“When the US catches a cold, everybody sneezes,” Premier Ralph T. O’Neal told reporters yesterday at a press conference, as he sought to inform the public about the effects of the US economic downturn would have on the Territory.

He disclosed that the Financial Services Commission (FSC) – the watchdog of the Territory’s financial sector - has not reported any fallout from the financial crisis in the US due to the fact that a huge chunk of the Territory’s business comes from Asia.

The limited exposure of commercial banks to the sub-prime crisis and subsequent credit crunch were reasons given also by the Premier as to why the BVI has not been directly affected.

“Luckily for us, we have a sharp Investment Officer who predicted something like this, so the funds for the Social Security Board are safe and sound because we were able to make that change. So the BVI funds invested in Lehman Brothers are safe and sound,” the Premier assured.

However, he stressed that his Government is mindful of the indirect impact, which would have a long-term effect on the BVI’s economy.

“The financial crisis has already resulted in a recession/slowdown in the US economy, forecasted recessions in the United Kingdom and Europe, increased unemployment and inflationary pressures.

“Consequently, such events will affect consumer and business confidence, spending and financing directly impacting (negatively) the pillars, which support our economy,” Premier O’Neal stated.

A prolonged crisis, the Territory’s leader said, could also impact adversely other sectors such as construction and real estate if liquidity dries up as a result of a reduction in mortgages either from the demand (consumers) or supply (lenders) side.

“The global credit crunch could affect the Government’s ability to secure overseas financing and borrowing locally could hamper private investment,” he revealed.

Additionally, with the VI’s twin-pillar economy highly dependent on the U.S. and European markets, especially in relation to tourism, the Premier stated that his office has already been in contact with the officials at CAPE AIR, “to continue our efforts to ensure that our tourism industry remains strong during the peak months starting November.”

Meanwhile, the Premier’s Office is also preparing to work closely with the ferry operators and tourism officials in the USVI to ensure that tourists destined for the VI have a smooth connection.

The BVI Tourist Board is working with both European and United States tour operators to ensure that the visitor arrivals to the Territory remain stable.

And according to the Premier, who also holds the Tourism Minister portfolio, the Tourist Board has also stepped up public relations efforts to attract more visitors from the Latin and Caribbean markets and emerging markets such as China and Fiji.

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