The Turks And Caicos Release Their 2018 Half Year Performance Report
Presented By Premier Sharlene Cartwright-Robinson
Turks And Caicos Government Press Release
Mr. Speaker, I rise today to present the mid-year fiscal and economic performance progress report for 2018-19. This report is mandated by the Framework Document published under section 109 (6a&b) of the Constitution and Section 4 of the Public Financial Management Ordinance of 2012.
Mr. Speaker, the report is being presented in line with my Government’s budget theme of ‘Consolidating the Gains, Expanding the Hope and Empowering Our People’. We will focus on the half year:
• financial highlights;
• economic outlook;
• performance update from the Ministry of Finance, Trade and Investments;
• and performance updates from selected Statutory Bodies.
FINANCIAL HIGHLIGHTS Mr. Speaker, the Budget was approved by this honourable House with an allocation of $290.0 million to implement the strategies, development programmes and projects, concentrating on the rebuilding efforts of the islands and the well-being of the people of these Turks and Caicos Islands; with national transformation and economic development being a major priority.
Recurrent expenditure was budgeted at $234.7 million, non-recurrent expenditure at $10.7 and capital expenditure at $36.6 million. Also included in the budget was a contribution to the National Wealth Fund of $8.0 million.
The mid-year operating performance of Government continues to improve. Operating surplus before Capital Expenditure and Debt Payment is $52.2 million; that is $37.7 million (262%) improvement from the $14.4 million projected for this period in the 2018-19 budget. Better than expected revenue performance and lower than expected expenditure performance are the contributing factors to the improvements.
Mr. Speaker, recurrent revenue outturn of $156.7 million is $16.0 million or 11% above the budgeted forecast of $140.7 million and $26.4 million or 6% above the results of the same period last year. Whilst, Non-recurrent revenue collection of $3 million was $0.1 million or 5% above budget forecast.
Mr. Speaker, while recurrent revenue is ahead of the budget, the recurrent expenditure outturn of $107.5 million, is $21.6 million or 17% below the budget of $129.1 million and $10 million above the results of the same period last year. Non-recurrent expenditure of $1.9 million was about 50% below the budget and 15% below last year’s result.
GOVERNMENT REVENUES Mr. Speaker, total revenue of $159.7 million recorded a favourable variance $16.1 million or 11.3% when compared to the budgeted outturn of $143.6 million and a favourable variance of $4.7 million or 3.0% when compared to the results of the same period last year.
Year-to-date, total revenue included $36.6 million (23%) from import duties; $35.9 million (23%) derived from hotel and restaurant tax; while $17.5 million from customs processing fees; $17.4 million from stamp duty on land transactions and $9.6 million from work permits and residency fees.
Taxes on goods and services were $4.7 million higher than budgeted and up $4.9 million from last year’s results largely owing to increased tourism volumes. Hotel and Restaurant Tax increased by 8% when compared to the budget and was above last year’s results by $1.1 million (3%). Stamp Duty on Land Transactions was $0.9 million or 5% above budgeted outturn and $1.8 million or 12% over last year’s outturn of $15.6 million.
Total duties (excluding stamp duty) collected for the year to date were $59.8 million. This represented an increase of $5.5 million or 10% from budget estimates and $11.6 million or 24% from last year’s results. Total duties include Import Duties of $36.6 million; a $6.8 million or 23% increase from last year and was $2.6 million, or 8%, above budget. Customs Processing Fees increased over the previous year by 29% or $3.9 million and was above budget by 21%. Fuel Tax also increased by 21% when compared to last year while being 2% under budget.
Fees, fines and permits totalling $14.4 million increased by 10% when compared to last year’s results while being $0.3 million (2%) below budget. The major contributor is Work Permits fees of $9.6 million. This was $0.4 million or 4% more than budget and 18% greater than last year’s results. This outturn is attributed to higher demand and a major effort to process backlog applications as well as collect overdue amounts.
Other Revenues collected for the year to date totalled $34.7 million which was 23% above the budgeted amount while being 43% above last year’s outturn. These variances are primarily due to a concerted effort implemented by the Ministry of Finance to have excess surplus from the SBs returned to the Consolidated Fund as well as improved collections for Seaport departure tax and telecommunication licenses.
Non-recurrent revenue for the year totalled $3.0 million. This amount was 5% or $0.1 million ahead of the budget.
GOVERNMENT EXPENDITURE Mr. Speaker expenditure for the first half of the year before capital expenditure totalled $107.5 million. This represented a shortfall of $21.6 million or 17% from the budget estimates while being $10.0 million above last year’s results.
The total spent during the current fiscal year included $44.7 million (42%) for Personnel Costs. Medical Treatments and Transfers to NHIB totalled $13.8 million accounting for an additional 13% while Hospital Provisional Charges totalled $10.8 million and made up 10% of expenditure.
Almost all expenditure heads were below estimates to date, the major contributors being Personnel Costs of $44.7 million which were 8% or $3.9 million below budget. This was due mainly to the late passage of the budget which would have resulted in delays in the recruitment process. It is noted however that there was an increase of $2.3 million (5%) over the prior year results, primarily due to efforts to fill vacant positions. (Later on in my presentation I will speak to the recruitment efforts)
Transfers to NHIB for the year totalled $13.8 million and was $2.2 million below the budget while Hospital Provisional Charges of $10.8 million was $0.8 million above the budgeted amount and $0.5 million more than the prior year’s outturn.
Subventions totalled $7.1 million representing a $1.6 million or 30% increase from last year’s cost of $5.5 million, and was 8% above the budget these variances however, are primarily due to timing differences in payments.
Maintenance Expenses for the year to date totalled $4.0 million. This amount was $1.2 million (22%) below the budget while $0.5 million (14%) above last year’s outturn. The short-term savings is due primarily to timing differences associated with the current maintenance schedule. It is expected that maintenance expenses will be on budget for the financial year.
Grants and Contributions totalled $4.0 million for the year to date of which $2.1 million was spent on scholarships. This amount was $0.4 million (11%) below budget while $1.8 million (82%) above last year’s results
Finance cost associated with TCIG’s public debt totaled $0.6 million for the year.
Other recurrent expenditure for the year to date totalled $21.1 million which saw an increase of $1.4 million or 7% from last year’s results, while being $14.2 million or 40% below the budgeted amount.
Non-recurrent expenditure for the year of $1.9 million was 50% and 15% less than the budget estimates and last year’s outturn respectively. Of this amount SIPT expenses accounted for $1.2 million, which were a marginal 3% less the budgeted amount and 36% less than the previous year’s results. Civil Recovery expenses were $0.1 million more than last year’s outturn and $0.3 more than the budget estimates. Statutory Land Acquisitions has year to date results of $0.2 million which remains significantly below budget as the negotiations regarding compulsory land acquisitions have not been finalized.
CASH FLOW MANAGEMENT
The Statement of Financial Position shows the amount of $211 million being held in cash and investments in respect of the Consolidated Fund, the Development Fund, the National Forfeiture Fund and the National Wealth Fund.
Cash and cash equivalents comprise cash on hand, cash at bank and deposits on call with maturity of three months or less. Excess cash is currently invested in short term deposits pending the finalization of TCIG’s investment policy. Cash and its equivalents increased by 39% from the end of the prior year primarily due to the surplus recorded thus far in the year.
Receivables from exchange transactions comprises staff loan and advances. The balance at September 30, 2018 is $3.3 million of which $2.8 million is deemed to be irrecoverable. This House has been requested to approve the write-off of this amount.
Non-current Assets include investments of $2.5 million comprising investments in shares of the Caribbean Development Bank (CDB) as a member of the Bank ($0.7 million) as well as receivables arising from the repurchase of TCIG bonds of $1.8 million.
Receivable balances arising from the former TCInvest loan portfolio of $14.8 million are disclosed as non-current receivables from exchange transaction. During the previous financial year TCIG concluded negotiations to repurchase the TOLCO portfolio which totaled $4.0 million at a discounted price of $1.4 million. This portfolio is deemed to be irrecoverable therefore a request has been made to cabinet to consider these amounts for write-off.
Current Liabilities comprise refundable deposits and payables from exchange transactions totaling $7.7 million as well as the principal payments of the debt which is due within a year.
The Government of the Turks and Caicos Islands debts includes both local and International borrowings. TCIG’s outstanding debt as at September 30, 2018 stood at US $14.6 million. Total principal debt repayment for the year to date was $5.2 million while total finance costs for the year were $0.6 there were no new borrowings during the Financial Year. The reduction in the balances from $19.8 million to $14.6 million represents the normal amortization of the loans. TCIG continues to repay its debt on time and expects that all current borrowings will be repaid within the next three years.
NATIONAL WEALTH FUND
Mr. Speaker, the initial $8m has been transferred into an account.
Ordinance 9 of 2016 which commenced on March 24, 2016 included an amendment to the PFM Ordinance to lend additional clarity to the previous amendment in FY 2014-15. The effect of the amendment was to indicate that moneys appropriated for the purposes of the Development Fund would not lapse and that any unexpended balance of moneys withdrawn, would remain in the Fund at the end of the financial year if the moneys were still required to meet any expenditure or commitment under the Fund.
The total amount spent on capital projects thus far for the fiscal year was $7.3 million, relating mainly to capital projects approved in the previous financial year.
Of the total spent, $4.0 million was spent on the construction, renovation & upgrading of Government building of which $1.8 million was spent on schools throughout the islands and a further $2.3 on road development.
Mr. Speaker, the focus of the Capital Programme since coming into office has been on inclusive growth that delivers benefits for all across the sectors, enlarging the size of the economy, leveling the playing field for investment and increasing productive employment opportunities for all residents of these islands. It is my Government belief that efficient public investment boost returns on private investment. Mr. Speaker, the Capital Programme for FY 2018/19 when compared to FY 2017/18 moved from $20.3m to $36.6m which is an 80.3 per cent increase. FY 2017/18 was not a normal year for the programme as all resources after the passage of the tropical cyclones in 2017 had to be reprioritized and directed towards investment in the education sector infrastructure that was badly damaged. Be this as it may, in an effort to expand the programme in FY 2018/19, my Government has utilized funding from the reserve fund to ensure that the most impacted infrastructure was not only built back better but was upgraded to ensure that the infrastructure was more resilient to future impacts. Even though the budget for FY 2018/19 was approved late Mr. Speaker, the total value of tenders issued at the first half of the year totaled $14.7m.
The breakdown of the projects tendered are:
- Construction of Promenade/ Boardwalk and Craft Market.
- Heritage Sites Improvement Project
– this includes works to the Wade’s Green Plantation and the Flamingo Pond in North Caicos.
- School Infrastructure Phase 1 – this includes works to the Helena Jones Robinson High School, Raymond Gardiner High School, Turks and Caicos Community College Campus GDT, and Oseta Jolly Primary School.
- School Infrastructure phase 2 – this includes works to the Mary Robinson Primary School and Clement Howell High School.
- Reinstatement of Government Building – this includes works to the Crown Land Building and the Ministry of Education Building in GDT.
- Road Development Phase 4 – this includes works to roads in PLS.
They are: Laney Lane, Tumpa Avenue, Matilda Circle and the Radar Site Road.
- Ministry of Health Infrastructure - this includes work on the Parade Grounds and the EMS Ambulance Base.
- Shelters and Emergency Operations Centre.
- Reinstatement of Sea Wall in Salt Cay
Mr. Speaker, the implementation of the Capital Programme has been a challenge since coming to office and continues to be a challenge for my Government. Additional manpower has been budgeted in this year for the Public Works Department to assist in the implementation of the programme.
THE ECONOMY INTERNATIONAL SECTOR
Mr. Speaker, in turning my attention to the economy, it is important that we take a look at what is happening in the region and the world as this also allows us to make an assessment about our local economy and projections for future economic performances for this economy. According to the IMF in its October publication on global prospects and policies, global growth is projected at 3.7 percent in 2018 and 2019. This is 0.2 percentage point below what was forecasted in the April 2018 forecast. Growth in the emerging markets and developing economies is expected to remain steady at 4.7 percent in 2018 -2019 and should rise modestly over the medium term.
Mr. speaker, growth in the advanced economies are projected to increase by 2.4 percent in 2018 which is marginally faster than 2017, and is expected to expand by 2.1 percent in 2019. In the USA, our major trading partner, growth is now expected to peak at 2.9 percent in 2018 and soften to 2.5 percent in 2019. This forecasted growth for 2019 is 0.2 percentage point down from the IMF April 2018 forecast and can be attributed to the recently introduced trade measures in the USA. As the fiscal stimulus begins to unwind, growth is expected to drop to 1.8 percent in 2020.
The Canadian economy is expected to grow in 2018 at a rate of 2.1 percent and 2.0 percent in 2020. In the United Kingdom, growth is projected to slow to 1.4 percent in 2018 and 1.5 percent in 2019. In the overall euro area which include the UK, growth is projected at 2.0 percent in 2018 and should gradually slow further to 1.9 percent in 2019. In the emerging and developing economies, growth is expected to remain steady at 4.7 percent in 2018- 2019, and to rise modestly over the medium term. China and India are expected to grow at 7.3 and 6.6% respectively. These growth rates are lower than in the recent past. According to the IMF, growth in the Caribbean is forecasted at 4.4 percent in 2018 and 3.7 percent in 2019.
Mr. Speaker, in turning our attention to the local economy, the Statistics Department, has indicated that the real GDP projection of 3.2 percent for 2018 has been revised downwards slightly to 2.6 percent, which is 0.6 percentage point below what was earlier forecasted. This revision takes into consideration the slow pace in the execution of the forecasted public and private sector construction projects for this year. This revised growth rate is also in line with emerging market growth rates. The economy however remains stable and future projections show signs of continuous positive growth as projects that are currently in the pipeline materialized providing spin-off going forward for the construction sector and the tourism sector.
Growth is expected in the construction sector as well as other sectors. Construction activity is expected to increase by approximately 10 percent in 2018 and even further in 2019. This will be propelled by foreign direct investment in large-scale tourism related and other projects. These will be complemented by increased public sector spending on capital works, as the Government find ways of ensuring that the capital budget is executed. Mr. Speaker, it is important to note here that the execution of the capital program is improving and a number of large scale capital projects are now at the contract awarding stage. This will also be boosted by projects funded from the TCIG/Carnival Infrastructure fund. Mr. Speaker, the Statistics Department has however indicated that we must always be mindful that these are projections and actual growth will also depend on the strength of the US economy and the commitment of the Government of the Turks and Caicos Islands to find ways of diversifying the economy, therefore making it less reliant on the tourism sector.
Mr. Speaker, preliminary indications by the Tourist Board are that stay-over arrivals into the Turks and Caicos Islands increased by approximately 10 percent during the first 6 months of the fiscal year when compared with the same period last year. Cruise ship passenger arrivals for the first half of fiscal year increased by 17.7 percent over the same period in 2017. The value of imports increased by 24 percent for the first half of the fiscal year. This increase is led by the increase in construction material.
Mr. speaker, if I was to summarize the performance of our local economy, I would say that despite all of the challenges we experienced as a country since last September, we have done well but we must work together to ensure that all which is forecasted going forward, is passed on to the people of the Turks and Caicos Islands. That is why my Government has mandated that a country poverty assessment is undertaken during the second half of the fiscal year. Preliminary works has already begun on this. This is a joint effort between the social welfare Department of Statistics, Social welfare Department, Epidemiology Unit and SPPD. A paper has already been taken to cabinet to establish the National Assessment Team (NAT) which will be meeting within the next few weeks, if they have not met already. The instruments are being drafted and the different components will start to be executed shortly. Mr. Speaker, it is important for me to encourage the people to partake in this exercise as the instrument are designed to not only give poverty results but it also speaks to disaster resilience, it speaks to labour and gender and how our people is living. Mr. Speaker I believe that you can recall that I have always spoken for a cost of living assessment to be undertaken and I am happy to report that a cost of living assessment will be undertaken as a part of this exercise. My Government will therefore now get a better understanding of the conditions under which our people is living and will therefore be able to put programs in place to ensure that all of our people can benefit from the economic growth of the TCI.
MINISTRY OF FINANCE, TRADE AND INVESTMENT TRADE
The Government of the Turks and Caicos Islands has signaled its commitment to improve the trade performance of the Turks and Caicos Islands. This undertaking is significant in the context of a number of factors that prove critical to the overall performance of the Turks and Caicos Islands economy. Reference is made in particular to (1) a merchandise trade deficit of $430 million for the year 2017 (Merchandise Trade Report); (2) Brexit; and (3) the decision of the UK Parliament to introduce public registers of owners of companies registered in UK Overseas Countries and Territories (UK Sanctions and Anti-Money Laundering Bill).
A number of initiatives are being developed to facilitate the growth and expansion of trade in goods and services by the Turks and Caicos Islands. Thus far, the following have been initiated: (i) drafting instructions for the development of a consumer protection framework; (ii) establishment of a national Working Group for the development of a National Quality Infrastructure; (iii) draft concessions policy for micro, small and medium sized enterprises (MSMEs); (iv) sought assistance from the Cayman Islands Government on the development of a trade policy; (v) advanced the need for an effective Customs Duty Calculator to assist importers; (vi) advanced proposals to InvestTCI on improvements to the administration of the MSME Program; (vii) assisted with the development of a Memorandum of Understanding on Trade and Investment between the Turks and Caicos Islands and the Dominican Republic; (viii) conducted a national workshop on a National Quality Policy/Infrastructure for the Turks and Caicos Islands; and (ix) attended training sessions and meetings held by the EU-COSME programme which tackled issues related to trade and business. Notwithstanding the above, additional initiatives are envisaged towards achieving the Government’s objective to improve the trade performance of the Turks and Caicos Islands. These initiatives broadly relate to: (i) the development of a draft national concessions policy; (ii) the negotiation of bilateral trade agreements; (iii) the development of a web portal for the prospective Department of Trade, Industry and Commerce (expected to be established in 2019); (iv) the finalization of legislation to support the establishment of a consumer protection framework (ahead of the establishment of the said Department of Trade, Industry and Commerce in 2019); and (v) the submission of amendments to the Business Licensing Ordinance/Regulations to allow for the business license application form to capture data related to MSMEs. The widening gap between imports to and exports from the Turks and Caicos Islands, the perceived future loss of EU funding for economic programmes etc. as a result of Brexit, the anticipated reduced performance of the financial services sector on account of the UK Sanctions and Anti-Money Laundering Bill, and other factors, support the need for a more robust trading environment in the Turks and Caicos Islands. It is considered that where support for the initiatives advanced above is given on a continuous and strategic basis, it is then that technological progress, economic growth, sustainable development and job creation for the people of the Turks and Caicos Islands will be realized.
National Investment Policy Statement, 2018 The National Investment Policy Statement 2018, having been approved, seeks to ensure that the Government of the Turks and Caicos Islands achieves its vision of a well-diversified economy in the ensuing years. A diversified economy minimizes the risk of economic shocks; it reduces reliance on one source of income or from one major sector; and it ensures economic flexibility and resilience. The IPS 2018, recognizes the tourism sector as the major industry that has propelled economic growth within the TCI and still has significant potential to be diversified. It registers its commitment to: • the expansion and critical care of the Cruise Sector • the growth of the critical Financial Services Sector into a strong pillar of the country’s economy. • supporting the development of Renewable Energy Technologies. • infrastructure development throughout the country and will welcome opportunities for Build/Operate/Transfer (BOT), Private-Public Partnerships (PPPs) • TCI Government is committed to the growth of the manufacturing, fisheries and agriculture sectors and will make direct investments them. Most of all, the IPS enforces the Government’s commitment to not only bring investors to the Islands but to actively work with domestic investors to identify projects and facilitate access to financing. Refurbishment Policy The Refurbishment Policy came into effect in November 2017 to provide facilities with incentives to conduct planned comprehensive maintenance. As most facilities generally conduct these works during the months of September and October, we are now seeing an uptick in requests to access the benefit during the off-peak season of 2018. The Policy offers incentives to facilities on all islands; however, islands outside of Providenciales that may face even more prohibitive cost structures when one considers transportation, carriage and freight costs are granted a higher concessionary rate. In normal times projects on Providenciales can receive and 50% duty remission, on construction material, furnishing, fixtures and fittings. All other islands can receive a 75% duty remission. Of course, if repairs are being carried out post a natural disaster the Government may set the duty exemption on a tiered basis to support eligible projects. For example, for eligible projects on Providenciales it will grant 50% duty concession on the first $5M of costs and a 75% duty concession on the remaining cost of eligible items up to a limit of $10M. For projects on the other Islands it will grant a 75% duty exemption on the first $5 million and a full duty concession on the remainder up to a limit of $10M. The concession encourages the improvement of properties through upgrades and extension works, which is outside of the general preventative maintenance that takes place on a day-to-day basis. Properties benefit from being able to maintain the quality of their rooms and other product offerings, which in turn ensures that their average daily rates of rooms do not decline. The Government, on the other hand, secures relatively higher tax revenues as compared to those associated with diminished ADR values, had facilities repairs been deferred. Partial Credit Guarantee Study As part of the ongoing works to bolster the Small, Medium Enterprise (SME) Sector in the TCI, the Government in July 2018, with assistance from the Caribbean Development Bank began conducting fundamental research on the ecosystem of micro, small, and medium enterprises within the country with a study specifically geared at address the issue of: Access to Finance, which is said to be one of the main determinants of success for these businesses. Preliminary interviews held with established as well as nascent entrepreneurs highlighted a general lack of funding sources or a requirement to be over-collateralized when seeking credit. However, lenders posited that the absence of proper financial records is the main impediment to accessing finance. As much of the information was anecdotal, an enterprise survey has been commissioned and will be administered in the coming weeks in the Month of November 2018. This will assist the Government in determining, what, if any, interventions are necessary to ensure that enterprises seeking funding, be it for working capital or fixed assets have a fighting chance of gaining access to it. Micro, Small and Medium Enterprises Still meeting the objective of supporting and sustaining the MSME sector, on September 4, 2018, the amendments to the MSME took effect. The Government was keen to ensure that islands outside of Providenciales could now benefit from concessions for tourism related activities. In addition, the amendment sought to avail the $10,000 cash grant to not only new micro start-ups but to allow for the cash grant to be given to all micro enterprises, irrespective of whether it is for a start-up or existing project. Finally, as we have found that many businesses needed the technical assistance at varying times, the legislation allows persons to access technical help at the point when it is needed most; either before or after a concession order is granted or in some cases, even if a concession order is not to be granted to the small business.
CITU IT Policy Mr. Speaker during the second quarter of FY 18/19 your Government took the steps to implement a comprehensive information technology policy for the TCIG. Your Government is cognizant that there is a need for heightened security standards and protocols as interaction between Government and the public move from traditional office visits, for service, to the new demand for Government to be a 24/7 online organization.
This policy aims to reduce expenditure in relation to decision made regarding IT for TCIG. It is envisioned that many of the ad hoc decisions regarding IT matters would be reduced and the CITU would be better able to monitor, not only the purchases of IT equipment, but also the procurement of IT modules and programmes This policy addresses specifically:
- Acceptable use policy – this informs all users on the acceptable use of technology. Areas covered are access, use of computer resources, no expectation of privacy, legitimate business purpose, responsibility for passwords, email standards, illegal copying, inappropriate or unlawful material, accessing other user’s files, personal equipment and computer security.
- Security Awareness – To inform all users regarding the impact their actions have on security and privacy. Implementing relevant security policies, blocking unnecessary access to networks and computers.
- Information Security – To lay the foundation for an enterprise data risk management program; people, process and technology. This includes Role of Information and Information Systems, Information access, User IDs and Passwords, User-ID issuance for Access to organisations information and Password Policy.
- DR/BCP (Disaster Recovery, Business Continuity Plan) To assure that TCIG has DR/BCP plans that are accurate and tested. This is to be used in conjunction with the DR/BCP that outlines
1. Recovery tasks – list of specific recovery activities
2. Recovery personnel – identify specific people involved in the business continuity efforts
3. Critical vendors – list of vendors critical to day-to-day operations
4. Critical equipment/resource requirements – detain the quantity requirements for resources that must be in place after plan activation
DEPUTY GOVERNOR’S OFFICE - HUMAN RESOURCE MANAGEMENT RECRUITMENT
Subsequent to the approval and passage of the ‘Annual Appropriation’ (Budget) for financial year 2018/2019 the Turks and Caicos Islands Government (TCIG) had approved funding for 130 vacancies (50 new and 80 existing) across Government. To date, the Human Resource Management Directorate (HRMD) has published four (4) batches of jobs which included approximately 100 vacant positions. As a result, HRMD has received and processed over 700 applications thus far, with the Public Service Commission (PSC) giving approval for 61 new appointments to the Civil Service. Additionally, several Ministries assisted by HRMD are scheduled to conduct 30 interview exercises by the end of October. It is the intention of the Office of the Deputy Governor to complete the recruitment exercise for all 130 vacancies by the end of December which would provide Ministries and Departments the final quarter of the current FY to focus on their preparation for next year’s budget (FY 2019/2020).
TRAINING AND DEVELOPMENT
The Office of the Deputy Governor invest approximately $300k annually on staff development. This is primarily done utilizing two methods. Firstly, the Training Department develops and offers a variety of in-house training programs throughout the course of the year. Secondly, the Professional Development Fund (PDF) provides civil servants with financial assistance for continuous development programs such as short courses and workshops, accredited programs, secondment, online degree programs, professional certificate programs such as CPA and ACCA as well as providing financial support for civil servants enrolled at the Turks and Caicos Islands Community College and grants to civil servants pursuing Bachelor or Graduate degree programs. Thus far, the Training Department has offered a variety of capacity building opportunities which included Hurricane Preparedness, Performance Management and Leadership and Emotional Intelligence for approximately 196 persons. Moreover, the professional development fund has approved and funded 36 applications; which has benefited 74 persons and committing roughly $190,000 thus far. These include:
• 8 approved grants for Associates Degree programs at the TCICC
• 7 approved grants for Bachelor’s Degree programs at various institutions
• 10 approved grants for Master’s Degree programs at various institutions
• Enforcement and Compliance Training for Conservation Officers
• UK/BNA 1981 Training for the Ministry of Border Control
• NEBOSH Diploma and Certificate in Safety and Health for staff in the Environmental Health Department
The DGO would like to encourage persons to continue to participate in the training programs offered by the Training Department and to also utilize the professional development fund as a tool for personal and professional development which ultimately can assist with persons progressing to more senior roles within TCIG.
PERFORMANCE UPDATE ON SOME STATUTORY BODIES
The new three-member Executive Management Team is in place with the new members (CEO, Medical Director and CFO) assuming office during Q2. This period also saw changes in the composition of the Board of Directors. The four new Board members included a new Chairman and Deputy Chairman.
The NHIB will continue organisational restructuring in key areas as evidenced by the ongoing recruitment and recent employment of key personnel at the executive and operational levels. These personnel include a new Executive Management Team, and ongoing recruitment for posts such as Human Resource Officer, Legal Officer, Compliance Manager, Compliance Officer, Nurse Case Managers, Claims Verification Officer and Public Relations Officer.
The National Health Insurance Plan (NHIP) remains committed to developing public relations, marketing and promotions activities utilizing social media and targeting the TCI population. Greater emphasis will be placed on acquiring customer feedback on the degree of satisfaction with services provided by the NHIP to inform a NHIP response and the dissemination of key information about benefits, safeguards, rights and obligations of beneficiaries. Recruitment efforts are underway to hire a Public Relations and Marketing Officer to spearhead these initiatives. It is anticipated that the position will be filled during Q3 of FY18/19.
A Capital budget of $352,500 was approved for NHIB for the FY18 /19. These funds will be used to enhance NHIB resources with retrofitted offices to accommodate the new hires, upgrade the IT infrastructure and web portal as well as obtain a new vehicle to allow our compliance officers to visit delinquent clients. In addition, some of this capital budget will go towards enhancing the pharmaceutical software. The NHIB continues to focus on collections and compliance as a means of increasing efficiency. Organizational strengthening is in process and the new structure is being drafted. The recent arrival of the New Chief Financial Officer and recruitment, which is underway for a Legal Officer, Compliance Manager, and a Compliance Officer (for GDT), is part of the process. Compliance collections budgeted for the first half of 2018/19 was $750,000 with actual collections being $873,409, some $123,409 above the budgeted amount.
Close collaboration and engagement of the NHIP Compliance Team with the NIB Team has commenced and is expected to be strengthened and create synergies. It is anticipated that increased field efforts and targeted interventions to reduce the delinquency as well as collect outstanding contributions will continue.
The Treatment Abroad Program (TAP) managed by the NHIB on behalf of the MOH had 728 overseas referrals in Q1 and Q2 of 2018/2019, down from 765 referrals in the same period for 2017/2018. This included 119 emergency referrals down from 138 in the same period for FY 17/18. In the period under report there were 61 air ambulance 19 charters and 657 transfers on commercial flights. We have also noted significant activity under the TAP related to Cardiology transfers (170), Ophthalmology (175) Oncology (36), Neurosurgery (44), Vascular surgery (53). On average, 80% of transferred persons were TCI Islanders.
Stakeholder engagements are ongoing as they relate to TAP, which has been drafted and is undergoing final reviews.
The Claims Department continues to focus on increased audits, provider visits and verifications of both local and overseas provider claims to ensure compliance with the expectations of the NHIB. The capability will be enhanced with the recruitment of a Verification Officer that is currently underway.
The Provider list is under review to ensure adequate coverage for all specialty areas. Increased focus remains on reviewing Provider Contracts to gain the greatest value for money while improving the quality of care. In relation to TAP, there will be an expansion of the provider network to include hospitals in Florida to treat select, complex cases that outstrip the resources available in the current network which consists primarily of Regional Providers. Hospitals already identified to provide services include; Broward Health, Holy Cross, Cleveland Clinic, and Children’s Hospital of Tampa.
The NHIB continues to partner with TCIG in ensuring greater oversight of the Project Agreement with InterHealth Canada/TCI Hospital as well as work with the MOH, the wider TCI community, and all stakeholders in areas such as health promotion and prevention and support Primary Healthcare Renewal in TCI.
The NHIB will continue to identify/review areas of specialized care that can be incorporated into the existing services within the TCI to reduce the number of persons who travel overseas for such services and in so doing increase efficiency. The focus for FY18/19 is on areas of cardiology and ophthalmology, which have consistently been identified as areas that require increased on Island services due to the epidemiological profile of the TCI Population and the financial and social cost incurred.
The Draft Pharmaceutical Policy has been prepared in response to the Pharmaceutical Review completed in consultation with various stakeholders and is currently being reviewed by the National Pharmacist at the Ministry of Health, Agriculture, Sports and Human Services (MOH). It is anticipated that ongoing collaboration between NHIP and the National Pharmacist will continue to focus on the drug formulary; acquisition and piloting of new software to manage and enhance efficiency and cost effectiveness of pharmaceuticals.
Members of the NHIP participated in various meetings/workshops aimed at improving efficiency and increasing fiscal space for health. The CEO, along with the PS of MOH, recently participated in a PAHO-sponsored Sub-Regional Dialogue on Heath Financing in the Caribbean in Barbados. The CEO of NHIP made a presentation on Creating Fiscal Space for Health. Representatives from IT and the Claims Departments participated in a Plexus Workshop and have organized demonstrations for the respective departments of various software that could impact case management and claims management.
The CEO and Medical Director participated in an insurance workshop and also met with representation from the current Reinsurance Carrier.
The Presentation of the findings of Actuarial Review of the NHIB took place and is in the process of being finalized, pending access to/receipt of critical data from TCI Hospital. NHIP has submitted this request on behalf of the Actuaries to InterHealth Canada via the MOH. This final Actuarial Review document is expected to provide information on the financial sustainability of the Plan and will inform key decisions and the way forward for NHIB.
The National Audit Office, through the Procurement Office, sent out an Invitation to Tender (ITT) for the audit of the TCI NHIB for the period FY15/16 to FY17/18. Only one audit firm, KPMG, made a bid for the service. After negotiations, KPMG was appointed on behalf of the Auditor General to conduct the audits of NHIP for the three-year period FY15/16 to FY17/18 at a cost of $161,250 per annum with the three audits to be done concurrently. Presently the financial statements and relevant schedules for the three periods are being prepared, which will then be provided to KPMG, so the audit can commence. This is expected to start in Q3 of 2018/19.
NATIONAL INSURANCE BOARD
Compliance Activity The National Insurance Board (NIB) as part of its key program strategies has committed to improving its compliance activities. During the period April 2018 to September 2018 the NIB undertook a total of 3,839 compliance activities. This represented an increase in the number of activities of 30% over that achieved for the year ending March 2018 and is 28% better than the target set for the entire financial year 2018/19. Improvement in Benefit Adjudication The NIB received a total of 761 short term Benefit claims between April 2018 and September 2018. The NIB was only able to process 32% or 241 of those befit claims in 5 days. While this performance is well below the target projected for the financial year 2018/19, we remain committed to working towards that goal. The NIB continues its efforts in public education to ensure that claimants provide a completed application form along with all the necessary documentation to reduce the processing time. We will also conduct more training for our frontline staff to ensure they are better prepared to vet the forms submitted and detect errors and missing supporting documentation. Reduction of Administrative Cost The NIB continues with its efforts to reduce administrative cost against the social security benchmark of administrative expense as percentage Benefit plus Contribution Income. Administrative expense for the period April 2018 to September 2018 was 8% which, is below the strategic target of 12% Percentage of Budgeted Contribution Collected The NIB collected a total of $18.3M between April 2018 and September 2018. This was 4% greater than the amount projected in the budget for the same period. This represented 55% of the total budgeted contribution projected to be collected for the financial year 2018/19. Percentage of Asset within Strategic Asset Allocation During the financial year, between the months of April 2018 and September 2018, the NIB undertook a rebalancing of its investment portfolio to ensure compliance with its strategic asset allocation. As at September 2018, 100% of the asset classes were in compliance with the strategic asset allocation. Percentage of Approved Legislative Changes There were no approved legislative changes adopted for the period April 201 to September 2018. This is in keeping with the estimates for the financial year 2018/19. Several bits of legislative amendments have been submitted for Cabinet’s consideration. Number of PR Activities Undertaken The NIB continues its public relations efforts as it seeks to inform the public about the role of the NIB. For the period April 2018 to September 2018, the NIB conducted 128 PR activities which included the use of various media, this involved electronic communication, live presentations and newspaper articles.
Concerted effort is being made to implement the Port Authority’s key program strategies for 2018/19. The majority of capital expenditure was incurred implementing post-hurricane rehabilitation projects. Progress was made in restoring key infrastructure at all ports. A few post-hurricane projects remain outstanding. It is anticipated that these would be tendered shortly and completed by the end of the financial year. With good progress on post hurricane projects, attention turned to commencement of strategic projects. Environmental Impact Studies to guide port rehabilitation on South Caicos and dredging on North Caicos commenced. Considerable progress was made in implementing a consultancy for the redevelopment and modernization of South Dock, Providenciales, with wide stakeholder involvement. A draft consultancy report is currently being considered. The consultancy should be completed during November. Sustainable financing arrangements for this project, consistent with key program strategy number 6 is also being assessed. there is increased collaboration and coordination between the Ports Authority and the Maritime Department. The Ports Authority is represented on the Steering Committee, for the planned, 2020 Coastal State Audit of the TCI by the International Maritime Organization. The two departments (and other maritime sector stakeholders) collaborated in the first annual Observances of World Maritime Day in the TCI, on September 27th, 2018. The Ports Authority also held its 1st Annual General Meeting during July. Enhanced efforts were made; by utilization of social media platforms, publications and launching of a new website to bringing greater awareness of the vital role of the maritime sector in social and economic development of the TCI. FINANCIAL OUTLOOK
The revised revenue forecast completed in October 2018 is projecting that Revenue for the Fiscal Year will increase to $298.7m approximately $19.1m, above original budget forecast. Approximately $9.5m of this amount will be windfall revenue mainly from Statutory Bodies net surplus and Dormant Account Revenue. Whilst Expenditure is forecast to end at approximately, $252.0 million, that is $38.0 million below budget. The forecast figures have reduced the outturn of the Capital Expenditure down to $20.3m from the approved budget of $36.6 million. These numbers may be adjusted during the next forecast if the activities relating to the Capital Expenditure are increased significantly. The reforecast also projects lower than planned expenditure for the Contingency Fund by $3.2m; SIPT (Judiciary) by $1.0m; Professional and Consultancy by $1.4m and Staff Costs by $ 5.2m. These numbers will be adjusted in the next forecast should the Ministries, Department and Agencies report increased performance activities.
Notwithstanding the strong cash position to mirror the trajectory of previous years, the Government is mindful of the various challenges in the global environment including slower economic growth and susceptibility to external shocks and challenges including natural disasters. There is uncertainty as to the impact of Brexit on the world economy and specifically on the Turks and Caicos Islands, as well as a negative impact of the opening of the registers of companies incorporated in overseas territories by the British Parliament. The looming trade war between the United States and its trading partners also has the potential to negatively affect the TCI; however, the continued strong performance of the tourism/hospitality sector augurs well for the country.
The Government will continue to provide value for money, an efficient and effective public services complemented by continued prudent expenditure management; as well as the strengthening of its revenue enhancement efforts in order to achieve further economic growth.
Cover Image credit @jocanflyaway