HMB Write to IMF Following Lovell letter

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Thursday, 23 August 2012 02:30

By press release

Antigua St. John's - Managing Director of H.M.B Holdings Natalia Querard has written a letter to Managing Director of the International Monetary Fund (IMF), Christine Lagarde, requesting an explanation as to why the IMF have overlooked expropriation of the H.M.B properties by the Government of Antigua and Barbuda.

This comes in the wake of a letter sent by Minister of Finance Harold Lovell to Lagarde, with attachments including a Letter of Intent and Memorandum of Economic and Financial Policies for the year 2012 - 2013.

The full letter from Minister Lovell and the attachments to the letter are available on the IMF's website: http://www.imf.org/External/NP/LOI/2012/ATG/052112.pdf

Both letters are printed below:

H. M. B. HOLDINGS LIMITED

P.O. Box 144 - St. John's, Antigua - West Indies
E-MAIL: This email address is being protected from spambots. You need JavaScript enabled to view it.
Open Letter
Madame Christine Lagarde, Managing Director
International Monetary Fund
700 19th Street N.W.
Washington D.C. 20431
August 15th, 2012
Dear Madame Lagarde,

I refer to the letter from Hon. Harold Lovell, dated May 21, 2012, addressed to you, which you have kindly reproduced on the IMF website.
I am the Managing Director of H.M.B. Holdings Limited, whose resort property at Half Moon Bay has been expropriated by the Government of Antigua in 2007. Our Company is still awaiting compensation to which it is entitled by law.

I would like to draw your attention to an affidavit issued (sic cert =sworn) by Minister Lovell, dated 3 September 2010, that states:

"GOAB is itself currently unable to finance the purchase of the property (Half Moon Bay Resort) and has embarked on a Fiscal Consolidation Programme (FCP) that is supported by a Stand By Arrangement from the International Monetary Fund. The FCP is intended to bring about fiscal and debt sustainability allowing the GOAB to review and rationalize expenditures, improve tax administration and increase its income streams.

Also, the GOAB plans to engage the Paris Club group of creditors to elicit support (sic) the FCP and the debt management strategy in particular.

......Continuous litigation over the issue of Half Moon Bay has not placed the development project in a positive light in the international financing community."

It is imperative that I re-affirm the position of H.M.B. Holdings Limited, a position that our company has held from the very beginning of the Government's intrusion into our private enterprise sixteen years ago and in which it has not wavered.

The Government of Antigua and Barbuda has exercised the sovereign powers of eminent domain under its Land Acquisition Act to "compulsorily acquire" our property.

The very same Land Acquisition Act lays out the steps the Government must now take to complete the "acquisition" by payment of "fair compensation within a reasonable time," such compensation to be paid out of the Treasury by direction of the Minister of Finance.

That is the law under the Land Acquisition Act.

The Constitution of Antigua and Barbuda also gives a constitutional right to payment of compensation to entities deprived of their property by the Government.

There is no standing or even mention of any third parties being involved in the exercise of eminent domain or the "compulsory acquisition" of private property in either of these two documents which provide the legal basis for the Government's actions.

Nevertheless, Finance Minister Lovell is on public record as saying "not one cent will be paid to the investors" and that the IMF would not permit such payment.



The Hon. Justin Simon, Q.C., Antigua's Attorney General and Minister of Justice and Minister of Legal Affairs, has published his opinion that payment of compensation to the dispossessed owners for the "acquisition" of their property is not legally required prior to the commencement of any redevelopment of the property.

You will also note the absence of any debt to H.M.B. Holdings Limited in any budget presented by the Government of Antigua to the IMF, although the balance currently due and owing to our company has been established by the Courts to be in excess of US $68 million, accruing further interest of US$ 4.5 million per year.

Meanwhile, both the Senate and the House in the U.S. Congress have issued Resolutions (#346 and #507 respectively) "expressing the sense of the Senate/House... that provision of all aid and assistance to Antigua and Barbuda should be suspended until the Government of Antigua and Barbuda provides complete redress of the issues described in the preamble, including ...(F) the fulfillment by the Government of Antigua and Barbuda of its obligations relating to the expropriation of the Half Moon Bay Resort."

No doubt the International Monetary Fund will be keen to respond with a credible explanation as to why it is willing to overlook expropriation of foreign-owned property in the first place and why during the ensuing period of quarterly reviews it has not insisted that Antigua take the first step towards returning to proper and acceptable practice by immediate payment of constitutionally overdue compensation to international investors forcibly deprived of their property and their business.

The shareholders of H.M.B. Holdings Limited and I look forward to your response.

Yours sincerely,
Natalia M. Querard, Managing Director
H.M.B. Holdings Limited


May 21, 2012
Mme. Christine Lagarde
Managing Director
International Monetary Fund
700 19th Street, N.W.
Washington, D.C. 20431

Dear Madame Lagarde,

Antigua and Barbuda continues to decisively address the major challenges to its economy that have arisen from the worst crisis in its history. Over the past three years, we have seen a contraction of economic activity of about 25 percent, with tourism receipts, labor remittances, construction and foreign direct investment displaying double-digit declines. Nevertheless, the Government has persevered in its program to correct fiscal imbalances, implement structural reforms and reduce the debt burden, all preconditions for sustainable long-term growth that will ensure the future welfare of our population.

The strains from the economic crisis also led to the collapse of one of our largest domestic banks, Antigua and Barbuda Investment Bank (ABIB), which was intervened in July 2011 by the Eastern Caribbean Central Bank (ECCB). The intervention and subsequent conservatorship of the bank by the ECCB have been skillfully managed to maintain the integrity and stability of the financial system. However, the resolution process has been complex given the systemic nature of the bank and its links to other banks and enterprises in Antigua and Barbuda and regionally. Uncertainty about the fiscal cost of resolution has led to delays in the Fund program reviews and purchases.

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Despite these challenges, Antigua and Barbuda’s performance under the Stand-By Arrangement (SBA), described in our Letter of Intent (LOI) dated March 18, 2011, has been strong, a palpable demonstration of our commitment to our fiscal consolidation program. Three targets under the program for end-September, 2011 were missed due to expenditures in support of ABIB and shortfalls in external financing arising from delayed reviews under the program, as well as the reprogramming of a previous loan from the Export-Import Bank of China.

However, the deviations were minor, temporary or addressed through corrective action and, excluding payments for ABIB, all indicative targets for December related to performance criteria would have been met. Furthermore, progress was made in achieving two important structural benchmarks before end-December: (i) the enactment of the new Procurement Act; and (ii) the issuance of guidelines for government debt guarantees. In addition, an important benchmark on the taxation of benefits as required under the PAYE law was completed in April 2012, and another on the activation of legislation authorizing garnishment for overdue ABST and PAYE taxes will be completed by end-June. These measures mark landmark reforms to help enhance fiscal performance in support of the long-term goals of increasing government investment and ensuring debt sustainability.

Our program for 2012–13, described in the attached memorandum of economic and financial policies (MEFP), is designed to consolidate our record of fiscal responsibility under the program and safeguard the gains from our recent debt restructuring. We are cautiously expecting real growth of 1 percent in 2012, based on a modest pick up in tourism and construction. Given the World Economic Outlook projection for an expected easing of food and fuel prices in 2012, we are expecting inflation to drop to 3 percent by the end of this year. Taking into account the possible impact of ABIB’s resolution, we have designed a conservative fiscal program that targets an underlying primary surplus of 1.7 percent of GDP in 2012 and the necessary effort in 2013 to achieve our debt targets in the medium term, contingent on the size of the recapitalization bond that will need to be issued in the process of resolution. Our structural agenda for fiscal reforms is in line with the technical assistance on public financial management and revenue administration we are receiving with funding from the European Union to boost fiscal performance.

Our program also contains a number of financial sector measures consistent with a rapid resolution of ABIB and the licensing of a new financial entity, as well as continued stability of the financial system. These measures entail actions on the part of the Eastern Caribbean Central Bank, which has provided the Government with assurances that such actions will be taken in a timely manner (see attached letter). On the basis of past performance and these policies, we request waivers for the missed performance criteria in September, based on the fact that they were minor, or
temporary and corrected in December, and we request the completion of the fourth, fifth and sixth reviews under the SBA. In addition, in consultation with Fund staff regarding the delays in the Fund program reviews, the Fund’s policy on access limits and the resumption of purchases under the SBA, we request a rephasing of purchases under the SBA (reducing access by 50 percent of quota to a total of 100 percent of quota to be available upon the completion of the fourth, fifth and sixth reviews and by 100 percent of quota to a total of 500 percent of quota under the SBA).

The Government of Antigua and Barbuda remains firmly committed to macroeconomic stability and to the implementation of the reforms outlined in the Memorandum of Economic and Financial Policies (MEFP) attached to our LOI of May 21, 2010. The attached MEFP describes our performance under the SBA up to the end of 2011, outlines policies that the government has adopted in the 2012 Budget or separately with the Fund to help keep the program on track, and proposes structural benchmarks for this year. We continue to make good progress on reaching agreements with our domestic and external creditors on the comprehensive restructuring of the public debt, which has virtually eliminated arrears and significantly reduced debt service payments.

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We are confident that the economic and financial policies set forth in the attached MEFP are adequate to ensure that the objectives of the program will be met. However, should there be any unforeseen events or external shocks, the Government stands ready to adopt the necessary polices and measures that would secure our policy objectives. The Government

will consult with the IMF on the adoption of such policies and measures, and in advance of revisions to the policies contained in the MEFP, in accordance with the Fund’s policies on such consultations. In addition, the Government of Antigua and Barbuda does not intend to impose new or intensify existing restrictions on the making of payments and transfers for current international transactions, introduce new or intensify existing trade restrictions for balance of payments purposes, or enter into bilateral payments agreements which are inconsistent with Article VIII of the Fund’s Articles of Agreement. In line with our commitment to transparency, we request that the IMF publish this letter of intent, the MEFP
and the technical memorandum of understandings (TMU).

Sincerely yours,
/s/
Hon. Harold Lovell
Minister of Finance, the Economy and Public Administration
Antigua and Barbuda

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