On Tuesday of this week, the Turks and Caicos Islands Government announced that the Country had received its first ever Credit Rating from the highly acclaimed American Financial Company, Standard and Poor’s (S&P), who awarded the British Overseas Territory an impressive BBB+ rating. Now, for all intents and purposes, this appears to be great news, meaning, a BBB+ is just below an A-; most territories in the Caribbean, at the same time, were rated lower; the outlook was rated as stable, blah, blah, blah,… but certainly, the question on everyone’s mind is, what does this mean to me? And better yet, what does it mean to the people of these Beautiful by Nature, Turks and Caicos Islands?
That was truly the question of the week, and luckily we have the answer, so here goes.
First things first, A Look Back – Like most of the world economies, and certainly those of the Caribbean, The Turks and Caicos Islands was not immune to the perils of 2008 and the years following, in fact, much of what was endured in our little paradise was layers above anything else the world’s economies faced – a return to Sovereign rule.
What came next? Bounded in Bonds – In efforts that have not gone unrecognized, the UK Government, under the Interim Administration lassoed the country from the brink of bankruptcy, and provided a loan guarantee which gave financial institutions the surety they needed to bail us out. But even this was at a price.
Where are we now? Reinventing the Pillars of Stability – Much ado about nothing is what many have termed the elected Government’s first year in office. This is generally the view when more focus is on laying the framework for the foundation of economic growth and maturity, than on the tangible rewards to a people. However, history has taught us that we must not put the cart before the horse. For development and growth to be sustainable, they must be built on the foundations of good governance, fiscal prudence and integrity.
Over this past year, the Ewing Administration has done a tremendous job of laying this foundation. It is quite evident in the following: responsibly servicing the national debt; slim-lining expenditure and minimizing wastage in the Civil Service; establishment of Public Private Partnership Framework; Manufacturing Policy; Small Medium Enterprise Stimulus Policy; Review and expansion of the Reserved and Restricted Categories of Businesses; Adoption of Transparency Laws for Financial Institutions; streamlining of Immigration Processes; Review of the Education Policy and Skills Gap; increased airlift capacity and reinforcement of well-established tourism industry, and the list goes on. Yet while the residents scream inactivity, the international arena applauds the efforts demonstrated by this Government, and cites confidence that the Turks and Caicos Islands has not only changed course, but is indeed on the road to economic growth and expansion. Hence, the BBB+ Credit Rating, which will definitely put us in a better position for the future.
Our Outlook – From Dependability to Resilience – Finally, the first rays of sunshine. This latest development means this:
1. Credit Ratings are an important tool for borrowers to access loans and security on terms dependent on that rating. Previously, the Turks and Caicos Islands could secure a loan to meet its obligations only with the aid of a UK Guarantee. This Credit Rating, if maintained or improved, means that in 2016 the TCI can refinance its debt by borrowing from financial institutions without the costly loan guarantee and on more favourable terms and lower interest rates.
2. Investors rely heavily on the ratings given by agencies such as Moody’s and Standards and Poor’s to decide whether they will invest or not. A BBB+ rating with a stable outlook for the Turks and Caicos Islands means that investor confidence will be boosted as the risk of them losing life savings are less likely. This will be a great sell in initiatives to attract more Foreign Direct Investment.
3. With increased investment, comes the creation of job opportunities and improved skills capacity through training, secondment and internship programs that new companies invest in through their human resource initiatives.
4. Investment also stimulates the construction industry and with that comes foreign labour. Now I know that there are definitely some drawbacks to importing foreign labour, but when managed effectively, foreign labour positively impacts the circulation of currency as it revives the retail sector of the society. As we all know, profits by demand negates a need for profits by price.
5. And believe it or not, our country’s credit rating also assists the borrowing power of investors! Banks and other financial institutions are much more inclined to loan money to an investor who is looking to do business in a positively rated country than in one that is poorly rated. And with much of the Caribbean being rated lower than the Turks and Caicos Islands, investors and financiers will see this island paradise as ripest among the crops.
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The Office of the Premier TCI 