Premier of the Turks and Caicos Islands, Sharlene Cartwright-Robinson, has detailed the territory has taken a severe economic battering from the onset of the novel coronavirus (COVID-19) pandemic.
Cartwright-Robinson, in an economic overview report on Tuesday (October 27), told the nation that the Ministry of Finance continues to focus on meeting critical obligations while exploring ways to stimulate the territory’s ailing economy.
The situation is bleak, however, as she said the TCI government estimated a 25 per cent decline in the territory’s GDP in the year to 31 March 2021. The government forecasts its revenues to decline at an unprecedented 45 per cent: from US$315m to US$173m.
She further indicated that her administration is in an ‘advanced position’ to begin assisting citizens and businesses in financial crisis.
“Our economic overview report shows what we already know – that revenues are down, and spending is up – leading to an operating deficit: which simply means that we are spending much more than we are making,” the premier argued.
“Turks and Caicos, like every other nation and territory, is hurting but not collapsing; the top of this economy has creamed off, but the bottom is not falling out. In fact, given what we have gone through together, we can hold our collective heads high,” Cartwright-Robinson continued.
The hotel and restaurant sector in the Turks and Caicos, according to the economic overview, is forecasted to decline by 53 per cent from US$303 million to US$142.4 million.
The United Kingdom (UK) territory further noted that its operating deficit for the second quarter was US$25.1 million.
“This outturn compared unfavorably to the projected surplus of $10.6 million. The operating deficit widened to $44.4 million at the end of the six-month period,” Cartwright-Robinson remarked.
In the meantime, as economic activity is expected to improve when public health measures are gradually lifted, the TCI premier contended the territory’s rate of recovery will largely depend on how the COVID-19 pandemic unfolds.
“As noted, this significant underperformance is a direct result of the TCIG’s response to COVID-19 which saw the closure of borders and a lockdown resulting in little to no economic activity,” Cartwright-Robinson said.
The premier explained that while the 40-island archipelago reopened its international borders reopened on Wednesday, July 22, business activity is nowhere near previous levels.
“The borders reopened on July 22, at which point business activity was somewhat restored. However, tourism activities have been slow as many persons are averse to travelling given that the virus continues to spread both locally and in our main international markets. At this point, it remains uncertain when revenue collections will begin to gain any significant momentum,” she added.
The Turks and Caicos’ aggregate expenditure for the second quarter totalled $58.3 million, some $2.4 million (or 4 per cent) above the projected amount.
Also taking a massive hit were import duties, which ended the quarter at $9.6 million. Totalling some $16.8 million at the end of the quarter — import duties are 42 per cent behind 2020 estimates and 54 per cent lower than the outturn of 2019.
“Customs Processing Fees collected for the quarter of $5 million was down $3.4 million or 43 per cent from both the budget and prior year Q2 result. As expected, Hotel & Restaurant Tax which also usually accounts for circa one quarter of TCIG’s total revenue, saw the most significant downturn during this time generating just $1.6 million for the second quarter and a total of only $2.4 million at the end of September versus a budget of $13.8 million,” the premier explained.
In her address, Cartwright-Robinson said significant expenditure continues to be incurred in the health care sector as well as the holding and repatriation of illegal immigrants.
“While our cash reserves have been lowered because of this year’s increased expenditure, we still have 155 million dollars in reserves,” she added.
In the meantime, returns from statutory bodies totaled US$13.5 million for the year to date. These estimates made up 18 per cent of total recurrent revenue. The outturn was US$1.2 million ahead of the estimates, the premier continued while showing an US$11.3 million increase over the prior year.
Stamp Duty on Land Transactions also exceeded expectations, totalling $12.8 million at the end of the second quarter, which was $3.4 million ahead of the estimates.
Additionally, the Turks and Caicos government will seek to borrow up to $80 million—through a soon-to-be issued Request for Proposals— to secure its financial position through to summer 2021.
Premier Cartwright-Robinson noted that her administration will not be seeking a UK Government guarantee.
“This new loan will form the first stage of a two-stage debt strategy. This approach was taken by my Government and will rightly leave the decision over Stage 2, or the long-term debt strategy, and issues such as whether to pursue a UK Government guarantee, to be dealt with after the election,” she said.