back to archiveBVI Economy Review 2022 for Real Estate
Article by Meghan McCann - Smiths Gore BVIFive years after the devastating impact of Hurricane Irma and the lock-down of the Territory in 2020 and 2021 as a result of the Covid-19 pandemic, the BVI has weathered both storms, albeit at a cost. The post Irma path to recovery, spearheaded by the Recovery and Development Agency, has not resulted in the original $187M recovery programme (the proposed expenditure in the “Revised Recovery to Development Plan 2019-2023”) that was envisaged being implemented. A $65M loan from the Caribbean Development Bank plus some limited direct funding from the UK in the aftermath of Irma has enabled a number of projects to be completed; but the vision to rebuild the infrastructure, services and facilities of the BVI never evolved and much of the BVI’s infrastructure and facilities remain in poor condition. This was partly due to the reluctance of the BVI Government to access the loan guarantee of $400M offered by the UK Government in the wake of Irma to help facilitate the recovery programme. The Government is now seeking to secure loans from other avenues to continue infrastructure improvements, as the window to access the UK loan guarantee has apparently closed. A request by the Chairman of the RDA to extend the RDA’s mandate by a further three years has been rejected by the Government, with the RDA’s tenure due to expire at the end of December 2025.
In December 2021, the VIP Government passed the 2022 budget of $397,174,331 of which $337M was put aside for recurrent expenditure and $39.4M on capital expenditure which included the rehabilitation works to the Elmore Stoutt High School, which are now nearing completion, and the East End Long Look sewerage project. The budget estimated revenues at US$356.7M, resulting in a deficit of US$40.5M, compared with a shortfall of US$69.8M in 2021.
The “twin pillars” of the economy, financial services and tourism, have both been impacted in recent years. International financial centres have faced increasing scrutiny from the US and Europe in the wake of the leak of information from “offshore” financial jurisdictions (Panama Papers 2016; Paradise Papers 2017 and Pandora Papers 2021) resulting in ever tightening regulations relating to transparency and money laundering. The passing of the Economic Substance (Companies and Limited Partnerships) Act, 2018 and the commitment by the government to set up public registers of companies by 2023, reflect the need for the BVI to update the financial services legislation in response to these external pressures. A landmark decision in late November by the ECJ (European Court of Justice) ruled that it was unlawful for the EU to require Member States have publicly available registers of beneficial owners has wide ranging implications for the financial sector. The decision is now being considered by the EU and the UK and BVI Governments.
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