Caribbean Investigative Journalism Network (https://www.cijn.org/2022/page/2/)
“1.5 to Stay Alive” signals the call for urgent action. Small developing countries are at high risk as the uncertainty of the future looms. A region’s people, culture and way of life are at stake. This series supported by Open Society Foundations.
History and Growth of CBIs
Citizenship-by-Investment programmes began in 1984 in St Kitts and Nevis, followed by Dominica in1991, by Antigua and Barbuda and Grenada in 2013 and then St Lucia in 2015. Since 1984, several changes and adjustments were made to the various schemes. Basically, however, there are three types of programmes: a financial donation; real estate and an investment. The donation normally goes to the treasury or to a national development fund to finance strategic development projects. The real estate option which has become the most attractive in terms of demand involves the purchase of property which could be sold after an agreed length of time.
The Citizenship By Investment Programme (CBI) of St. Kitts and Nevis seems shrouded in a troubling combination of secrecy, a lack of transparency and financial accountability.
The existing reporting by the government itself indicates the Commonwealth nation relies on its CBI programme for a large portion of its total revenue. Based on the Auditor General’s report of 2020, as much as 40% of the country’s revenue is derived from the CBI programme.
Across the world, Citizenship by Investment Programmes have come under increased scrutiny due to concerns of transparency and accountability. What is clear is that they are a necessary aspect of the economic survival of the Caribbean nations that offer them. The significance of these initiatives are magnified in the pandemic era where small island developing states have suffered tremendously.
While there are many benefits to golden passport holders who contribute to the revenue of the islands, it is unclear how beneficial they are to the citizens of these countries. We explore how they operate, the concerns around them and the difference it makes in the lives of the people the Caribbean region.
Established in 2013 through an act of parliament, the Antigua and Barbuda Citizenship by Investment Program (CIP) was intended to increase foreign direct investment. It was envisioned as a way to promote development without imposing any new taxes on the country’s 100-thousand citizens.
Today, the program makes up about 10% of the country’s overall budget revenue. Prime Minister Gaston Browne told CIJN this kind of non-tax revenue helped the country “create fiscal space, [to] continue to fund government operations.”
The Commonwealth of Dominica is one of five countries in the Eastern Caribbean that allows persons born outside of the state to obtain a passport for a one-time fee or real estate investment through its Citizenship by Investment (CBI) programme. The programme began in 1991 to support areas like tourism, manufacturing, low-cost housing, infrastructure, agriculture, and healthcare. The Caribbean Investigative Journalist Network (CIJN) found that Dominica is heavily dependent on the CBI programme and that more than half of the government’s projected growth in revenue for the fiscal year 2021/2022 is expected to be financed by the CBI. Prime Minister Roosevelt Skerrit in his latest budget address declared that CBI will contribute 58% percent of Dominica’s capital budget for the Public Sector Investment Programme. The Public gets a glimpse of some of the CBI earnings during Dominica’s annual National Budget presentation.
This table depicts the reported contributions for CBI’s Economic Diversification Fund (EDF) over the last five years:
CBI Total Yearly Revenue for the Period 2017-2022
YearCBI Revenue in USD2017-2018$148,146,7762018-2019$83,086,5172019-2020$67,538,9022020-2021$109,841,9092021-2022$171,612,697Figure 1.1 (This figure does not include monies collected under the real estate option of the CBI)
Between 2017 to 2022, the country collected more than USD$580M from CBI applications and investments from its Economic Diversification Fund – one of two options to gain citizenship via the programme.
St. Lucia’s Citizenship by Investment (CBI) program came later than others in the region. Initially, it operated at a deficit as the program was established. In April 2022, Prime Minister Philip Pierre hailed CBI receipts of $38M USD during his annual Budget Address.
In the face of European and US objections to the way the programs risk being used to avoid taxation, launder money or even support terrorism, St. Lucia’s former Prime Minister is urging all CBI programs to be merged under the control of the Organisation of Eastern Caribbean States (OECS).
Agents, politicians and the former head of St Lucia’s CBI Program say there is a need to improve public awareness and transparency. They contend that ordinary citizens need to understand how CBI funds benefit them in helping to offset disasters, manage debt and brace for unexpected economic shocks.
When the Grenada Citizenship by Investment (CBI) programme was launched in August 2013, it was believed by many to be the only way to save the island from an economic downfall.
Grenada’s Prime Minister Dr Keith Mitchell pushed the passport scheme in 2013 as his government battled economic struggles whipped up by the global financial downturn. Government declared that the programme would become a main source of revenue to help develop the island and pay outstanding debt to international creditors and lending agencies.
The programme offers individuals the ability to buy its passport in as few as 60 days at a minimum cost of USD $150,000 USD in addition to USD $8,000 processing fees. In 2018, five years after the programme started, the International Monetary Fund (IMF) warned of an overreliance on CBI inflows, noting that the programme accounted for 4.5 per cent of GDP in 2017:
“Further improve mechanisms for monitoring the proceeds of CBI inflows and recording all flows through the consolidated fund on budget to improve fiscal management and reporting,” was a major red flag from the IMF, which also asserted that “strict enforcement of the due diligence process of the CBI program are critical for Grenada’s continued stable access to cross-border bank payments”. (https://www.elibrary.imf.org/view/journals/002/2018/236/002.2018.issue-236-en.xml)
Source: IM Daily https://www.imidaily.com
The CBI program based on projections in the budget estimate is expected to remain a vital earner for Grenada’s economy. Red Flags
By law, the identity of beneficiaries under the programme is a tightly kept secret – just one of the restrictions that raises a transparency red flag for a programme that plays a major role in raising cash and investments to boost economic growth.
Grenada is just one of five countries in the English-speaking Caribbean to offer the programme.