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The Government of Montserrat team led by Premier Joseph Farrell (head of table) at the Closing FAM Virtual Press Briefing. (Jenzil Skerritt Photo)

Montserrat Awaits Decision on 2021/22 Aid Package as UK ODA Budget Slashed

The United Kingdom Financial Aid Mission (FAM) meetings to discuss Montserrat’s aid package for the coming financial year has ended without a decision on what the local government will have to work with. Definitive figures are still weeks away officials said and comes as confirmation was received that the UK Government will reduce its Official Development Assistance (ODA) spending target from 0.7% of UK national income to 0.5% in 2021.

This was announced by the foreign secretary, *Dominic Raab in a written statement yesterday.

Governor Andrew Pearce said of the FAM meetings that tough decisions and tough prioritisations will have to take place and that the outcome will be known once the Foreign, Commonwealth and Development Office knows what it’s budget for the coming year will be. Using an analogy from his love of hiking, the governor said the meetings serve as the base camp in calibrating the route Montserrat will have to traverse in the months and years ahead.

Pearce also noted that the UK and Western nations have not seen an economic contraction as is currently happening since the 1930s. Despite this, the Overseas Territories remain a priority for the UK budget and they will support all the key areas once they have been prioritised.

Shailaja Annamraju, who represented the UK-based FCDO team called the meetings intense and very useful in providing a context on which to make decisions. She reiterated the current economic challenges that the UK is facing will play a role in what the final aid package will look like for Montserrat. The economist noted that early decision-making by the Government of Montserrat has helped to stabilise things on island and that the sectors are performing at a stronger level than previously estimated.

COVID-19, she said, has unmasked some of the issues which Montserrat has been facing. She added reassurance that the UK will continue to help Montserrat and her team will be fighting for the best possible settlement to support the island.

Annamaraju said it is going to be a challenging year for the FCDO and cuts are on the horizon as they are also working to secure their budget. This is also the reason why the budget is being taken year on year rather than in three-year cycles which had become the norm. The FCDO representative noted that replacing European Development Funding grant support, which was lost due to BREXIT, is also on the table but will be dependent on the final departmental budget.

(l to r) Deputy Premier Dr. Samuel Joseph. Premier Joseph Farrell and Minister of Education and Health Charles Kirnon at the Closing FAM Virtual Press Briefing. (Jenzil Skerritt Photo)

Premier and Minister of Finance Joseph Farrell called the eight-days of meetings an “experience” as they discussed the development needs of the island. While he did not go into detail, the minister said his team presented the 2021/22 draft estimates as well as the strategic priorities for the coming year. Among the priority areas noted were pension reform, social services and welfare, the Social Security Fund, access, healthcare, and public sector reform.

The premier said they have told their UK counterparts that raising taxes on a people who are already heavily taxed is not an option they wish to pursue. Managing more efficiently and effectively available funds, and cutting extravagances will be the methodology for the year ahead.

The finance minister said despite the early estimates and starting the 2020/21 financial year with a 22-million-dollar deficit, the economy has performed better than expected and he does not believe the deficit will remain at the start of the 2021/22 budget year.

Farrell said he was hopeful that the Government of Montserrat would receive the same budget support from the UK as it did last year. He added that bolstering Social Services was a key concern as over the past year more households have suffered due to COVID-19. Working with the FCDO to safeguard the Social Security Fund, which is the only social safety net that many on Montserrat have, was a priority.

Streamlining the Department of Trade and adding staff and programmes to support private sector development would be beneficial at this time. He added that his government was eager to conclude the discussions on the recurrent budget and discuss a phase two of the capital programme CIPREG.

*Source: Raab confirms aid cut and pledges a ‘more integrated approach’ to ODA (