Government of the British Virgin Islands

As a British Overseas Territory, the majority of the external relationships of the British Virgin Islands Government are conducted on its behalf by the United Kingdom through the Foreign and Commonwealth Office. However the Constitution provides that this power is delegated to Premier and Ministers of Government in relation to certain specific areas:[6]

1. the Caribbean Community, the Organisation of Eastern Caribbean States, the Association of Caribbean States, the United Nations Economic Commission for Latin America and the Caribbean, or any other Caribbean regional organisation or institution;
2. other Caribbean regional affairs relating specifically to issues that are of interest to or affect the British Virgin Islands;
3. the relationship between the British Virgin Islands and the United States Virgin Islands in matters of mutual interest;
4. tourism and tourism-related matters;
5. taxation and the regulation of finance and financial services; and
6. European Union matters directly affecting the interests of the Territory.

However, there are a number of restrictions imposed by the Constitution upon the exercise by Ministers of that delegated power,[7] including the need for separate authority from the Secretary of State to conclude any treaty or other international agreement, and the requirement to keep the Governor "fully informed" of relevant activities and to provide on request all papers and information relating to such matters.

In turn the British Government has indicated in a letter of entrustment that will consult fully with the British Virgin Islands in relation to matters which are reserved to the United Kingdom Government, including defence, internal security and civil aviation.[8]

Public finances are administered through the Ministry of Finance. In the British Virgin Islands it is common for the Premier to also be the Minister for Finance. Public finance is regulation by the Public Finance Management Act, 2004.

On 23 April 2012 the Government of the British Virgin Islands signed protocols for effective financial management with the Governor and the British Minister for the Overseas Territories. The protocols contain a number of wide-ranging provisions agreeing on certain parameters for financial and risk management, making commitments to financial transparency, and includes various limitations on the Government of the British Virgin Islands in relation to borrowing.[9]

The protocols provide that all capital projects undertaken by the Government shall comply with applicable protocols for: (i) appraisal of business case and cost-benefit analysis, (ii) transparency for tendering and procurement, (iii) contract management, and (iv) evaluation process.[9]

The protocols also include certain hard limits in relation to Governmental borrowing. Under the protocols:[9]

1. outstanding public debt must remain less than 80% of recurrent revenue;
2. debt service (i.e. interest payments) must remain less than 10% of recurrent revenue; and
3. liquid assets must be retained in an amount of not less than 25% of recurrent expenditure.

As at 2014 public debt in the British Virgin Islands is approximately US$111 million, which is approximately 36.6% of recurrent revenues.[10] In recent years problems have arisen because of repeated unbudgeted expenditure by Ministerial departments; the problem became sufficiently acute that in 2016 the Territory's Financial Secretary wrote an open letter to all Ministers warning them against such practices.[11]