Trusting politicians with money or power is like trusting teenage boys with whiskey and car keys. U.S. Virgin Islands spent money intended to help after hurricanes.
(Reuters) – The U.S. Virgin Islands for years redirected money intended to help pay insurance claims after large disasters for other needs, raising the vulnerability of residents as Hurricane Irma ravishes the territory.
During years of yawning budget deficits, the U.S. protectorate tapped the V.I. Insurance Guaranty Fund to pay for other public services, according to government financial records reviewed by Reuters. Since 2007, nearly $200 million was transferred from the fund, including $45 million in fiscal 2011.
In 2013, the territory authorized up to $40 million of debt issuance in case it needed to pay claims, but early this year, the Virgin Islands government was essentially frozen out of the municipal bond market by investors spooked by trouble in neighboring, bankrupt Puerto Rico.
S&P Global Ratings warned on Tuesday that it plans to withdraw its credit rating for the U.S. Virgin Islands within the next 30 days, after the territory’s government said it would stop providing information to the rating agency.
For years the Virgin Islands sold debt to help fund essential public services and budget gaps. With just over 100,000 inhabitants, the protectorate now owes $2 billion to bondholders and creditors.As of August, the Virgin Islands government had about three days’ cash to pay for operations, according to rating agencies.