TCI Government
Government House
Grand Turk
Tel: 649 941 2801
TCI Finances: Statement from Office of CEO
September 13, 2009: Office of the CEO – TCI Finances
For Immediate Release
As part of the Government’s commitment to transparency, and in advance of the presentation next week of a draft budget to the Advisory Council and Consultative Forum, the Finance Ministry offers the following summary of the Government’s financial position.
The Turk sand Caicos Government has no known financial assets of any kind and owes 135 million US dollars.
Only $61m of this debt has been borrowed from banks on terms which allow for repayment over a number of years. The balance of $74m is owed via an overdraft or to companies and individuals who wish to be paid immediately. This $74m can be analysed as follows:
Bank overdraft: $20 million
Amounts owed to health care providers and certain other substantial creditors: $45 million
Amount owed to smaller creditors: $9 million
The need to pay these creditors is causing very serious cash flow problems. The Government’s expenditure is under firm control. (It averaged $14m per month from April to July 2009 compared with $22m per month in the same period in 2008). But the Government’s tax revenue has recently been even lower, having averaged only $12million per month from April to July 2009, compared with $21million over the same period in 2008. The drop in revenue is mainly a result of last year’s hurricane, the downturn in the economy, reduced tourism, and a drastic fall in Stamp Duty revenue as properties are not currently being bought or sold.
The Government is currently exploring a number of options, which will shortly allow it to speed repayment of its current debt: For example:
It is making a number of adjustments to current tax rates, which should yield a useful increase in revenue over coming months, to supplement the seasonal increase in revenue, which sill occur during the autumn.
It is setting out to improve the effectiveness of tax collection and revenue enforcement.
It is reviewing its tax exemption policies. (exemptions given to developers and others currently cost $60m a year.)
It is beginning a longer term review of tax policy – aimed at ensuring (a) that the TCI remains a low tax economy, (b) that tax increases are paid by those who can afford to do so, and (C) a steadier and more reliable income flow across the financial year.
In the shorter, term however, the need to repay debt will require some very difficult spending decisions to be made, Our priority will, therefore, be to ensure that we are able to continue to make those payment which have the greatest impact on the Community.
Note: The above figures include amounts owed by the Tourist Board, exclude amounts owed by TCInvest, are rounded to the nearest $1m, and are subject to revision as further information comes to light.
