Further to the written statement by the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for North West Norfolk (Mr Bellingham) of 9 December, Official Report, columns 40-41WS, and the Department for International Development’s minute of 3 February notifying Parliament that the Secretary of State for International Development had approved in principle a loan guarantee to the Turks and Caicos Islands Government (TCIG), I would like to update the House.
The Department for International Development (DFID) has now finalised a guarantee in favour of Scotiabank (Turks and Caicos) Ltd to provide TCIG with access to a maximum capital amount of US$ 260 million over the next five years. I confirm that TCIG will immediately repay DFID its loan of £29.9 million plus interest.
This level of commercial borrowing is vital if TCIG is to turn around its dire financial situation. It will provide the time TCIG needs to implement budget measures which will lead to achieving a fiscal surplus in the financial year ending March 2013. As the Under-Secretary of State, my hon. Friend the Member for North West Norfolk, and I reported to Parliament on 9 December 2010, this is one of a number of key milestones to be reached before a date for elections can be set. Once the territory is in fiscal surplus it will be able to start to pay off its debt and should, after the five-year period is over, if not before, be able to secure new and reduced bank lending without the need for a UK Government guarantee.
The guarantee is intended to cost the UK taxpayer nothing. It will ensure that TCI does not fall victim to financial ruin and it is in line with DFID’s responsibility to underpin the reasonable needs of all British overseas territories.
The current chief financial officer has done an excellent job in getting a grip on TCIG’s public finances. To ensure that the financial plan stays on track to achieve a fiscal surplus DFID reserves the right to require TCIG to retain the position of chief financial officer for as long as the guarantee is in force and to nominate the holder of this post who shall then be appointed by the governor.