STATEMENT BY PREMIER AND MINISTER OF FINANCE
DURING THE 12TH SITTING OF THE SECOND SESSION OF THE FOURTH HOUSE OF ASSEMBLY
10 July, 2020
COVID-19 Relief Initiatives -
Property Ownership and Moratorium on Bank Credit
Mr. Speaker, I thank you for this opportunity to address this Honourable House on the favourable response that your Government has been receiving from the commercial banks operating in the Territory, with respect to relief measures for the people of the Virgin Islands in this COVID-19 era.
One area that we are particularly pleased with is the strides your Government has made in removing obstacles that have been standing in the way of our people becoming empowered through the ownership of real property.
I am happy to inform Honourable Members that we are beginning to see the stimulation that we intended to create, being realised. The catalyst for this was the waiver of stamp duty on land transfers between Belongers, which Cabinet agreed to and approved on 8 May, 2020, which was subsequently approved by this Honourable House in terms of legislation to allow for such.
Through the Speaker, I want to urge all Belongers, especially our young people, to make maximum use of the opportunities that are currently available which make it far easier than normal for you to own a parcel of land and a home of your own, even amidst this COVID-19 era.
I say this because there are aspects to these arrangements that are outside of the control of your Government and, therefore, we have no way of knowing how long the special loan facilities being offered by commercial banks will be available. Hence, my advice is to do not delay and act now because if you wait you may end up having regrets.
I want to be clear that I am not here to promote the lending products being offered by the commercial banks, nor to endorse any particular bank. I am just reporting the facts.
By all means, I urge our citizens to do your due diligence. Talk to every bank. Ask all the questions you need to. Get the fine print details. Consult your relatives or financial advisors. Evaluate the loan products from the banks. Compare and contrast them to see which suits you best. But by all means, do not sit down idly by and let this opportunity slip away without you checking it out. Your generations will regret it if you do.
Honourable colleagues, over the last few years – and especially this one – we, the people of the BVI, have been subjected to the hardships of catastrophic events. It is a fact that many of our people do not own their own homes and they rent. They are at the mercy of others.
Unfortunately, when catastrophes strike, some landlords show no patience or empathy to persons. They increase the rent on tenants and increase their worry and suffering. In some cases, persons have even been evicted.
In any event, Mr Speaker, when you pay rent, that is money that is lost to you. If that money was paid instead to a mortgage or towards materials and labour, you would have something to own, to show, to enjoy, to pass on to your children, to use as collateral with the bank – even to rent to others and earn an income.
When you pay rent that is an expense; but when you apply the same money to home ownership it is an investment, and that is empowerment.
This is why your Government saw it fit and important to create the environment and the policy framework to lessen the obstacles that stand in the way of our people owning property. One major initiative in this regard is the removal of stamp duty on land transactions for Virgin Islanders.
Persons who have been following closely enough would recall that the removal of the stamp duty was one of your Government’s campaign promises during the 2019 General Election. It is in our manifesto.
Our initial proposal was for the waiver of the stamp duty for young people and first-time property owners.
But when coronavirus/COVID-19 was declared a pandemic in March of this year, when your Government began to analyse the potential social and economic impact that the pandemic would have on our people, the plight of rental tenants came sharply into focus. We recognised that many of our people would again be placed at the mercy of some landlords who would not show empathy and compassion.
Your Government decided that we needed to make a start towards combating this situation, especially since it is likely to keep recurring whenever we have a catastrophic event. The journey of a thousand miles starts with a single footstep.
So, on 8 May, 2020, your Government, through the Cabinet, amended the Schedule of the Stamp Duty Act to allow for the waiver of stamp duty fees payable on the sale or transfer of property by a Belonger to another Belonger no matter the amount, even if it’s just a transfer of love and affection.
The four percent stamp duty that normally would apply to land transfers can add up to thousands of dollars, and is not included in the mortgage principal by the banks. Therefore, as Honourable Members are aware, this is money that citizens have to put out up-front from their pocket.
You had to have the money before you could even think about making an appointment to see the bank. Now that your Government has waived this fee, it means this is not an obstacle blocking your way anymore.
As Premier, I must say I am happy to see that commercial banks in the Territory have followed our lead with the stamp duty waiver, and are offering loan packages that go further in making it easier for Virgin Islanders to own property in their name.
For instance, with the stamp duty waiver being announced on 8 May, National Bank of the Virgin Islands has since launched a Land Loan Campaign, commencing 1 July, 2020 and running until December 2020, offering 100 percent financing on raw land purchases and 6.5 percent interest, highlighting the additional savings to applicants through the stamp duty waiver.
The bank has reported that the offer is very well received so far.
May I also say that your Government continues to engage the commercial banks in dialogue about other ways to help Virgin Islanders to own their own property. What is being offered by some banks, while it is very good, it is still lagging behind their competitors. So, we are asking them to review and reconsider their position and to see how they can improve and become more competitive. Customers benefit when there is competition in the market.
On 1 July, 2020, as Premier and Minister of Finance, I wrote to the Bank Association and the individual banks asking them, in light of the hardships that citizen are experiencing due to the ongoing economic impacts of COVID-19, to consider further incentives to help citizens, not only with land ownership, but with home construction. Some of the banks have promised to look into this request and we are keeping an optimistic mind.
I have also asked the banks, in my most recent letter, to see if they can provide any loan facilities to assist existing and start-up small and medium sized businesses, since these are critical to our economy.
Another area I have been dialoguing with the banks is in the area of relief for persons who have lines of credit such as credit cards and loans, and who would be facing hardship due to COVID-19, and therefore are unable to keep up with payments.
Mr. Speaker, you would recall that from the onset, your Government began working very diligently to prepare for and respond to COVID-19. We were conversing and providing frequent updates to the people.
When our very able and competent BVI technocrats made their initial projections that a serious economic storm was on the horizon due to COVID-19, we immediately constituted the Coronavirus Economic and Fiscal Stability Task Force to study the situation and to make recommendations.
We stated that there would be an initial response programme, and the phase two would be kept flexible because the situation was early and very fluid.
The task force report was completed on 7 April, 2020, and one recommendation was to approach the banks for a moratorium on personal and business loans and credit facilities, as well as Government loans. The task force was cross sectional and multi-sectoral, so it was not any grand secret what were the options under consideration.
On 15 April, 2020, in my address to the Territory, I disclosed the areas under consideration for the Phase One response; and this included requesting a moratorium of three to six months in the initial stage.
By the very next day, we began receiving confirmation from banks that they would be implementing waivers for three to six months, on a case-by-case basis.
As Minister for Finance, I wrote the banks again on 4 May, 2020, asking them, in light of the deepening economic downturn from COVID-19 and based on the forecasts that the impacts would be protracted due to absence of a vaccine or cure for the coronavirus, to consider extending the moratorium to one year.
I am very pleased that National Bank of the Virgin Islands, has confirmed that it has implemented a one-year moratorium for its customers, which would end 31 March, 2021. On behalf of the people of the Virgin Islands, I thank the Board, Management and staff of National Bank for their compassion towards the people of the Territory, and for their support.
We are also grateful to First Caribbean bank which responded positively and gave a break to statutory agencies that have loans with them like BVI Ports Authority. I thank them for understanding the position in which we all find ourselves in this COVID-19 and to see the importance of meeting people and agencies where they are so that there is not only assurance, but an opportunity for these agencies to reorganise themselves and strategise for remaining resilient in this New Regular.
As I mentioned earlier, I sent a follow-up letter to all banks on 1 July, 2020, requesting that the other commercial banks reconsider our request for a one-year moratorium.
Mr. Speaker, I know the banks operating in the BVI want to help the people more than they already are doing. I know that they are aware that if their customers go bankrupt then they will have no customers left to do business with.
We all need each other; the banks, the businesses, the customers, the employers, the workers, the Government. We live on an island, but no man, no woman, and no business is an island. We depend on each other in ways that we may not always recognise or remember. But what is important is that we must support each other to get through these unforeseen challenges so that we can look forward to having a better and brighter tomorrow.
These are not normal times.
The world is uncertain about what it will look like in the future, but one thing is certain is that it will be different from what we have known it to be. That is why we are calling it the “New Regular”. And, the New Regular is still something that is evolving.
While we in the Virgin Islands have made the sensible, but tough, decisions to keep our people safe from COVID-19, we are seeing where in other countries this has not been happening and those countries are experiencing spikes in their infection rates. And, until and unless everybody on the planet wises up and gets serious about COVID-19, we cannot say we are clear and out of the woods; the danger is still there.
Many leaders and many societies that threw caution to the wind are living in regret today because their actions have resulted in the loss of many lives – in some cases thousands; in some cases hundred thousand.
In the BVI, every life is precious – and this is both for their physical health and emotional wellbeing.
So, I want to thank our partners in the commercial banking sector for the consideration and support they have shown to our people. I thank them for what they do in this Territory and I ask them to do their best to facilitate our request for the one-year moratorium on credit repayments, along with any other areas that we have mentioned before. Please work with our people in these difficult times. Do allow your policies to adjust so that they can be applicable to the realities on the ground at this time.
Mr. Speaker, I also urge our Virgin Islanders to make maximum use of the opportunities that we have made possible for them to acquire land at much lower cost than normal and without some of the upfront obstacles being moved out of the way.
Mr. Speaker, your Government renews our pledge to continue working towards the betterment of all our people and to improving their quality of life and prospects for the future.
Mr. Speaker your Government intends to continue to champion because the causes of the people in this area, while at the same time Mr. Speaker, being fair to our financial institutions.
I thank you.