Standard & Poor’s credit rating analysis of Turks and Caicos Islands (TCI), a British Overseas Territory, was released yesterday and highlighted a prosperous economy and net general government asset position for the Caribbean country.

The ratings agency gave TCI a sovereign credit rating of BBB+/Stable/A-2.

The report comes after the islands returned to home rule in 2012. The UK suspended TCI’s self government in 2009, stepping in to administer the island group following alleged ministerial corruption within a previous government led by Michael Misick who along with 11 other persons is now awaiting trial. However, the UK retains authority in several key areas.

S&P detail the governing arrangements between TCI and the UK, and pointed a spotlight on the political and institutional links between the UK and TCI as key determinants to their analysis.

“We view the political and institutional links between the UK and TCI has a positive rating factor,” stated the ratings agency.

It went on: “The UK Foreign and Commonwealth Office monitors public finances of overseas territories. Although the UK does not guarantee the debt issued by overseas territories, except in specific cases, it has intervened in various territories and provided fiscal support in the case of TCI.

“The British Government has intervened in territories suffering from financial difficulties by signing a memorandum of understanding with the local government giving the UK authority to agree over the budget in certain circumstances. It typically establishes a multiyear fiscal plan that targets financial benchmarks to be met before local fiscal autonomy is restored.

“Currently Cayman Islands, Anguilla and TCI are in breach of the UK’s prudential financial benchmarks (called ‘borrowing guidelines’) and thus, need to submit their annual budgets to London for agreement.”

The report also said the UK’s intervention led to the creation of a “new framework for public policy, especially fiscal policy, plus various institutional changes to strengthen the quality of governance. The TCI government must submit its medium term fiscal plan as well as its annual budgets to the UK for prior approval.

“The TCI government must do this whenever it is in breach of the terms of the public financial management framework and until any breach has been rectified.”

S&P stated: “TCI’s strengthened institutional anchors augur well for policy continuity and stability. The civil service has been strengthened with the deputy governor put in charge of the bureaucracy and permanent secretaries (not ministers) made responsible for administration, recruitment and spending within ministries starting in 2012.

“The important posts of CFO (chief financial officer) and the head of the Financial Supervision Commission, which regulates the financial sector, report to the governor, not to the local government.

“The government has also strengthened oversight of statutory bodies, an important step for containing contingent liabilities, and revamped laws for public procurement.”

The report pointed to other factors which included:

— A well developed tourism industry

— A per capita GDP of $24,000

— An expected GDP growth to average three percent, which they said will be sustained by “a good flow of new tourism products”.

— A projected general government debt decline to 24 percent of GDP in 2014 from 27.5 percent in the previous year.

“The debt burden is likely to continue to decline modestly in the next three years as a result of fiscal surpluses and continued economic growth,” said S&P.

On a net basis, the government’s projected asset position of ten percent of GDP in 2014. (A nation’s asset position is the value of overseas assets owned by a nation, minus the value of its domestic assets that are owned by foreigners.)

General government interest payments that are likely to remain below three percent of revenues in the next three years.