NEW YORK, New York — Ratings agency Standard & Poor’s (S&P) today published a supplementary report on the Turks & Caicos Islands (TCI), reaffirming the UK dependency’s BBB+/A-2 rating and stable economic outlook.
The report is TCI’s second in just over a month – following its first-ever S&P review in July – and demonstrates the territory’s economic recovery after falling into bankruptcy in 2009.
According to S&P Analyst Joydeep Mukherji, the updated economic data in the supplementary report continues to reflect a “prosperous economy and net general government asset position.”
Despite the TCI’s limited monetary and external flexibility – given that it uses the US dollar as its currency, and does not have a central bank – S&P expects favourable growth prospects for the territory, based on its well-developed tourism industry and the TCI’s relationship with the UK.
GDP growth and falling debt: S&P analysts project that the TCI’s per-capita GDP will hit US$24,000 in 2014, with an average GDP growth of 3% between 2014-2017. At the same time, government debt is expected to decline to 24% of GDP this year, down from 27.5% in 2013.
Given current fiscal surpluses and continued economic growth, a general decline in Government’s debt-to-GDP ratio is expected to continue through 2014-2017.
The UK’s role in TCI’s growth: The UK dissolved the TCI’s local government from 2009-2012, following financial mismanagement by a previous political administration led by ex-Premier Michael Misick. During this time, the UK introduced several constitutional and legislative changes to strengthen TCI’s governance and the administration of its public finances, which S&P credits for the territory’s positive future outlook.
S&P cautions, however, that the direct role of the UK in TCI’s governance will be lessened when its UK loan guarantee expires in 2016. And with the responsibility for backing sovereign loans again falling to TCI, analysts warn that the effective management of public finances will depend on the quality of TCI’s political leadership, particularly given limited resources in the government sector.
S&P report praised by TCI officials: Commenting on the report, Finance Minister Washington Misick said that his government is committed to broadening and strengthening the islands’ economy, and he affirmed his commitment to keeping public finances in order to deliver a balanced and responsible budget.
TCI is on the way to becoming a prosperous nation with the chance to be a true Caribbean success story.
– Peter Beckingham, Governor, Turks & Caicos Islands
Meanwhile, TCI Governor Peter Beckingham was equally bullish about the outlook for the territory, stating that it provided further evidence that the TCI is “on the way to becoming a prosperous nation with the chance to be a true Caribbean success story.”
He added: “the Government’s plan to strengthen public finances, backed by Britain, has allowed it to get its finances in order, steadily reduce debt and to attract new investment. This must continue.”