Virgin Islands (British)

Politics:

• Analysis

  Virgin Islands (British) politics: Quick View - BVI formally adopts UN anti

  Event

  Two key UN anti-crime conventions have been extended to the British Virgin Islands, and came into force in June.

  Analysis

  As is the case elsewhere in the Caribbean region, the government of the British Virgin Islands (BVI) has been under pressure to boost efforts against organised crime and drug-trafficking. It is increasingly co-ordinating security and drug-control efforts with law enforcement agencies in neighbouring countries and with the US. Most recently, the UN Convention against Transnational Organised Crime (the Palermo Convention) and the UN International Convention for the Suppression of the Financing of Terrorism (the Terrorist Financing Convention) were formally extended to the BVI and came into force on June 20th. The conventions were extended through declarations made by the UK government.

  The conventions are designed to prevent the spread of terrorist financing, money-laundering and similar illicit activities. Previously, the BVI had essentially incorporated the requirements of the conventions, as acknowledged in the territory's 2008 Mutual Evaluation Report by the Caribbean Financial Action Task Force (FATF), which sets international standards on money-laundering and terrorist-financing issues. Officials now say that, with the formal extension of the UN conventions, the territory is in complete compliance with the recommendations of the FATF.

  The government hopes that formal adherence to the accords will facilitate the growth of the financial services sector and help it to promote the BVI as a trusted and recognised international financial centre.

  August 20, 2012

• Background

  Virgin Islands (British): Constitution and institutions

  The 1977 constitution provides for a ministerial system of government, headed by a chief minister. Elections are held every four years. The British crown is represented by a governor with important reserve powers over national security and other matters, a post held since April 2006 by David Pearey. The governor presides over an Executive Council responsible for the administration of government. The Legislative Council includes a majority of elected representatives as well as several officials. Minor constitutional reforms were enacted in 2000.

  A locally appointed constitutional review commission completed work in April 2005, with a report containing 116 recommendations presented to Mr Smith and the then governor, Thomas Macan. Matters considered included the addition of a sixth minister, a reduction in the governor's reserve powers and the definition of “Belonger” status: an estimated 45% of the rapidly growing population are not at present classified as British Virgin Islanders. No major change is believed to be envisaged in the BVI's relationship with the UK. Constitutional discussions with the UK followed, with a final draft of the new constitution passed in May 2007 by the Legislative Council, and expected to take effect prior to the 2007 election with the next dissolution of the Legislative Council (although some clauses will not take effect until after the election). The draft provides for a cabinet headed by a premier, instead of a chief minister sitting in an executive council chaired by the governor; as well as a Human Rights charter. The UK will remain responsible for external affairs, but with some responsibilities—for negotiations towards and conclusions of bilateral and multilateral agreements—delegated to the local government. The Legislative Council requested a letter of entrustment from the UK confirming the delegation of responsibilities as a condition of acceptance of the new constitution. Belongers not born in the BVI will be allowed to vote.

  June 05, 2007

• Structure

  Virgin Islands (British): Political structure

  Official name

  British Virgin Islands

  Form of government

  UK Overseas Territory; a UK-appointed governor controls defence, foreign affairs, the civil service, the judiciary and certain financial matters

  The executive

  The Executive Council is composed of the governor, the chief minister, the attorney-general as an ex-officio member and three other ministers appointed by the governor on the advice of the chief minister; the premier is appointed by the governor from the largest party in the Legislative Council. William Boyd McCleary took office as governor in 2010

  Head of state

  Queen Elizabeth II, represented by the governor

  Legislature

  Unicameral Legislative Council with a four-year term, currently composed of a speaker, elected from outside the council by its members, the attorney-general as an ex-officio member and 13 directly elected representatives

  Legal system

  Based on UK common law; a court of first instance sits on each island; the Court of Appeal is in London

  Elections

  November 8th 2011; next national election due by December 2015

  Government

  The NDP holds nine of the 13 directly elected seats on the Legislative Council

  Main political organisations

  Government: National Democratic Party (NDP)

  Opposition: Virgin Islands Party (VIP)

  Key ministers

  Premier & minister of finance & tourism: Daniel Orlando Smith

  Deputy premier & minister of natural resources & labour: Kedrick Pickering

  Communications & works: Mark Vanterpool

  Health & social development: Ronnie Skelton

  Education & culture: Myron Walwyn

  UK governor: Boyd McCleary

  December 12, 2012

Economy:

• Background

  Virgin Islands (British): Economic background

  The economy is dependent on tourism and financial services. Agriculture is limited and mainly supplies the local market. The only manufacturing that takes place is on a small scale.

  June 05, 2007

• Structure

  Virgin Islands (British): Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010b	2011b	2012b
  GDP at market prices (US$ m)	991.9	876.8	894.4a	915.6a	948.6
  Real GDP growth (%)	-7.0	-13.4	0.4a	0.6a	1.4
  Consumer price inflation (av; %)	7.1	3.3	2.4	2.3	2.2
  Population ('000)	28.2	28.9	29.5a	30.2	30.8
  Exports fob (US$ m)	23.6b	20.2b	20.1	25.0	26.0
  Imports fob (US$ m)	-331.6b	-291.5b	-296.1	-320.0	-310.0
  Note: The currency is the US dollar.
  a Actual. b Economist Intelligence Unit estimates.

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  December 12, 2012

• Outlook

  Virgin Islands (British): Country outlook

  British Virgin Islands: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: The British Virgin Islands (BVI) government has agreed a pact with the British government that provides guidelines for an information sharing arrangement. The pact is expected to provide a planning framework and greater transparency for the economy. One immediate knock-on effect has been the ending of the UK government's objection to a US$15m loan from the Caribbean Development Bank (CDB).

  DOMESTIC POLITICS: The BVI government, led by the prime minister, Daniel Orlando Smith, of the centre-right National Democratic Party, has signed a new fiscal pact with the UK government. The protocol came into force at a signing ceremony on April 23rd attended by Mr Smith, the UK-appointed BVI governor, Boyd McCleary, and the UK minister for overseas territories, Henry Bellingham, on his first visit to the islands. The agreement will provide guidelines for a new information sharing arrangement with the UK on the overseas territory's finances. This requires an amendment of the territories' existing Public Finance Management Act (signed in 2004) to strengthen its provision. However, the fiscal protocol stopped short of a previous controversial proposal that would have required the annual budget to be pre-approved by the British government before being presented to the BVI's National Assembly. The deal helped the government to save face over the possible embarrassment of more intrusive direct control by the UK of the BVI's public finances. Mr Bellingham reiterated the UK's position that it was not seeking to micro-manage the budget of its territories, but that it does expect sufficient information sharing to monitor the fiscal sustainability of government spending decisions. Enhanced financial management under the new act is also intended to provide a medium-term planning framework and greater transparency, with the BVI government required to provide regular reports on fiscal and economic performance. The timely and accurate production of statistical data-sorely lacking in the BVI-has also been promised.

  INTERNATIONAL RELATIONS: Region-wide integration efforts of the Caribbean Community (Caricom) remain stalled, despite the selection of a new secretary-general, Irwin LaRocque, in mid-2011. Caricom member states, with the exception of Haiti and the Bahamas, have formally joined the region's single market, although the single economy has been placed "on pause". Fiscal austerity in most member countries has led to financial hardship for the region's key institutions, particularly the Caricom Secretariat. The Economic Partnership Agreement (a reciprocal trade agreement compatible with the World Trade Organisation, or WTO), signed between the EU and the Cariforum (Caricom and the Dominican Republic) in mid-2008, has little impact. In addition, disputes between Caricom and the Dominican Republic over trade adjustment funds from the EU remain contentious, and economic and political interests in the region continue to block the Dominican Republic's bid to join Caricom as a means of easing these disputes. Progress is being made on a free-trade agreement (FTA) with Canada, albeit slow, owing to resistance within the region to further trade agreements in the wake of the economic downturn. Other initiatives aimed at boosting trade flows have little impetus-talks within the WTO and proposals for an FTA with the US remain stalled.

  POLICY TRENDS: One immediate knock-on effect of the BVI government agreeing to beef up its fiscal reporting standards has been the ending of the UK government's objection to a US$15m loan from the CDB. The loan for a number of infrastructure projects was initially approved in July 2011 by the BVI's House of Assembly under the previous Virgin Islands Party (VIP) government-now the main opposition party since being ousted at a general election in early November 2011. However, the UK objected to the disbursement of the loan-the UK holds the final decision in debt matters-citing concerns over the use of financing so close to an election and the fiscal deterioration that had taken place under the VIP government. The UK approved the loan on May 18th and the BVI government now anticipates the first disbursement to be made as early as July. The funds will largely be directed towards road infrastructure repair and improvement projects, all of which have already been identified and approved by the CDB. Some of the works have been pending since Hurricane Otto traversed the islands causing severe floods in October 2010. However, after six months in office the government has yet to define how it will finance two other long-standing infrastructure projects: expanding airport capacity and cruise ship docking facilities. That said, improving relations with the UK suggest that the BVI government could potentially tap more multilateral funds in the short term.

  ECONOMIC GROWTH: In June 2011 the Louis Berger Group, a US infrastructure development consultancy, delivered a final report to the BVI Airports Authority (BVIAA) that recommended different options for upgrading BVI's main international airport, located on Beef Island. Since then, the government has narrowed down the report to two options: to extend the existing runway at an estimated cost of US$38m, or build a second runway with a US$70m price tag. To make a final decision the BVIAA has now contracted the services of the International Airline Transport Association (IATA) to conduct a technical review of the two remaining options. In preparation for IATA's review (which is expected within the next six months) the BVI's Ministry of Natural Resources and Labour announced in early May the appointment of a project manager to prepare tender documents for the project, indicating the government's intention to move swiftly ahead once a decision is taken. An environmental impact study is also expected to be delivered in June. The airport expansion is intended to boost tourism-one of two major economic activities in the BVI (together with offshore finance) and a large source of employment-by providing access for larger aircraft and thereby bring down travel costs.

  EXTERNAL ACCOUNT: Regionally, Caricom is "in crisis" and the regional bloc could collapse within several years if fundamental changes are not made to its administrative structure, according to a recent official Caricom report. The first discussions of the confidential report were held in Suriname in early March at a special session of the Community Council of Ministers, but no concrete plans for action were announced following the meeting. Although full-year country specific data was not available at the time of publication, the Barbados-based Caribbean Tourism Organisation reported in February that 23.8m stopover tourists visited the region in 2011, a year-on-year increase of 3.3% compared with 2010.

  June 01, 2012

View detailed map

Country Briefing

Land area

151 sq km; comprises 47 islands, of which 16 are inhabited; located 80 km east of Puerto Rico

Population

29,537 (2010 official estimate)

Major islands

Tortola, Virgin Gorda, Anegada and Jost Van Dyke

Capital

Road Town, Tortola, population 9,300 (2009, Commonwealth Secretariat data)

Climate

Subtropical

Weather in Road Town

26-31°C in summer; 22-28°C in winter (average daily minimum and maximum); average monthly rainfall, 100 mm

Language

English

Measures

UK (imperial) system

Currency

1 US dollar (US$) = 100 cents

Time

4 hours behind GMT

Public holidays

January 1st; Commonwealth Day (second Monday in March); Good Friday; Easter Monday; Whit Monday (seven weeks after Easter Monday); Sovereign's birthday (third Monday in June); July 1st; Festival Monday; Tuesday and Wednesday (first week in August); October 21st, November 14th; December 25th-26th

March 20, 2012