The appropriate use of funds generated by economic citizenship programs has long been a bone of contention in the Caribbean, where several of countries are offering second citizenships to generate revenue for their economies. Data provided by Caribbean governments has so far been patchy and no longer fits the new world paradigm of transparency we live in…
The appropriate use of funds generated by economic citizenship programs has long been a bone of contention in the Caribbean, where several of countries are offering second citizenships to generate revenue for their economies. Data provided by Caribbean governments has so far been patchy and no longer fits the new world paradigm of transparency we live in. Morever, the credibility of Caribbean countries on the international scene is now at stake and is has become of vital importance to know precisely how much is generated by these programs and how funds are being utilised.
Adressing these issues, Timothy Antoine – the Governor of the Eastern Caribbean Central Bank (ECCB) – provided last week important guidelines. The countries in question offering a Citizenship by Investment Program (CIP) are currently Antigua and Barbuda, Dominica, Grenada, St Lucia and St Kitts and Nevis, running the longest and most established CIP. The Governor’s key comments and recommendations were as follow:
On transparency: “First of all we say, be transparent by publishing all the flows, the ins and outs of the fund. We believe that is extremely important for people to know how much is collected and how it is spent.”
On process for sharing data: “We have also suggested a template that can be used to publish information on a regular basis so that anybody home or abroad can see this information and understand what is happening with the programme.”
On prudence: “None of us knows how long the CBI will last. We hope it will last for a long time, but we really don’t know. Right now Dominica is doing well on it in terms of collections, but who knows the future. Many of our countries now have such a programme and so we say be prudent by not using the money for recurrent expenditure.”
On appropriate use of the funds: “Don’t use it to pay wages and salaries, don’t use it to pay light bills, because when you do that, if the funds stop, you are in trouble. What should you use it for? To pay down domestic arrears, if you owe local and small business suppliers for goods and services to government, use the money to pay them.”
On foreign debt and critical infrastructure: “If you have foreign debt, pay them (on CIP funds)” citing the example of Dominica and praising the government for using the funds to repair the damages caused Tropical Storm Erika in 2015 rather than borrowing.
CIPs allow foreign investors to obtain citizenship in return for an investment in local real estate or a donation to the government. In the Caribbean, the minimum real estate investment ranges from $200,000 to $400,000 and the minimum donation from $100,000 to $250,000 (for a single applicant) depending of the country.
No doubt the issue of transparency and governance will be of growing importance for the sustainability of CIPs across the Caribbean. Shorex Capital is currently conducting a survey on the number of new citizenships resulting from CIPs issued by the members of the Organisation of Eastern Caribbean States (OECS). This report will gather the information available on the amount of funds generated by these programs over the last 3 years and their forecast for 2017 and 2018.
