No Fallout in the BVI from Financial Crisis in the U.S
~~Adz:Right~~ Roadtown, Tortola - Premier and Minister of Finance Honourable Ralph T. O’Neal, OBE is reporting no immediate fallout in the Territory from the financial crisis being experienced in the United States.
Premier O’Neal made the revelation to the local media yesterday at a Ministerial Press Conference. Stating that the Financial Services Commission has not yet reported any fallout, the Premier said there is still cause for concern.
“There is always a time lag of months before the BVI feels any negative effects,” the Premier acknowledged, noting that the same is true when there is growth in the U.S. economy.
“The BVI has not been directly affected by the financial crisis mainly as a result of the limited exposure of our commercial banks to the sub-prime crisis and subsequent credit crunch,” the Premier and Minister of Finance said. He quickly added that “Government is mindful of the indirect impacts which would have a long-term effect on the BVI economy.”
Noting the BVI’s dependence on American and European markets as it relates to tourism and to a lesser extent financial services, the Premier and Minister of Finance said it is therefore prudent to keep a watchful eye on what is happening.
Honourable O’Neal said the slowdown in the U.S economy and forecasted recessions in the United Kingdom and Europe will increase unemployment and inflation which will in turn “affect consumer and business confidence, spending and financing directly impacting (negatively) the pillars which support our economy.”
According to the Premier and Minister of Finance “a prolonged crisis could also impact adversely other sectors such as construction and real estate if liquidity dries up as a result of a reduction in mortgages either from the demand (consumers) or supply (lenders) side.”
He noted too that “the global credit crunch could affect the Government’s ability to secure overseas financing and borrowing locally could hamper private investment.”
Responding to a question about the security of the assets of the Social Security Board, some of which have been invested in the U.S., the Minister of Finance said he has received assurances that they are safe. He revealed that an information paper on the subject is being prepared and will be presented to the Cabinet shortly.
Though fortunate to have escaped these wider effects thus far, the Premier and Minister for Finance acknowledged that residents of the Territory are already feeling the impact of “high fuel costs which have impacted food prices and electricity.”
Noting the resulting reduction in disposable income, the Premier said Government has already initiated efforts to ease the financial burden of residents by meeting with supermarket owners. Government is now awaiting the recommendations of the supermarket owners.
Government is committed to ensuring that the local economy remains strong, growing and adaptable to change.
