Virgin Islands, British 

Virgin Islands, British country policy

Policy established 07 December 2011

• Case-by-case assessment
• The country ceiling is 50 mln euro
• Early warning signal 37.5 mln euro

Country class: 2

Virgin Islands, British country facts

COUNTRY TEXTSHEET © Atradius Dutch State Business Economic Research
Date :  26 November 2011
Country :  UK VIRGIN ISLANDS 

POLITICAL SITUATION:

STABLE

Head of state : QE II, represented by a governor.

Nature of regime : Virgins are UK Overseas Territory; democracy.

Form of government : Government of the National Democratic Party (NDP), headed by p.m. Orlando Smith.
Internal situation :  UK Virgins are British overseas territory with limited self-rule (since 1967). In the November 2011 general elections Smith’s NDP defeated the ruling Virgins Islands Party by a wide margin, gaining 9 of the 13 seats in parliament. 
International relations : UK government is responsible for international relations.

INTERNAL ECONOMIC SITUATION : WEAK RECOVERY FROM RECESSION
Status : Population: 30.500. GDP/capita $43,800.
Most important sectors : Financial and business services and tourism.
Energy situation : Bad.
General situation : The economy is closely tied to the larger and more populous US Virgins; US$ is legal currency. Tourism and offshore banking dominate the domestic economy that experienced a recession in 2009, recovering since 2010. In 2002 OECD removed the Virgins from the list of uncooperative tax heavens. The islands are prone to tropical storms and hurricanes: Earl devastated 90% of the crops in August 2010. Moderate inflation (appr. 2% p.a.).
Economic policy : Despite structural fiscal prudence (low budget deficits, low public sector debt), the recession badly hit the public sector accounts, urging the government to take austerity measures. Regularly returning power blackouts are tarnishing the islands’ tourist destination. Social emphasis and better infrastructure (water, power). 

EXTERNAL ECONOMIC SITUATION : TRADE DEFICITS
Main sources of foreign exchange : Services; rum, fruit. 
Main foreign markets : USA, incl. US Virgins and Puerto Rico.
Main expenses of foreign exchange : Building materials, food.

Foreign debt
Level : Low: est. $ 62 mln (=5% GDP). 
Remarks : -
Balance of payments
Trade balance : Negative: appr. 15% GDP.
Remarks : - 

PROSPECTS : GOOD
Internal political situation : Stable.  
Internal economic situation : Moderate recovery: tourism and financial services are set to drive GDP-growth. Investments in power and roads to enhance the tourist sector.
External economic situation : Largely depending on service/tourist revenues.