Economy of the British Virgin Islands

Infobox Economy
country = British Virgin Islands


width = 300px
caption = Road Town, Tortola
currency = U.S. Dollar (USD)
year = 1 Apr - 31 Mar
organs = CARICOM (Associate member)
rank = 197th
gdp = $853.4 million (2004 est.)
growth = 7% (2006 est.)
per capita = $20,200 (2005 est.)
sectors = agriculture: 1.8%, industry: 6.2%, services: 92% (2005 est.)
inflation = 2% (2005)
poverty = NA% (2004)
labor = 12,770 (2004)
occupations = agriculture: 0.6%, industry: 40%, services: 59.4% (2005 est.)
unemployment = 3.6% (2005 est.)
industries = tourism, financial services
exports = $25.3 million (2002 est.)
export-goods = rum, fresh fish, fruits, animals; gravel, sand
export-partners = United States Virgin Islands, Puerto Rico, US (2004)
imports = $187 million (2002 est.)
import-goods = building materials, automobiles, foodstuffs, machinery
import-partners = United States Virgin Islands, Puerto Rico, US (2004)
debt = $36.1 million (2004 est.)
revenue = $254,017,000 (2007 est.)
expenses = $222,386,300 (2007 est.)
aid = "recipient": $NA (2004)
cianame = vi
Additional information not from CIA World Factbook taken from [http://www.bvi.org.uk/news_item.asp?news_id=639 BVI Government Press releases]

The economy of the British Virgin Islands is one of the most prosperous in the Caribbean. According to the CIA World factbook, in 2004 the Territory had the 12th highest GDP per capita in the world. [ [https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html CIA - The World Factbook - Rank Order - GDP - per capita (PPP) ] ] The economy of the Territory is based upon the "twin pillars" of tourism, which generates an estimated 45% of the national income, and financial services, which generates almost all of the rest.

Tourism

An estimated 350,000 tourists, mainly from the United States, visited the islands in 1997. The bulk of the tourism income in the British Virgin Islands is generated by the yacht chartering industry. The Territory has relatively few large hotels compared to other tourism centres in the Caribbean. The British Virgin Islands also entertain cruise ships, although these generate relatively little revenue. However, cruise ship passengers are an important source of revenue for taxi drivers, who represent a politically important voice in the Territory.

Financial services

In the mid-1980s, the government began offering offshore registration to companies wishing to incorporate in the islands, and incorporation fees now generate substantial revenues. An estimated 550,000 companies were on the offshore registry by yearend 2004. The adoption of a comprehensive insurance law in late 1994, which provides a blanket of confidentiality with regulated statutory gateways for investigation of criminal offenses, is expected to make the British Virgin Islands even more attractive to international business.

The British Virgin Islands is now one of the world's leading offshore financial centres. Over 700,000 offshore companies have been formed in the British Virgin Islands, although only approximately 450,000 remain active (the remainder having been dissolved or struck off). This would account for approximately 42% of the estimated 1.1 million offshore companies incorporated worldwide.

Former president of the BVI's Financial Services Commission, Michael Riegels, recites the anecdote that the offshore finance industry commenced on an unknown date in the 1970s when a lawyer from a firm in New York telephoned him with a proposal to incorporate a company in the British Virgin Islands to take advantage of a double taxation relief treaty with the United States. Within the space of a few years, hundreds of such companies had been incorporated.

This eventually came to the attention of the United States government, who unilaterally revoked the Treaty in 1981. [The British Virgin Islands was not alone in this regard; this was part of a policy of mass-repeal by the United States of double tax relief treaties with "microstates".]

In 1984 the British Virgin Islands, trying to recapture some of the lost offshore business, enacted a new form of companies legislation, the International Business Companies Act, under which an offshore company which was exempt from local taxes could be formed. The development was only a limited success until 1991, when the United States invaded Panama to oust General Manuel Noriega. At the time Panama was one of the largest providers of offshore financial services in the world, but the business fled subsequent the invasion, and the British Virgin Islands was one of the main beneficiaries.

In 2000, KPMG were commissioned by the British Government to produce a report on the offshore financial industry generally, and the report indicated that nearly 41% of the offshore companies in the world were formed in the British Virgin Islands. The British Virgin Islands is now one of the world's leading offshore financial centres, and boasts one of the highest incomes per capita in the Caribbean.

On 12 April 2007 the "Financial Times" reported that the British Virgin Islands was the second largest source of foreign direct investment in the world (behind Hong Kong) with over US$123,000,000,000. [ [http://www.ft.com/cms/s/2aec1ac0-e893-11db-b2c3-000b5df10621,_i_email=y.html FT.com / Lex - The Russians are coming ] ] Almost all of these sums are directly attributable to investment through the Territory's offshore finance industry.

Agriculture

Livestock raising is the most important agricultural activity; poor soils limit the islands' ability to meet domestic food requirements.

Dollarisation

Because of traditionally close links with the U.S. Virgin Islands, the British Virgin Islands has used the US dollar as its currency since 1959.

:"See generally: Dollarisation"

CIA World Factbook statistics

Economy - overview:

GDP:purchasing power parity - $287 million (1999 est.)

GDP - real growth rate:6.8% (1999 est.)

GDP - per capita:
purchasing power parity - $15,000 (1999 est.)

GDP - composition by sector:
"agriculture:"1.8%
"industry:"6.2%
"services:"92% (1996 est.)

Population below poverty line:NA%

Household income or consumption by percentage share:
"lowest 10%:"NA%
"highest 10%:"NA%

Inflation rate (consumer prices):5.3% (1998)

Labor force:4,911 (1980)

Labor force - by occupation:agriculture NA%, industry NA%, services NA%

Unemployment rate:3% (1995)

Budget:
"revenues:"$121.5 million
"expenditures:"$115.5 million, including capital expenditures of $NA (1997)

Industries:tourism, light industry, construction, rum, concrete block, offshore financial center

Industrial production growth rate:4% (1985)

Electricity - production:42 GWh (1998)

Electricity - production by source:
"fossil fuel:"100%
"hydro:"0%
"nuclear:"0%
"other:"0% (1998)

Electricity - consumption:39 GWh (1998)

Electricity - exports:0 kWh (1998)

Electricity - imports:0 kWh (1998)

Agriculture - products:fruits, vegetables; livestock, poultry; fish

Exports:$6 million (1998)

Exports - commodities:rum, fresh fish, fruits, animals; gravel, sand

Exports - partners:Virgin Islands (US), Puerto Rico, US

Imports:$175 million (1998)

Imports - commodities:building materials, automobiles, foodstuffs, machinery

Imports - partners:Virgin Islands (US), Puerto Rico, US

Debt - external:$36.1 million (1997)

Economic aid - recipient:$2.6 million (1995)

Currency:1 United States dollar (US$) = 100 cents

Exchange rates:US currency is used

Fiscal year:1 April–31 March

Footnotes