BVI Premier Announced New Budget Format and Fiscal Strategies

In his 2013 Budget Address to the BVI territory, the Premier and Minister of Finance Dr Orlando Smith named the increase of revenue from tourism, increased market share in the financial services industry, and renewed activity in the other components of the economy as the main factors for achieving positive economic growth in the British Virgin Islands.

The Premier explained that this budget is made over a rolling three-year period, for the first time in the history of the British Virgin Islands. This method will assist the government in the planning for a longer term, and allow for the better management. The new budget format is built upon a new chart of accounts that is based on the International Monetary Fund’s government finance statistics (GFS) format. 

The fundamental principles of the government’s fiscal strategy include: increasing the recurrent budget surplus over the medium term through the enhancement of the revenue stream, a reduction in recurrent revenue growth, reducing the fiscal deficit by 2015, meeting the borrowing limit ratios stated in the protocols for effective financial management, and enhancing the financial management structure and practices within the government.

BVI Adopt New Laws on Aicraft Registration

New laws to support the expansion of the aircraft registry of the British Virgin Islands entered into force, enabling locally-registered operators to secure aircraft financing. New pieces of the BVI legislation, named the Mortgaging of Aircraft and Aircraft Engines Act, 2011, and the Mortgaging of Aircraft and Aircraft Engines Regulations, 2012, allow aircraft operators to register their ownership in the jurisdictions under three separate registries – for aircraft, their engines, and their mortgages. This will give to aircraft operators the opportunity to receive financing from lending institutions, which require that legal ownership should be demonstrated before providing financing.

The British Virgin Islands has been known as tax-efficient jurisdiction for aircraft holding companies, and in the last year the government launched the development of the local Aircraft Register. The BVI government expects that, with the new legislation, the jurisdiction will be able to use its position as a holding company domicile to encourage international operators to register their aircraft and engines in the BVI. 

According to Harney’s law firm, the new legislation, and especially its development providing for the filing of priority notices for credit institutions “paves the way for new business opportunities which complement and support the British Virgin Islands’ position as the premier offshore corporate domicile with over 850,000 companies incorporated to date.”

Next Year Budget To Be Presented On November 15

Next week, BVI Premier and Minister of Finance Hon. Dr. D. Orlando Smith will present the Budget of the Territory for 2013. It will be the second Budget of this Government since taking up office a year ago.

The 2013 Budget presentation is the first to be made since signing of the Protocols for Effective Financial Management with Britain’s Government, which mandate that the BVI jurisdiction builds its reserve funds – the initiative much criticized by the Opposition and named too restrictive for the Government. Under these protocols, which were signed by Premier Smith, the amendments to the Public Finance Management Act were passed by the House of Assembly, but they are still waiting Governor’s approval. 

According to the Public Finance Management (Amendment) Act, 2012, the Budget must include Medium Term Fiscal Plan (MTFP); a Budget Policy Statement; and a Multi-year Budget Document.