The future of the [citizenship by investment] program, given the issues surrounding Correspondent Banking, has been anticipated to have severe implications on national revenue for the remaining months of 2021 and the 2022 financial year. A slowdown in the receipts from this program has already been recorded so far this year. While there are other policy options currently in place to cover for any shortfall, the amount of revenue earned will certainly be insufficient to offset the fiscal gap that would occur if the program were to come to a complete stop.
In a nutshell:
We need the passport stream, but it’s already drying up. Nothing we have on hand can fill the gap.
The Finance team has consistently warned that passport money could not be treated as recurring revenue, and did their level best to keep the government from relying too heavily on it. If not for the pandemic, they might have succeeded entirely.
The National Bank of Vanuatu is the only bank authorised to handle citizenship fees. In June, the National Australian Bank closed the NBV’s last US dollar account, along with several others across the Pacific. This has
dried up the flow of money into government coffers, and has made it harder for citizenship agents to remit VAT and related fees.
Finance’s warning is deeply worrying, and yet refreshing at the same time. It may be a day late and a dollar short, but they’ve finally taken this long-standing fear out of its own hurt locker and aired it frankly and honestly with everyone who needs to hear it.
It’s not just passports, of course. There have been a raft of activities by the kind of
get-rich-quick schemers who wash up on our shores. They’re generally third-raters who failed to make their mark in London, the Gulf states, Bangkok, Singapore or Hong Kong, but who still dream of hitting that one big score.
And sadly, we’ve bred a generation of local operators who play these guys (they’re almost always guys) like violins, indulging their wild-eyed fantasies of a freebooting digital frontier… sucking them dry of funds in the process.
We’re not that good at it, but then again, neither are they. The ones who actually are good at it don’t need to come here. They can stay in
Australia, the
UK or
wherever and launder billions, while we’re placed under the international microscope for what the FATF estimated was $10-41 million annually, and others claim is in the single digits.
But the facts are the facts. We’re making money from our visa-free access to the EU, and the EU doesn’t like us doing that if it means that people
who would otherwise be blocked can travel in whenever they like.
And end to visa-free access to Europe and the UK will almost certainly mark the end of our passport windfall.
So now, because we’ve ignored the warnings, and hung out once too often with a questionable crowd, we’re facing the worst part* of the pandemic with the prospect of a sudden and precipitous drop in revenues.
We’ve managed to defuse
similar threats in the past, so there’s a chance that we may survive this yet. But if the programmes emerging from the national hurt locker cause a sudden implosion in the government’s finances, I can’t speak for what will happen next.
This isn’t Honiara, so we’re not likely to torch the town. Nor are we likely to see a Sandline-style crisis, or a coup. That’s not how we roll here.
But times could get tough in a hurry, and although we’ll find a way through, people won’t forget the hardship this easy money created, and who got fat off it.
[* The worst part of the pandemic will begin on the day when community transmission starts here, as it inevitably will.]
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