TCI will soon be debt free, says Washie
In just a few years time, the Turks and Caicos Islands will be "largely debt free, with the associated cost savings that this brings", says Finance Minister Hon. Washington Misick.
"And (we) can look forward to a future where we are free to invest, spend or save our surpluses as we see fit," the minister said in his recent budge address.
He stated: "The Turks and Caicos is clearly taking giant steps towards being financially independent, with all of the responsibility that this implies."
He said the acting Permanent Secretary and refinancing advisor, met with major regional financial institutions in Trinidad and Tobago last month, alonmgh a number of banks, asset managers and other financial institutions in Port of Spain, and began telling them the dramatic story of our successful turnaround.
"The response was enthusiastic – our officials were told that the Turks and Caicos had made an ‘impressive bounce back’, that the government here had ‘done the right things’ and that our BBB+ investment grade credit rating awarded by Standard and Poor’s in 2014 is seen a critical factor in the future success of this country," he said.
"There are a number of critical steps towards our successful refinancing during this financial year. Standard & Poor’s will reassess our credit rating in May 2015. Negotiations will begin around September 2015 with potential refinancing investors.The refinancing will, of course, take place in February 2016. This is so critical to the future success and suitability of the Turks and Caicos, that it requires cross party political unity at all levels of our society. Silly, dissenting voices, motivated by misguided short term political gain could – intentionally or unintentionally – damage their country’s future prospects for years to come."
Misick said the government's approach to debt management has been centred around striking the right balance between financing cost, cost stability and risk.
"The $260m UK loan guarantee expires in February 2016. We currently make use of $170m of this facility. At the end of the financial year 2014/2015 the Turks and Caicos Public Debt to Gross Domestic Product ratio will be 24 percent. Whereas total revenue to GDP is estimated at 30 percent. Turks and Caicos’ overall borrowing commitments are reducing as a result of the actions of this government. This is the most prudent course of action – reducing debt as it: improves investor confidence in the Turks and Caicos; improves the quality of our borrowing options as we are seen as safe; keeps the costs of borrowing as low as possible – great news for the taxpayer; also ensures that we do not pass on the burden of debt to the next generation."
He said the total public debt held by the Turks and Caicos government at the end of financial year 2014/2015 is estimated to be $191.7m. Net public debt by the year-end will approximate $131.7m.
"The sinking fund currently stands at some $60m. We are planning to make a further contribution of at least $37.2m early in the financial year 2015/2016. Further, I plan a further deposit of $19m by February 2016 bringing the total in the sinking fund to more than $116.2m.
Remember we currently make use of $170m of the $260m UK guaranteed facility. So, this would see us need to independently refinance less than $54m on the markets. I cannot highlight enough just how much of an astonishing turnaround this is. We faced real financial difficulty. We swallowed hard and have now largely overcome those difficulties.We will refinance this balance in February 2016, and look to pay off this lesser amount in a planned and sustained way too," Misick said.
"And (we) can look forward to a future where we are free to invest, spend or save our surpluses as we see fit," the minister said in his recent budge address.
He stated: "The Turks and Caicos is clearly taking giant steps towards being financially independent, with all of the responsibility that this implies."
He said the acting Permanent Secretary and refinancing advisor, met with major regional financial institutions in Trinidad and Tobago last month, alonmgh a number of banks, asset managers and other financial institutions in Port of Spain, and began telling them the dramatic story of our successful turnaround.
"The response was enthusiastic – our officials were told that the Turks and Caicos had made an ‘impressive bounce back’, that the government here had ‘done the right things’ and that our BBB+ investment grade credit rating awarded by Standard and Poor’s in 2014 is seen a critical factor in the future success of this country," he said.
"There are a number of critical steps towards our successful refinancing during this financial year. Standard & Poor’s will reassess our credit rating in May 2015. Negotiations will begin around September 2015 with potential refinancing investors.The refinancing will, of course, take place in February 2016. This is so critical to the future success and suitability of the Turks and Caicos, that it requires cross party political unity at all levels of our society. Silly, dissenting voices, motivated by misguided short term political gain could – intentionally or unintentionally – damage their country’s future prospects for years to come."
Misick said the government's approach to debt management has been centred around striking the right balance between financing cost, cost stability and risk.
"The $260m UK loan guarantee expires in February 2016. We currently make use of $170m of this facility. At the end of the financial year 2014/2015 the Turks and Caicos Public Debt to Gross Domestic Product ratio will be 24 percent. Whereas total revenue to GDP is estimated at 30 percent. Turks and Caicos’ overall borrowing commitments are reducing as a result of the actions of this government. This is the most prudent course of action – reducing debt as it: improves investor confidence in the Turks and Caicos; improves the quality of our borrowing options as we are seen as safe; keeps the costs of borrowing as low as possible – great news for the taxpayer; also ensures that we do not pass on the burden of debt to the next generation."
He said the total public debt held by the Turks and Caicos government at the end of financial year 2014/2015 is estimated to be $191.7m. Net public debt by the year-end will approximate $131.7m.
"The sinking fund currently stands at some $60m. We are planning to make a further contribution of at least $37.2m early in the financial year 2015/2016. Further, I plan a further deposit of $19m by February 2016 bringing the total in the sinking fund to more than $116.2m.
Remember we currently make use of $170m of the $260m UK guaranteed facility. So, this would see us need to independently refinance less than $54m on the markets. I cannot highlight enough just how much of an astonishing turnaround this is. We faced real financial difficulty. We swallowed hard and have now largely overcome those difficulties.We will refinance this balance in February 2016, and look to pay off this lesser amount in a planned and sustained way too," Misick said.