgin Islanders, and is currently upgrading its physical plant to include: 

• The Learning Resources Centre
  

• The Culinary Arts Centre
  

• The Virgin Islands National Centre
  

• The Marine Centre 
  

• The Electronic Library
  

• Land acquisition for future expansion

2. In collaboration with the United Kingdom Civil Service College, the H. Lavity Stoutt Community College and the Government's Training Division, training will be provided for Civil Servants during 2001 via the, by now well-known, Public Sector Development Programme.

National Parks Trust

Over the last year, steps have been taken by the National Parks Trust to put in place requirements for the collection of admission fees at some of the Territory's National Parks. The collection effort will ensure the on-going upkeep and development of park areas, and improve the level of services provided to residents and visitors alike. In 2001, the National Parks Trust will celebrate forty (40) years of conservation of plant, animal, geographic and geological diversity within the Territory. The importance of their work cannot be underestimated in light of the fact that many premier sites commonly promoted as tourist attractions are directly protected and managed by the Trust. The National Parks Trust will signify the importance of its work through a series of activities that will continue to highlight the importance for protected areas to the livelihood and well-being of the residents of the Territory.

Development Bank of the Virgin Islands

The Development Bank of the Virgin Islands has continued to reflect moderate growth, aided by the recent strategic consultancy, provided by MCT and Associates Limited, of Port of Spain, Trinidad. The Consultants have made recommendations for the Bank's strategic development into the 21st Century.

2. The Development Bank plays an integral role in the development of our community and in the coming year will direct its operations to being the primary source of credit to low and middle income earners of the Territory, particularly for home construction, small and start-up businesses, for fishing, agriculture, and educational purposes. To support the efforts of the Bank, the Government has committed to an equity injection programme commencing with one million dollars ($1 M) in the 2001.

British Virgin Islands Ports Authority

The British Virgin Islands Ports Authority will be engaging the services of a consultant in the coming year to assist in the preparation of a master plan for the Authority's facilities. Proposals for future development of our various ports of entry and the land adjacent to the Cruise Pier will be addressed, especially the much needed improvements to the West End Ferry Terminal.

British Virgin Islands Tourist Board


See Section on Tourism.

British Virgin Islands Electricity Corporation


The British Virgin Islands Electricity Corporation has commenced a major expansion of its facilities, both physical plant as well as equipment. This expansion is pan of a phased sequence to improve the overall generating capacity of the Corporation to cope with current and future needs. The crossroads to this point were evidenced by numerous power outages earlier in the year. The problem has been primarily curtailed and the new generators that are on island, once commissioned, will provide sufficient capacity.

2. The Corporation through its capital programmes to maintain the supply of power has done so without sufficient growth in revenue to offset the increasing expenses. To counteract this problem due to growth, it is necessary to inject equity into the corporation to increase its share capital and cash flow. The intricacies of an equity programme have not yet been finalized; however, as a measure of good faith, the Government has already committed two million dollars ($2M) in the 2001 estimates. The details of how the Corporation will move forward will be ratified with the Ministry of Communications and Works and the British Virgin Islands Electricity Corporation in conjunction with the Ministry of Finance.


MINISTRIES & DEPARTMENTS

            In the year 2000, Mr. Speaker, we have charted a course for social advancement and economic sustainability. The accomplishments and the plans for the upcoming year cannot be highlighted in the snapshots previously given, for they were gained under much political strife, international pressures, and economical challenges. Permit me therefore to discuss each under the respective Ministerial umbrella or operational area of the Government. 

Under the Auspices of the Deputy Governor's Office

            The time has come, Mr. Speaker, for us to challenge the traditional ways of service delivery. In July 1999 the Government of the Virgin Islands embarked on a comprehensive programme to improve and develop its Public Service. Changes in the global arena and the demands of our local economic and social environments dictate the need for the British Virgin Islands' Public Service to modernize its approach to service provision. 

2. Modernisation, Mr. Speaker, would allow the British Virgin Islands' Public Service to better respond to the increased competition and external threats to our Financial Services and Tourism Sectors; and would bring us up to date with the rapid technological changes advancing throughout the world, plus enhance the provision of core services to the people of this Country. 

3. The programme has progressed under the supervisory management of the Public Sector Development Programme Coordinator, with the support of His Excellency, The Governor. I have been pleased over the past year or more to witness the dedication of members of the Civil Service towards the achievement of the goals promoted by the reform effort. 

4. In particular, I commend the Programme Coordinator on the identification and development of the Public Sector Development Quick Wins, of which several have been implemented including public awareness and educational programmes, appropriate and visible signage to guide the public in their informational needs and the establishment of a Help Desk (located within the Government Administration Complex), as an aide for informational guidance and assistance. 

5. The next phase of implementation speaks to the creation of Service Charters for each Ministry and its respective Departments. These service charters, Mr. Speaker, are intended to improve the access to and promote higher quality of public services. Each will lay out and advise on the role of the respective Ministry and/or Department, pledge the level of service which can be expected and recommend the appropriate remedies in the event such level of execution is not adhered to.

6. Stemming from the Public Service Reform effort, is the proposal to conduct a comprehensive salaries review for both the established and non-established work forces .The proposed salaries review is expected to adjust public sector wages and qualifications to those of similar standards both regionally and, as much as possible, internationally. The exercise is necessary in order that we may expand the pool of available and qualified human resources within this Country. The process of tendering for a qualified consultant in this regard has commenced, though we do not anticipate finalization of the study until well into the New Year. In the interim, an across-the-board percentage increase is proposed in anticipation of the expected service wide salaries adjustment, The Estimates have allowed for the payment of the interim salary increase upon approval by this Honourable House. It would later be necessary to source the required level of funding to satisfy the recommendations from the consultancy in collaboration with the Civil Service Association, without allowing it to undermine the Government's financial position. (Unfortunately, Members of Council are not included.)

7. I am pleased to note, Mr. Speaker, that as a result of recommendations from the Public Sector Reform Programme, the Personnel Department will be restructured and strengthened to address the human resource management needs of the Civil Service. Greater decentralization and more delegation for the management of human resources will be extended to Ministries and Departments, especially in the area of recruitment. It is further our intention to expand the membership of the Public Service Commission from three (3) to five (5) persons. For the first time, the Governor will receive nominations from the Chief Minister and Leader of the Opposition of persons to serve on the Commission. It is expected that such expansion will in turn strengthen and enhance the formulation of an effective public service.

8. Having said as much, I would be remiss if I did not share my feelings on the inadequacy of the current personnel system to fill vacancies in a timely manner. While we acknowledge that there is a shortage of qualified human resources to be found locally, I am of the view that the current administrative structure for recruitment hampers and at times frustrates the process of employment to the point of stagnation. The most classical case of this is the current scenario at the Public Works Department. Numerous posts remain vacant in critical technical areas, which renders the Department almost handicapped with regards to executing its duties. This situation is unfair to the Ag. Director of the Public Works Department, whose performance must be evaluated on the premise of accomplishments in the midst of insufficient human resources to do the very same tasks. For our people to be disadvantaged in this way is not in keeping with good governance, and thus, I call on His Excellency The Governor, Deputy Governor and Chief Personnel Officer to look at this situation and grant more autonomy to the various Ministries and Departments if need be, given that examples of this already exist in the recruitment of personnel for the Financial Services Department.

9. Mr. Speaker, the constitutional amendment recently made, requires the establishment of a Complaints Commissioner, or as it is more commonly called, an Ombudsman, for the Territory. This officer is to have such functions and jurisdiction as may be prescribed by law.

10. I would like to state here that it is my hope that early in the coming year a Bill will be drafted to prescribe the functions and jurisdiction of the Commissioner. I would thereafter seek funding to establish the office and request His Excellency to take steps to make the first appointment. I consider that the size and the functions of the public service have grown to the extent that such an office is warranted as an additional avenue of redress for the public.

11. The concept of a Law Reform Commission is well advanced and it is anticipated that the Attorney General's Chambers will move towards implementation during the course of the up-coming year. Collaborative efforts such as these between the public and private sectors will go a long way towards timely, effective and efficient legislative reform, to keep the Territory in line with all international and regulatory mandates.


The Chief Minister's Office 

            The Chief Minister's Office is responsible for coordinating all government business. It is the pivotal Ministry from which most activities in one way or another are coordinated or channelled. This role cannot be underestimated, as execution cannot be properly done if not coordinated appropriately. I will be calling upon this Ministry for greater involvement in the management of the way forward in respect of the Territory's affairs. As we look towards the Public Sector Reform initiative, the emphasis needed to direct the future of this Ministry can be sought and a clear path determined.

2. One of the areas of concern to the Government and the people of this Territory is the current state of the capital city of Road Town. There is need, Sir, to enhance the Capital and this must be a priority for the Chief Minister's Office in the up-coming year. In recent discussions with the Governor, the current state of affairs is not due to a lack of funding, for over ten million dollars ($10M) has been appropriated in areas such as the Road Town Improvement Vote, Traffic Light Programme, Dual Carriage Way (both Blackbourne and Drake's), the repairs to schools and medical facilities, improvement to ghuts and drains, and the A. 0. Shirley Recreational Grounds. As a matter of fact, the recent enhancement to the Legislative Council Chambers/Court House on such short notice is an example of what can be done once the will is there.

3. The move towards a more coordinated project approach, I hope, can advance this initiative along with others. I am eagerly awaiting the construction stage of Phase II of the Virgin Gorda Administration Complex. This project is now in the tender phase and once completed, I anticipate initiation of construction by the end of the first quarter. The programmes under the H. Lavity Stoutt Community College will require greater assistance from the Ministry to ensure timely completion and such assistance will be forthcoming in this regard.

4. To ensure that we continue to develop in areas of Tourism, I have added a token provision in the Estimates for the East End Harbour Development Project, the Virgin Gorda Airport and the Crafts Alive Project. All such projects are geared towards ensuring that the overall programme of diversification continues within the economy.

The Ministry of Finance

            In the manner of introducing institutional strengthening and towards the achievement of economic growth, the Ministry of Finance has initiated several reform programmes in tandem with the overall public sector reform already underway.

2. The Customs Modernisation and Reform Programme recommends the appropriate legislative, technological and operational platforms required to maximise the effective collection of Government's revenue and dispensation of enforcement in protection of the Territory's borders. The responsibilities thrust on the shoulders of the men and women employed within the ranks of the Customs Departments are not easy. Our expectations as a people are high, and so too must be our commitment of support and encouragement to the Department's efforts.

3. The Postal Reform Initiative is well underway, and the soon to be appointed Postal Consultant will only serve to positively expedite matters. The award of Contract for the architectural design of a new General Post Office has been approved, and plans are in train for the procurement of land to provide a centrally located Western Post Office. A site has also been identified and agreed for the construction of a centrally located eastern facility, as well as a post office in North Sound, Virgin Gorda. Commensurate with such activity is the remodeling of the current Road Town facility and an increase in services to be offered, such as express mail, retail shop, etc.

4. The Ministry has appointed an interim consultant to assist in the preparatory framework necessary to advance a Pension Scheme for the established and non-established work forces of the Government. Such an initiative is long overdue and will have an impact on reserves because our scheme must be structured properly and fully funded.

5. It is anticipated that advancement of the Financial Rating for the Territory will be initiated within the New Year. The need to attract funding at internationally competitive rates is a must to keep our debt ceiling as low as possible, as we continue our capital programme.

6. A discussion has been initiated with the Commonwealth Fund for Technical Cooperation to provide assistance in the Inland Revenue Department as a means of institutional strengthening.

7. The mandate will be to assist with strategic planning, implementation of the information technology (primarily as regards the Standardised Integrated Government Tax Administration System) and the legislative and operational reform initiatives. These initiatives are expected to provide relief to tax payers in general, whilst not unduly affecting Government's revenue base. A laudable task I admit but one I am convinced we can achieve.

8. The Treasury Department is in the process of completing a strategic plan for the implementation of accrual accounting. The 1999 accounts are virtually completed and will be tabled early in the year 2001 Though long in coming, I am sure efforts to move this initiative will progress more timely. Also before me now is a proposal to eliminate the use of vote books as the manual means for financial record keeping, and to utilise the electronic medium fully. This, I expect to implement early in the year 2001 as well. 

9. The Information Systems Unit continues to provide the support services needed in the area higher
of information technology. The integration of Government's networking system continues to improve by the introduction of Lotus Notes as a central software tool. This programme will be made available to select areas before year's end and substantially throughout the wider Government very early in the coming year. 

10. The Finance Act and Procurement Rules are to be revised in collaboration with the Attorney General's Chambers and with assistance from the Commonwealth Fund for Technical Cooperation. Legislation that is currently on the books, twenty (20) and forty (40) years old, respectively, will be reviewed with the goal of updating and amending as necessary. Needless to say that a subject as of dynamic as finance would need more recent legislation simply to keep up with the changing times. 

11. The focus of this address has been on the need for increased planning, and as such, the Development Planning Unit must become more involved in this exercise. To assist with this intent
I have introduced a Public Sector Investment Programme Unit, whose primary responsibility it will be to develop a Public Sector Investment Programme. This Programme will be used to fuel the budget exercise, as the projects will be properly planned and structured thus appropriately directing the role of the Ministry of Finance to financing and assisting with project execution. The human resource element in the Development Planning Unit must be continuously enhanced to keep pace. Current staff vacancies in senior positions must be filled timely as sustainability of this Unit is questionable. I have the assurance of the Director of Development Planning and the Financial Secretary that these positions will be filled early in the up-coming year. The National Integrated Development Plan is currently in the Ministry of Finance for review and I anticipate that a final draft will be ready early in the year 2001 for submission to the Executive Council. This Plan will serve to further complement the enhanced planning function I intend to see advanced in the New Year. The role of statistical and economic analysis, along with compilation of the respective database, remains crucial for solid development and economic planning. The utilisation of consultants continuously to support some of these functions is not good for the long term and thus our people must be prepared to assume these duties and responsibilities.

The Ministry of Natural Resources and Labour

            During the current year, the Ministry of Natural Resources and Labour focused its attentions on laying the groundwork for the improvement of the agricultural and fishing sectors of our community. It is our goal to promote greater self-sufficiency in basic and naturally supplied foods. In 2001 and beyond, the Ministry intends to be more project oriented, as far as the continued development of the Country, in these related areas.

2. The Ministry of Natural Resources and Labour has increased access to farms by means of providing new feeder roads, and increased the maintenance of existing routes to assist farmers in delivering their produce to market; the spinoff effect of which is expected to be the production of higher yields.

3. The Ministry looks forward in the coming year to the construction of a state-of-the-art abattoir at Paraquita Bay, which is intended to be completed to United States Department of Agriculture (USDA) standards, bringing the Territory closer to its goal of exporting meat products. This initiative also complements existing training programmes available at the H. Lavity Stoutt Community College in the area of agricultural development.

4. Proper docking facilities are significantly needed in order to support the future development of our fishing industry. Mr. Speaker, the Ministry of Natural Resources and Labour will progress its plans to introduce Pelagic Fishing with the appointment of a consultant, to assist in the formulation of an appropriate programme. Construction of proper docking facilities for use by fishermen will be aggressively pursued in keeping with this Government's commitment and support. The benefits to be realized by the fishermen of Virgin Gorda and the Territory are anticipated to be significant, resulting from the recent agreement between Little Dix Bay Management and the Government for the utilisation of docking facilities in the marina. The details of the agreement will be forth-coming, however, the continued support the Government provides to the fishing industry remains evident.

5. Mr. Speaker, land is probably the most precious commodity the people of this Territory own. From generation to generation, the understanding of the value of owning land is passed on. The management of land affairs is a complex subject and therefore, the personnel involved must similarly be qualified. A post of "Chief Registrar of Lands" has been created in the Estimates to ensure that the legal implications of this responsibility are well managed.

6. Just last week, the Nanny Cay property, which has been in liquidation for over ten (10) years, was procured and the leasehold rights transferred. The management intends to upgrade the roadworks, replace existing docking facilities, install a sewerage treatment plant, increase the accommodation capacity, and develop the marina facilities in general.

The Ministry of Education and Culture

            Mr. Speaker, the Ministry and its related Departments will continue to focus on improving the provision of services, enhancing staff development, generally upgrading and improving the schools physical plants and recreational facilities, and reviewing the existing legislative platform for relevancy.

2. The focus of the education system within the coming year, will be a comprehensive development plan for the provision of education and its related services over the next five (5) years. Inherently, is the intention to develop the existing curriculum with a view towards implementing a National Curriculum, which takes into account the progressive world changes facing our students. It is the intention of the Ministry to advance recommendations stemming from the Education Review and to host seminars and retreats with the various stakeholders in determining the future direction for effective provision of education services within the Territory. Included in these plans will be the implementation of the Alternate Certification Programme. 

3. Mr. Speaker, I am very interested in ensuring that as many people as desire higher education, are provided with the opportunity to pursue such training and personal development. The Ministry of Education and Culture has increased its funding by over ten percent (10%) for educational scholarships for training locally and abroad. A partially funded graduate studies programme will be introduced for those desirous of obtaining a Masters Degree in specified fields of study. 

4. A programme was initiated over the previous years, in conjunction with the Ministry of Finance and the Information Systems Unit, to provide schools, both primary and secondary, with computer equipment for student use. Funding has been appropriated in the Estimates, Mr. Speaker, to ensure the continuous maintenance and upgrading of the technological platforms introduced within our education system. Additional computerized equipment will be added to complement the administrative operations of the various schools. To ensure full utilisation of these benefits by students and teachers alike, the Ministry has established a programme of teacher incentives. One of these such incentives provides for special bank financing to teachers for the procurement of computers, which can be used as teaching aides and help to enhance training opportunities for teachers and students. This particular programme, I am pleased to note, has been agreed in communication with local banks. I have considered the role that technology plays in all of our day to day lives, whether at the office or in our homes. In consideration of this, I have instructed the Financial Secretary, in consultation with the Comptroller of Customs, to amend the relevant legislation to exempt computer hardware and software from importation duty. 

5. Facilitated by the separation of ministerial portfolios, the Ministry has initiated the process of establishing the long awaited Department of Sports and Youth Affairs, which will better direct, manage, and regulate all sports facilities, activities and resources. In train with this initiative, is the development of comprehensive youth programmes to help our youths to channel their energies and talents in directions of positive and constructive mediums.

6. The pilot project to teach Spanish within the primary schools will be expanded, with the aim towards having a permanent Spanish Teacher on staff at each primary school within the Territory. This will afford children, at a very young age, the opportunity to be introduced to a second language and improve the qualifications and marketability of our future professionals.

7. Mr. Speaker, for many years, missing from our education system has been a Truancy Officer. I am pleased to highlight, with gratification, the re-introduction in this year's Estimates of this position to our established roll of human resources. In accordance with the Educational Ordinance, this addition will allow us to focus on school aged students, who do not attend school regularly and in some cases not at all. A programme of educational support and counseling is already available within our system to ensure that corrective efforts result in the retention of students within the educational system.

8. Mr. Speaker, the Ministry is proud to announce it will be introducing a Code of Conduct to the school system so as to aid all responsible authorities in their efforts of governance and appropriate administration within the schools. It is expected as well that this measure will improve the assessment of principals and teachers to ensure greater accountability for the quality of education provided to the students of the Territory.

9. The Ministry of Education & Culture has commenced the improvement of recreational facilities throughout the Territory in such areas as The Valley and North Sound, Virgin Gorda, and the A. 0. Shirley Recreational Ground and Greenland, Tortola.

10. The Library Services Department continues to improve and upgrade its services and activities, especially in its drive to automate its branch libraries. A new initiative which will be expanded to the Sister Islands is the After-School Programme, providing after school care to children ages 7-9 years (the service is currently provided at the Road Town Public Library). The Library Services, in conjunction with the Ministry, is also working assiduously to ensure that the National Information Systems (NATIS) building becomes a reality in the very near future.

11. Mr. Speaker, the preservation of our cultural heritage is a vital aspect of this community. As in the past, culture will be given special attention within our educational system. We propose to develop a more structured cultural programme and to employ a Museologist to direct and guide the Ministry in the development of National Archive Museum.


The Ministry of Health and Welfare

            Mr. Speaker, a few years ago the Government engaged in a project of Health Sector Reform. From that exercise, some changes were made in the health sector by way of job reclassification and increased staffing to help support the services being provided. To further compliment the initiative, guide infrastructural changes were necessary, and in minor ways some were done. The Territory has outgrown most of its existing health facilities and a major thrust must be made to get the health services up to speed with recognized standards.

2. To do so, the Government has initiated the New Hospital Project, with the engagement of consultancy services for the purpose of architectural and engineering services and programme management services. Soon to be secured are the services of a Quantity Surveyor and Project Manager to help expedite the advancement of the project. Primarily sources of financing have to be reviewed and once the overall project planning is complete, I anticipate construction to commence in the latter half of the year 2001. Also included in the Estimates are other enhancements to the health sector, improvements to community centres, the construction of new community centres (along with completion of those already under construction), new hospital equipment and infrastructural and support programmes for waste disposal.

3. During the year, the Ministry retained the services of a consultant from "Help Age International" to conduct an assessment of the services offered to the elderly. I am pleased to note that a site has been identified, in principle, for the relocation of the Adina Donovan Home for the aged.

4. The Ministry of Health and Welfare is spear-heading plans to improve the care and protection of children at risk through the introduction of certain amendments to the Juvenile Act. The most significant innovation proposed will require educators, health care professionals, youth workers, legal practitioners, religious leaders, police officers, and other professionals who deal with children to report any instance of suspected abuse. Penalties will be imposed for cases in which there has been a failure to report. Members of the immediate family will also be bound by the reporting guidelines under the proposed amendment. Other proposals include provisions which will make it easier for the Government to find homes for abused and neglected children, whose parents have not demonstrated a meaningful effort to remedy their situation. Mr. Speaker, I would like to make it clear that the Government has no intention of seeking to remove children from their parents, but neither will we
allow the children of this Territory to suffer from physical or psychological damage. 

5. The sweeping legislative changes proposed to the Juvenile Act will not be addressed in isolation. Negotiations are currently underway with the Commonwealth Fund for Technical Cooperation to retain the services of a consultant who will advise on the establishment of a Children's Services Board.

6. This body will be expected to coordinate all programmes and services offered to children at risk and their families. The Ministry of Health and Welfare has contracted a consultant (with the help of UNICEF) to develop a situational analysis of children within the Territory. This analysis will guide the formulation of further Government policies on behalf of our children, whilst bringing us in conformity with the United Nations Convention on the Rights of the Child.


The Ministry of Communications and Works

Mr. Speaker, Sir, turning to the Ministry of Communications and Works and its related departments.

2. I am pleased to confirm that during this year the Government of the Virgin Islands has finalized all Financial Agreements with respect to the Airport Project. These loans were from the four institutions mentioned hereafter:

• European Investment Bank                                                              $ 5,000,000 euro
  

• Caribbean Development Bank                                                           $19,63 1,000 USD
  

• The British Virgin Islands Social Security Board                                   $ 4,470,000 USD
  

• Scotiabank (British Virgin Islands) Limited                                          $ 3,250,000 USD
  

• Grant from the European Union                                                        $ 5,000,000 euro
  

• Guarantee from Barclays Bank PLC

3. These loans could not be finalized without the approval of Her Majesty's Government, and I would like to take this opportunity to thank Her Majesty's Government for their approval, and I hope that the procedures for future approvals as indicated would be better clarified, and thus be a more transparent process.

4. Mr. Speaker, Sir, it is important to note that the loan between the Caribbean Development Bank and the Government of the Virgin Islands is the largest single loan ever executed by the Government. This year significant progress on the Beef Island Airport Project has been made on the two (2) contracts (the Terminal Building and the Landside Infrastructure), of which the works include:

• the earthworks and setting out of the new airport access roads and car parks; 
  

• construction of large drainage ponds to protect our maritime environment; and
  

• the construction of the structural steel frame of the new terminal building which is erected on the ground floor slab and foundation.

5. In addition, to the two (2) aforementioned contracts, we have just signed the contract for the runway extension which is comprised of the upgrading of the existing runway to accommodate larger aircrafts and the construction of a turning loop to facilitate safer maneuvering of the aircrafts.

6. The target date for the completion of this project is the 2002 Tourist Season, ceteris paribus, and by God's grace we the people of the Virgin Islands look forward for this day. It is hoped that all industries within the economic sector will benefit from this major infrastructural investment. 

7. The Government is fully committed to infrastructural development throughout the Territory to meet increasing public demands. The new Beef Island Bridge is moving ahead without delay and we hope to have a completed bridge within the next six (6) months. Mr. Speaker, the Ministry of Communications and Works has done substantive work with respect to the traffic lights and the necessary preparatory work and procurement of equipment is already in progress.

8. Road improvement will continue throughout the Territory in the New Year. These include:

• the continuous paving of the Long Trench/Purcell Access Road
  

• new works at Pasea, Georges Northside, Josiah's Bay, Diamond Estate, Brady Ghut and Paraquita Bay 
  

• road works from Lambert to Little Dix Hill 
  

• partial resurfacing from The Valley to North Sound, Virgin Gorda

9. Also, Mr. Speaker, road widening is critical and intensive work is being carried out along the Ridge Road from Belle Vue to Fahie Hill and Pickering Estate. This year the Blackburne Highway from Paraquita Bay to the Roundabout Port Purcell was overlaid with asphalt. It is the intention of my Government to overlay the Drake's Highway from Fort Burt to West End. 

10. Mr. Speaker, I am a strong advocate on preparedness for natural disasters and to this end,I have appropriated funding under the Public Works Department to install hurricane shutters on public buildings throughout the Territory. It is hoped that the initiative will reduce the damages and loss to property while improving the value of Government's assets. 

11. Sir, continued efforts will be made to upgrade the taxi industry in the Territory. The Taxi Cab Commission which has direct responsibility for making recommendations to improve the industry, has proposed that an upgrade is essential since tourism serves a very important role in the sustainability of the Territory's economy.

12. Without efficient, effective and reliable taxi services, it will not be possible to serve the many tourists who visit these islands regularly, as well as our local people who depend on taxi service to get around. Subsequently, the need to ensure that persons employed in this industry are trained and aware of the important role they play, is a vital link in the quality of service that they provide.

13. Speaker, this year was abnormally calm for this Territory, and its experience during the hurricane season. However, based on past occasions there are certain areas along Drake's Highway that are vulnerable to erosion by the sea. Efforts to strengthen and improve the sea defenses along ,this highway and on the northern coast will continue in the year ahead. We must continue to strive to protect our coast land, where most of our main roads are, and our people who dwell in those areas.

Water and Sewerage Department

            Regarding public water supply for the year, a major step was taken with the replacement of cast iron pipelines in the Baughers Bay, Purcell, Free Bottom and Main Street (Road Town) areas of Tortola. This project was aimed at simultaneously improving the quality of water and the pressures of the water supply to customers.

2. The project also addressed reducing leaks in the system. Funding is being included in 2001 Budget for its continuation, with emphasis expected to be placed on the Lower Road Town and MacNamara areas. This project dovetails well with the Water and Sewerage Department's leak detection survey, which is currently in progress.

3. In the Government's quest to bring an adequate supply of potable water to all residents of the British Virgin Islands, the distribution system was extended to serve residents of Josiah's Bay during the course of 2000. Also on Tortola, a supply line inter-connecting the systems at Harrigan's and McNamara is well underway. With material in hand, the commencement of a public water supply system for Anegada is expected to take place any day now. The first phase of this project is expected to bring a pipe-borne water supply system to The Settlement and airport areas.

4. Looking towards the future, funding is also being provided in the 2001 Budget for the continuation of Government's efforts to inter-connect the island of Tortola with a distribution network. This continuation will take the form of inter-connecting the systems at Towers and Pockwood Pond. Besides facilitating residents along this route, the realisation of this project will allow for more strategic use of water from the various water treatment plants in addressing water shortages in various parts of the island.

5. The matter of water distribution, however, still is not to my satisfaction. This is largely attributed to the lack of implementation of the project to rehabilitate the Fort Hill Reservoir. This project must take on a greater priority for water is a scarce and necessary resource, whose importance cannot be devalued. 

6. Lack of revenue collection in the Water and Sewerage Department is a matter of major concern and I am currently awaiting a report from the Ministry of Communications & Works as regard the current state of affairs and proposed corrective measures. The Internal Audit Unit of the Ministry of Finance has a draft audit report, which is currently with the Ministry of Finance for review. I, therefore, intend to use the outcome of both reports to bring the matter to some closure, and online plans for how this problem will be alleviated.

7 . Mr. Speaker, I have long since lamented about the need to address the national sewerage situation. Funding has been identified in several previous Budget Estimates and as recently as the 2000 Budget Estimates the project was structured in two fold:

1. The commencement of a consultancy to identify the appropriate methodology for a sewerage system including a proper feasibility study. 
   

2. The implementation of the aforementioned study, which will include an engineering and consultancy service component.

8. To my chagrin, the project has not been initiated, however, the Project Cycle Management Unit in conjunction with the Ministry for Communications and Works and the Water and Sewerage Department has completed Terms of Reference for consultancy for a National Sewerage Study and thus tendering for the consultancy should commence before year's end.

Addressing the Sister Islands

            Mr. Speaker, as introduced in the 2000 budget exercise, is that of a feature of the salient aspects of the budget that focuses on the Sister Islands. 

2. The Sister Island of Anegada remains one of the most undeveloped islands. This renders it poised to be developed, not only from a perspective of civil works, but more substantially as a premier tourist destination, targeting environmental and health conscious travelers. There are proposals currently under review but before they can be advanced, a comprehensive development plan would have to be structured and agreed. The Chief Minister's Office, in conjunction with the Tourist Board, the Development Planning Unit and the Ministry of Finance, will be charged with moving this initiative forward.

3. To show my commitment to the proposal, I have already commissioned the establishment of our National Hero's residence as a Historical Site and National Monument. Also in the Estimates, is the funding to continue the programme to upkeep Anegada's public facilities and road works. To ensure the quality of the road works in both Anegada and Virgin Gorda, I am negotiating the procurement of an asphalt plant to be housed on Virgin Gorda to service these islands.

4. Virgin Gorda remains the feature island of tourism activity. Its development is paramount to the continued growth of tourism and the Territory's economic diversification. In support of such, the Estimates provide funding to commence an alternate road to North Sound, road works to various tourist sites such as the Copper Mine, and several other projects including:

                    i) Phase II - Virgin Gorda Administration Complex

                    ii) The North Sound Post Office

                    iii) Improvements to the recreational facility on Virgin Gorda

                    iv) Health Sector Reform

5. Mr. Speaker, the island of Jost Van Dyke remains an integral part of the