Anguilla Must Not Become Debt-Ridden

In years gone by Anguilla was not in a position to undertake major borrowing. One reason was certain restrictions placed on the island as an Overseas Territory by the British Government. Eventually the Anguilla Administration was able to put forward a strong case which led to a relaxation of the rules which guided the requirements for borrowing.

Two factors may have influenced the easing of the restrictive measures imposed by Britain. One is probably the island’s phenomenal economic development thrust with the prospects for increased public revenue over the years. The other is perhaps the withdrawal of British aid to Anguilla and the consequent need to obtain borrowed financial assistance from other sources to meet various public sector needs.

While many of the other Caribbean islands found themselves in huge debt, the level of Anguilla’s borrowing remained relatively very low so much so that there seemed to be some justification for boasting. The IMF always appears to look critically at countries with high and unmanageable public debt, and it is known that Anguillians have always been of the view that their island would not reach a situation where it would find itself saddled by debt.

Thankfully, with all the borrowing the Anguilla Government has been doing in recent years, to finance the island’s public sector infrastructure programme, there has been no reported case where the local or overseas loans could not be paid. In fact, at last week’s House of Assembly meeting the Minister of Finance gave a litany of the island’s borrowing and repayment transactions stating that some loans had already been settled, thus giving way to further opportunities for more money to be made available to the Government by lending institutions.

The Minister was at the time piloting a Motion through the Legislature for authorisation to borrow EC$27 million to finance various public sector projects including road development, a Central Office Accommodation Building and the Land Acquisition Project. The money is to be borrowed either from Commercial Banks in Anguilla or sources outside the island. The Minister’s account of the Government’s borrowing and repayment record was aimed at showing that there was no fear about going into the impending debt as Anguilla had the resources and ability to pay its mounting loans. He gave the island’s current total public debt as $124 million – quite a tidy sum indeed, but he was not bothered about it. Interestingly, none of the other Members of the House showed any worry either as they voted for the passage of the Motion.

It appears that Anguilla will have a long and enjoyable period of credit-worthiness. Perhaps much to the envy of some of its neighbours, the island has recently been given a double A credit rating by the Caribbean Information & Credit Rating Services Limited (CariCris). Wayne Dass, the organisation’s CEO, described this as “an extremely good rating” noting that it falls very high in the CariCris rating range of Triple A to C. The reasons for this high rating, which allows the Government to qualify for large loans, are obviously due to the backing Anguilla has from the British Government and the island’s own economic prosperity. Not to be outdone, the Minister of Finance added a third reason: The Anguilla Government’s attention to accountability, stability and credit-worthiness.

There is however reason for caution. The fact that Britain has responsibility for Anguilla serves as a safeguard for money lenders in addition to the island’s own financial resources, but there is always the danger of over-extending one’s capacity to the extent that difficulties could arise if due care is not taken. Anguilla must avoid ever finding itself in a debt-ridden situation where, although the economy is buoyant, there is still a heavy burden on the national purse to meet the requirements of the Government’s loan commitments with ease.