Montserrat’s Future with BNTF Tenuous

When the Caribbean Development Bank (CDB) announced in 2017 that it was releasing US$40 million in support for the Basic Needs Trust Fund (BNTF) to Borrowing Member Countries, Montserrat was not on the list.  Head of BNTF Office on Montserrat Mervin Browne said that despite the island being given a reprieve and allocated US$780,000 to be used before December 2020, Montserrat’s position with the fund is tenuous and there is no guarantee it will be considered for future assistance.

Montserrat has been receiving assistance for poverty alleviation projects since the BNTF was created in 1979. However, as the CDB has recategorised the island as a high income nation, it is no longer seen as a priority for accessing the funds.

In 2017, Montserrat was notified by the CDB that the island “has made commendable developmental strides and now exceeds the per capita income band for Group 2 Countries. This has resulted in the territory being reclassified as a Group 1 Country under the country groupings. As a consequence of there classification, Montserrat will no longer qualify for a [Special Development Fund] SDF country allocation nor be eligible for financing under the Basic Needs Trust Fund (BNTF),” the letter read.

Premier Romeo and his team attended several meetings early in 2017 to discuss the island’s position. This resulted in Montserrat being approved for a small disbursement, which Browne said came from unallocated funds and/or savings from BNTF 8. He added that the banks position on Montserrat as a Group 1 high income nation with the likes of Cayman Islands, Trinidad & Tobago, and Antigua & Barbuda has not changed. He explained that work is needed to change the perception and also recategorise the island to a lower group as Montserrat continues to rebuild.

The Bank’s BMCs are assigned to one of three country groups based on their relative per-capita incomes. The country groups help to determine the terms and conditions for SDF lending. While all BMCs are eligible for SDF resources, countries in Group 1 do not receive a country allocation and can only benefit from regional projects and support for RPGs and assistance in the event of a natural disaster.

Current local thinking by many, including government leaders, is that the high level of technical consultants on island, who earn salaries often triple and quadruple the average local salary has skewed the numbers. Montserrat’s annual receipt of more then 60% of its budget from the British Government compared to the dwindling population of less than 5000 is the main culprit for the island being placed in the higher grouping in 2017.

That is expected to remain the case for the coming year as the CDB has given the economic outlook for Montserrat as positive for 2019.

CDB’s most recent economic review of the island states ” Preliminary data from the Eastern Caribbean Central Bank (ECCB) show that GDP expanded by 1.6% in 2018. The expansion was supported by a 5.0% growth in construction activity, following a decline of 33.0% in 2017. Output in the transport and storage sub˗sector rose by 7.5% on account of the improved reliability of the ferry service and increased construction activity.
“Additionally, real estate activity grew by 1.5%. However, a 1.0% fall in public administration, the country’s largest contributor to GDP, acted as a drag on economic performance.

“The economic outlook for 2019 is positive. Output growth is projected to accelerate slightly, reaching 2.0% in 2019, and fiscal conditions should remain on par with the2018 outturn. However, the balance of risks to the outlook is slightly negative.”

The BNTF programmes support a socially inclusive development process that empowers the poor and vulnerable, and supports institutional development.

There have been nine BNTF Programme cycles, implementing over 2,000 sub-projects to directly impact the lives of more than 2.8 million people in poor commu­nities. Community participation is essential to every sub-project, as this facilitates local ownership of BNTF investments and enhances social capital within each community.

Over the years, BNTF programmes have contributed positively to Montserrat’s development efforts. Some of the programmes funded under previous BNTF cycles include, the construction of the Abbatoir in Brades; the Barzey’s Community Road Rehabilitation and the Drummonds Community Road Rehabilitation, among others.

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