The Ministry of Finance flagged a $25 million gap in the budget for public service salary increases in 2024, but the warning was not disclosed to Cabinet or the House of Assembly, according to the Auditor General’s latest report.
The audit examined how the Virgin Islands government financed pay raises for more than 2,500 public officers after the first full compensation review since 2002.
The PricewaterhouseCoopers (PwC) study, completed in November 2023, recommended adopting a new market-based salary structure estimated at $9.4 million above the 2023 wage bill.
Cabinet approved this figure and added statutory obligations, bringing the allocation in the 2024 budget to $11.7 million. But auditors found the Ministry of Finance’s Budget Unit had produced its own estimate weeks earlier, showing the real cost could reach $25.5 million, with social contributions pushing the total to $27.7 million.
“The Budget Unit forwarded to DGO a schedule that showed that implementation of the new regime would require an additional $25.5 million for salaries. This, together with the related statutory obligations (payroll taxes, SS and NHI) of $2.2 million brought the overall total of $27.7 million,” the report stated.
Despite the discrepancy, the Cabinet submissions in November 2023 relied solely on PwC’s $9.4 million projection. “The submissions to Cabinet did not mention the verification exercise or the Ministry of Finance’s estimate,” the Auditor General found.
The report said this lack of disclosure meant the 2024 budget “did not provide clear disclosure of the full cost of the increase” even though enough funds were later reallocated across ministries to cover actual spending of about $120 million.
The review also highlighted that legislators voted themselves salary increases of up to 119 percent in December 2023, taking the total for House of Assembly members from $681,000 to nearly $1.5 million. That decision, separate from the public service review, required an additional $809,652.
The Auditor General concluded that “there were indications that the cost of the implementation would be substantially higher than the consultants’ estimates, but this information was not presented when the decision was brought before Cabinet”.
The issue has fuelled intense public debate about transparency in government. In April 2024, opposition lawmakers made calls for clarity on how the government would sustain the salary increases given other spending pressures, including health services and infrastructure.
The audit recommends that the Deputy Governor’s Office and the Finance Ministry explain why the higher estimates were not disclosed, and that the government provide greater public transparency around salary decisions, including their impact on pensions.
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