An Examination of the Proposed Jolly Beach Transfer to the Social Security Scheme: An Assessment of Strategic, Financial, and Governance Risks

Executive Summary

The Government of Antigua and Barbuda’s proposal to transfer ownership of the Jolly Beach Hotel to the National Social Security Scheme is presented as a “strategic imperative” designed to secure the nation’s pension funds and transform a dormant liability into a productive asset. A detailed, independent analysis of the policy, however, reveals a series of critical vulnerabilities in its strategic, financial, and institutional underpinnings.

The report’s key findings indicate that the proposed financial model is built upon a precarious foundation of highly optimistic, and likely unattainable, valuations and revenue projections. The deal is structured in a way that shifts a distressed, illiquid asset onto the books of the Social Security Scheme at an inflated value, creating the illusion of a debt reduction without any real cash injection. This approach, while politically expedient, exposes the pension fund to the volatile and high-risk hospitality sector, a risk that private financial institutions and hoteliers have repeatedly refused to undertake.

Furthermore, the government’s policy framework appears fundamentally inconsistent. While championing a model of state ownership and public enterprise, it has chosen to bypass a more prudent and stable investment avenue in the essential energy sector, which is instead being managed through a controversial private contract with a politically connected family. This strategic inconsistency and the deal’s lack of transparent, institutional oversight run contrary to the principles of sound fiduciary management and long-term planning. The proposal does not represent a genuine safeguard for pensioners but rather a speculative, high-risk gamble!!

Chapter 1: The Stated Imperative and the Pensioner’s Perspective

In a booklet titled “The Transfer of Jolly Beach to Social Security: A Strategic Imperative,” Prime Minister Gaston Browne’s administration outlines a plan to vest the Jolly Beach Hotel in the National Social Security Scheme. The foreword frames this as a bold application of “Entrepreneurial Socialism,” a paradigm where the state makes strategic investments to generate profits that are then socialized for the benefit of the people. The centerpiece of this proposal is the conversion of a non-performing EC330 million government bond, which has never been serviced since its issuance in 2010, into a “performing asset”. This would be achieved by setting off the resort’s value, assessed at EC137.7 million, against the long-standing debt. The government argues this move will provide the Social Security Scheme with a reliable, above-inflation revenue stream and fortify the pension scheme.

The government’s booklet explicitly acknowledges that “historical inaction worsened the Scheme’s position” and that “prior leaders delayed critical measures”. It asserts that the UPP administration incurred the original IOU to the Social Security Scheme and failed to honor it, leaving it as a non-performing asset. However, the current administration, which has been in power for over a decade , is only now presenting this as the definitive solution. The timing raises questions about whether this is a genuine long-term solution or a politically motivated attempt to resolve a persistent problem—the government’s debt to the Social Security Scheme—by offloading a troubled asset in a non-cash transaction. This analysis aims to move beyond the political rhetoric to assess whether the proposal is truly in the best interest of the pensioners it claims to serve.

Chapter 2: The Financial Projections: An Analysis of Discrepancy and Disillusionment

The government’s proposal rests on a series of ambitious financial projections that appear to be significantly detached from both the asset’s history and current market realities. A detailed examination of the stated figures reveals a significant financial and valuation risk.

The Asset Valuation: A Financial Shell Game

The government’s proposal is predicated on the Jolly Beach Hotel being valued at EC137.7 million (US51.0 million), a figure that serves as the basis for setting off a portion of the dormant government bond. This valuation is presented as a core component of the deal’s prudence. However, this figure stands in stark contrast to previous government pronouncements regarding the property’s value. In early 2022, Minister of State in the Ministry of Finance, Lennox Weston, stated that the Jolly Beach hotel was “estimated at EC47 million” (US17.4 million). This represents a near 300% increase in valuation for a property that was in a state of “disrepair” as recently as 2022.

The act of using an inflated valuation to “pay off” a portion of a non-performing debt is a dubious form of financial engineering. The government, instead of making a cash payment to the Social Security Scheme, transfers an illiquid asset. The Social Security Scheme is then forced to book this asset at the government’s stated, unsubstantiated value of EC137.7 million. This maneuver creates the illusion of a significant debt reduction on the government’s books (EC137.7 million of the EC$330 million bond is “paid down”) while simultaneously exposing the Social Security Scheme’s portfolio to a potentially overvalued and difficult-to-liquidate asset. A pension fund’s fiduciary responsibility is to preserve and grow capital through safe, stable, and transparent investments. Acquiring a distressed asset at an arbitrary, inflated value falls outside the scope of this mandate. The following table highlights the clear inconsistency in the asset’s valuation over time.

Key Event	Date	Stated Valuation (EC$)
Talks with Investors	Early 2022	EC$47 million
Government Proposal	August 2025	EC$137.7 million

CIP Revenue Projections: A Mismatch Between Product and Price

The government’s plan to generate a projected EC392.75 million in net receipts hinges on selling 550 rooms at prices of EC900,000 and EC$1.3 million. The success of this venture depends on the assumption of a robust and willing market of CIP investors. However, a comparison with established CIP market prices and the asset’s brand perception suggests these projections are highly speculative.

The current minimum investment for citizenship through real estate is US200,000 to US300,000. The government is proposing to sell Jolly Beach units for US333,000 and US481,000, respectively. These prices are substantially higher than the minimums, and they position the property in direct competition with new, purpose-built luxury developments already approved for CIP, such as Tamarind Hills, where villas start at US450,000. The Jolly Beach resort is widely described in reviews as “old,” “dated,” and a “budget-friendly” three-star property. It is a mass-market product with an average daily rate as low as US159. A rational, high-net-worth CIP investor seeking a US$300,000+ investment is typically targeting a high-end luxury product, not a renovated legacy resort. Gaston Browne’s aggressive sales targets are therefore based on an assumption of irrational investor behavior, and the Social Security Scheme is being exposed to a sales risk that the open market has already signaled as being too high.

Hotel Profitability and Operational Uplift: The Leap of Faith

The proposal projects a dramatic increase in the hotel’s net profits, from an operating net profit of EC3.0 million in 2024 to EC10.0 million post-development. The financial summary presented in Gaston’s booklet provides a 2024 profit and loss statement showing a net profit of US1.11 million. While this figure technically confirms the hotel’s recurring profitability, the government’s primary argument for the investment’s prudence is based on a projected average annualized net yield of EC39.275 million over ten years.

This key figure is a misleading representation of the investment’s return. It is an aggregation of one-time capital receipts from the sale of CIP units averaged over a decade, not a sustainable, recurring income stream. A pension fund requires a consistent, reliable revenue source to meet its long-term obligations. The only recurring income is the hotel’s operational profit, which the government speculates will increase by 333% from EC3.0 million to EC10.0 million. This dramatic increase is highly speculative, contingent on a successful capital-intensive renovation and a brand overhaul. The risk of this operational uplift failing would leave the Social Security Scheme with a significantly lower return than promised, further compromising its financial health.

The following table contrasts the government’s projections with more conservative, market-based expectations for the investment.

Financial Metric	Government’s Projections	Market-Based Assessment
Asset Valuation	EC$137.7 million	EC$47 million (Historical)
CIP Unit Price	EC900k – EC1.3M	Competes with new luxury projects (US$450k+)
CIP Revenue	EC$392.75M (Net)	Highly speculative and likely unattainable.
Hotel Profitability Uplift	333% increase (EC3M to EC10M)	Highly speculative and reliant on a major brand and operational shift.
Annual Yield for Social Security Scheme	EC$39.275M (average over 10 years)	One-time capital receipts; not a recurring, stable income source for pensioners.

 

Chapter 3: The Institutional Framework: Bypassing a Prudent Path

The decision to bypass existing institutional structures for the Jolly Beach acquisition raises significant questions about transparency and governance.

The Curious Case of a National Asset Management Company (NAMCO) and also the EASTERN CARIBBEAN ASSET MANAGEMENT CORPORATION (ECAMC):  A Mandate Ignored

The government’s proposal to create special, purpose-built mechanisms for the Jolly Beach deal appears to ignore more suitable and transparent institutional vehicles.

Both the NAMCO and also the ECAMC(headquartered in Antigua), were established by law with the explicit purpose to “carry on the business of asset management including acquiring the whole or any part of, dealing with, managing, and disposing of assets or liabilities of approved cabinet or financial institutions”. The ECAMC was created to handle precisely the kind of distressed asset represented by Jolly Beach, which has a history of bankruptcy and debt. NAMCO was created to invest, hold and manage government investments as a holding company. The government’s choice to not use or expand the mandate of these existing, local and regional bodies signals a preference for an ad-hoc, less-scrutinized arrangement. A dedicated, purpose-built asset management entity would have provided the independent oversight, formal accountability, and professional expertise necessary to manage this type of distressed asset, a governance standard that is not evident in the current proposal.

The Market’s Verdict: Why Private Capital Shuns Jolly Beach

The government’s decision to offload the Jolly Beach hotel to the Social Security Scheme is the result of a clear market signal: private financial institutions and hotel groups have refused to touch the asset. The government itself acknowledged that it had been in talks with “about five potential investors” but that the funds they promised were never “forthcoming”. This lack of private interest is a rational and powerful indictment of the asset’s financial viability.

Jolly Beach’s history of financial distress is a major deterrent. The hotel was in receivership, owing millions in unpaid taxes and severance to both the government and its workers. It had fallen into a state of “disrepair”. A private-sector hotelier or financial institution’s due diligence would have uncovered these liabilities and the need for a massive capital injection for renovation. The fact that multiple investors backed out of discussions is the strongest possible market signal that this is a high-risk venture that private capital is unwilling to underwrite. The government, unable to find a private buyer, has turned to a public institution as a final resort, offloading the risk onto the nation’s pensioners under the guise of an investment.

Chapter 4: A Comparative Strategic Assessment: Hospitality vs. Energy Infrastructure

A prudent, statesmanlike approach to managing public funds would weigh competing investment opportunities against a clear set of criteria, primarily risk, return, and stability. The government’s decision to pursue a high-risk hospitality venture while ignoring a more stable alternative in the energy sector highlights a fundamental strategic miscalculation.

The Unexamined Alternative: A Case for Utility Investment

The Social Security Scheme’s investment mandate should prioritize capital preservation and predictable, long-term returns. This profile aligns perfectly with a public utility investment, which is a stable asset class due to its essential nature and inelastic demand. Antigua and Barbuda’s national plan explicitly identifies the Social Security Board as a potential “investment entity” for the nation’s energy transformation, which aims to achieve 86% renewable energy by 2030. The country’s reliance on diesel fuel for 93% of its electricity generation represents a clear and strategic opportunity for a stable, long-term investment in renewable energy infrastructure. This avenue of investment would be a far safer and more logical choice for a pension fund, generating steady revenue while simultaneously advancing national development goals.

The Hadeed Family, APC, and the Public Good

The government’s relationship with the private Antigua Power Company (APC), which is controlled by the Hadeed family, presents a stark contradiction to its stated “Entrepreneurial Socialism” ideology. While the government is offloading a high-risk, distressed tourism asset to the Social Security Scheme, it has simultaneously entered into a major private contract for power generation. This includes the development of a new EC$300 million liquefied natural gas (LNG) plant at Crabbs Peninsula. This arrangement exists despite a history of past disputes over millions in unpaid debt between the state-owned Antigua Public Utilities Authority (APUA) and the private APC.

The decision to entrust a multi-million-dollar, essential public service to a private company while assigning a volatile, high-risk hospitality venture to the public pension fund exposes a profound strategic and ideological inconsistency. A true commitment to public ownership would have seen the Social Security Scheme invest in a public good with a predictable and essential revenue stream, rather than a speculative, luxury-dependent hotel. This appears to be a clear example of prioritizing politically connected private interests over the financial security of the nation’s pensioners.

Risk-Return Profile	Jolly Beach Hotel	Electricity Infrastructure
Asset Class	Hospitality / Tourism	Public Utility / Energy
Demand	Discretionary, volatile, seasonal	Essential, inelastic, predictable
Market Risk	High (dependent on global tourism trends, brand perception)	Low (stable, recurring revenue from a captive market)
Operational Risk	High (turnaround of a failed, dated resort)	Low to Moderate (standard utility operations)
Investment Returns	Highly speculative, projected to rely on one-time CIP sales	Stable, recurring income from electricity fees
Liquidity	Low (illiquid real estate asset)	Potentially low, but with stable cash flow

 

Chapter 5: The Political Dimension and Governance Concerns

The government’s proposal has also generated significant political discourse, including claims of internal cabinet servile-silence and a culture of political bullying.

While the provided public record does not substantiate the specific claim that Minister Chet Greene was reprimanded in cabinet for merely questioning the Jolly Beach deal on his WTP radio station, it does highlight a broader political culture that could lend credibility to such an assertion. Minister Greene, as chairman of the ABLP, is on public record as a key and loyal defender of the Prime Minister. Other cabinet members, including Charles Fernandez, Molwyn Joseph, and Daryll Matthew, have publicly praised the deal as a “visionary investment” and “one of the smartest decisions”.

The more accurate interpretation of the claim of “bullying and reprisals” lies in the political dynamic and public record of the administration. Some ABLP members have been cussed-out, fired or sidelined for criticizing the Prime Minister. The Antigua and Barbuda Workers’ Union (ABWU) has accused the Prime Minister’s administration of using “bullying, slander and disrespect” to stifle opposition and has condemned what it calls an “anti-worker posture”. Similarly, political opponents have alleged intimidation and threats of violence. This political culture, as described by various sources, may create an environment where dissent, if it exists, would not be openly expressed due to concerns of reprisals. Thus, while the specific claim about a cabinet split on this issue is not publicly supported, the political environment that would generate such a claim is well-documented.

Chapter 6: Conclusion and Recommendations

This analysis concludes that the Jolly Beach transfer to the National Social Security Scheme is not a “strategic imperative” but a high-risk financial and political gamble. The proposal is characterized by a reliance on an unsubstantiated asset valuation, unrealistic CIP revenue projections, and a speculative operational profitability model. It fails to adhere to the fundamental principles of sound fiduciary management and long-term planning for a public pension fund. The government’s decision to bypass more stable and predictable investment opportunities in critical national infrastructure, such as the energy sector, in favor of a volatile tourism asset represents a clear misallocation of public resources. This policy appears to be a politically expedient, non-cash solution to a long-standing debt problem, placing the financial future of Antigua and Barbuda’s pensioners at undue risk.

The following table provides a clear financial timeline of the Jolly Beach hotel’s recent history, demonstrating the chronic instability of the asset.

Date	Key Financial Event	Stated Valuation
March 2020	Hotel closes due to pandemic	N/A
January 2022	Workers protest, owed EC7M; hotel owes EC80M to government	EC$47 million (estimated)
February 2022	Government announces plans to acquire property	N/A
August 2025	Government proposal to transfer to Social Security Scheme	EC$137.7 million

 

Recommendations for a Prudent Path Forward

For the benefit of all pensioners and the long-term financial security of the Social Security Scheme, this report recommends the following:

1. Independent Valuation and Fiduciary Review: The government and the Social Security Scheme should immediately halt the proposed transfer and commission a new, truly independent valuation of the Jolly Beach property by an internationally recognized firm. The Social Security Scheme’s Investment Committee, which is supposed to be strengthened with independent experts , should conduct a thorough fiduciary review of the deal’s risk-return profile, treating the capital receipts and operational profits as separate and distinct financial streams.
2. Reprioritize Investment Mandates: The Social Security Scheme should re-evaluate its investment policy to prioritize low-risk, stable, and liquid assets. The nation’s energy transition, which is a pre-vetted investment area, represents a prime opportunity for the Social Security Scheme to acquire a stake in a critical public utility, consistent with its long-term need for stable, recurring cash flow.
3. Address Debt with Cash, Not Assets: The government’s debt to the Social Security Scheme should be paid down with cash injections from the national treasury, or through a long-term, interest-bearing bond that is regularly serviced. This would provide the Social Security Scheme with the necessary liquidity to meet its obligations and invest in a diversified portfolio, rather than being burdened with a single, high-risk, illiquid asset.
4. Implement Sustainable Parametric Reforms: As the government’s own document noted , the Social Security Scheme’s long-term sustainability will require a combination of parametric reforms, such as premium adjustments and retirement age changes. These necessary, though politically challenging, measures should not be replaced by speculative, one-off ventures that put pensioners’ futures at risk.

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