Following the last Government’s statement about the situation in TCI in October 2009, I would like to update the House. The financial situation in TCI has worsened to the point where it was not possible for its government to meet its June financial commitments, including payment of public sector salaries. Without immediate UK support, TCI would fall further into economic crisis.
Following discussions with the Foreign and Commonwealth Office, I have decided to provide a temporary package of financial support. This support is conditional on the TCI Government strengthening its capacity and systems to manage its public finances, and balancing its budget within the next three years. We are finalising the details of the package, which we want to put in place together with commercial lenders over the coming months. We intend these arrangements to be at or near zero cost to HMG over the medium term.
In order to address the immediate shortfall, we last week agreed a short term loan of up to £10 million to help meet unavoidable commitments including staff salaries for the police, health and education services. This loan will be repaid in full as soon as the package outlined above is in place. Our aim is to restore and firmly embed the principles of sound financial management, sustainable development and good governance. This should help rebuild confidence in TCI and its ability to manage its public finances.