Premier faces UK on finances

| 10/03/2010

(CNS): The Cayman Islands premier will be meeting with the UK government this week to discuss the Miller Report and the state of the country’s finances. Following the revelations in his address to the country on Monday evening that the government will need to borrow again to balance the 2009/10 budget, McKeeva Bush will also need to seek permission from the FCO’s Overseas Territories Minister Chris Bryant. The last time Bush went to London seeking UK approval for borrowing he was told the UK wanted to see direct taxation, and while he was eventually granted permission, it was based on a number of conditions, including a balanced budget for this year. (Photo by Dennie Warren Jr)

With or without the sale of government assets, the fall in government earnings for 2009/10 by at least $70 million means that operating revenue is far short of operating expenses, leaving the government with an anticipated deficit of $62 million, breaking the first rule of the government’s own guidelines for sound financial management. With the country’s cash reserves likely to be below the 90 day minimum of operating expenditure, an overdraft in the government current account and a debt of around $½ billion, giving a net-debt ratio of 106% well over the 80% limit, the premier will once again be in the hands of the UK government when it comes to resolving the government’s budget problem.

With the government goals of attracting inward investment, engaging in public-private partnerships, seeking private finance initiatives and utilizing government assets not yet coming to fruition, the premier is likely to face considerable opposition from the UK for further borrowing without broadening the country’s tax base.

Bush, however, has said he remains fundamentally opposed to that route and is heading to the UK armed with the Miller-Shaw Report, which emphasises the need to dramatically cut government rather than increase fees or taxes.  Speaking to the country Monday night, Bush said a delegation led by the governor, himself and the financial secretary, will present the report to the United Kingdom government this week, and Bush said he would not support the introduction of income or property tax and would resist any moves in that direction.

The premier said government had estimated that it will need to borrow a minimum of CI$112 million in the upcoming financial year 2010/11 and admitted that, as a result, the UK will be looking for some form of taxation.

“Because the government cannot comply with all the principles of responsible financial management at 30 June 2010, the UK Government will, once again, have to give its approval for the Cayman Islands Government to incur further borrowings or something like taxation from the 1st July 2010 onwards,” he said.

In order to tackle the stalemate over taxation that is likely to occur between the UK and CI governments, Bush emphasised the importance of reducing the predicted deficit of $62 million through salary and operating cuts. According to the financial secretary, however, the salary reduction and benefit cuts including the freezing of pensions would reduce costs by around $17 million in this financial year, leaving government with a further $45 million of cuts to make in operating expenses in the next three months to avoid an impasse with the UK.

In his letter to Bush on 8 October Chris Bryant agreed to extend the borrowing limits to CIG because Bush had presented a balanced budget to the Legislative Assembly. While he stated he had his concerns about how the UDP administration was going to achieve the fiscal year end surplus, he wrote:

“If you are genuinely confident that CIG can deliver the budget…..I will be prepared to approve the borrowing….”  But the UK minister went on to say that only under exceptional circumstances would he agree to further borrowing.


 

Category: Headline News

Comments (31)

Trackback URL | Comments RSS Feed

  1. Go To The Office! says:

    I don’t tink……he’s going to be discussing anyting.  I tink……he’s going to be told.

    I remember when I got some of my reports:

    First.. I tried to say there was some mistake.  They got the numbers wrong.

    That isn’t really a D minus.  It’s a typo.  It was supposed to be an B minus.

    I was actually there those days.  But for some reason I wasn’t counted.

    There has obviously some mistake made and I have no idea what I’m doing in this office!

    They have my name mixed-up with some other student.

    The teachers hate me.

    The exam was too long.  I was tired.

    The sun was in my eyes.

    Lightning struck my books… and they caught on fire.

    The dog ate my homework.

    I’m going to do better next semester.  Just watch.

    None of it worked.

    So I became a politician.

  2. anonymous says:

    MacKeeva if you had the Islands interest at heart you would sit down with the elected brains of these Islands.  I mean Rolston, Kurt, Alden, CG, Ezzard and Mark and said guys, this is the report, we together need to go through it and analyse it and see what we TOGETHER could take to the UK as a united front and tell them this is OUR plan.  This rouge approach you have embarked on, will ONLY backfire on you and then you will come back with a sorry story to tell the people and command them that this MUST be done as per Chris Bryant and the FCO.  MacKeeva there is no excuse for stupidity, so stop being stupid.  Wny are you putting friendship and party before COUNTRY and PEOPLE?  Sensible minds achieves and sensible minds advances.  We need to UNITE to gain, but you are determine to DIVIDE and lose.  MacKeeva have you not done enough damage to these Islands already? ala the Status Grants.  You have turned these Islands into a welfare state and you STILL continues to do so, with this new Immigration Policy.  Who are you damaging Mackeeva?  You are damaging your OWN people, yes these same people you are going to grow old with.  When you are going to need them, they are going to turn their backs on you, because what goes around comes around.  Remember THAT!!

  3. Anonymous says:

    Is Mac really taking Paul Byles and the FS to meet with the FCO in the UK? Isn’t it time to call in some real experts? Mac how can you still believe in Paul Byles and the FS? Haven’t they caused you enough embarrassment!!

     
  4. Anonymous says:

    Mac I wonder what you are telling them about finances?  Please don’t lie and please don’t tell them PPM did it only, you were part of this bargain too. Duncan I hope you meet with them seperately and tell them the truth, as you see it. You tell them about your welcome by the Premier, what a real XXX laugh that is going to be.  Lord help us please.

  5. Complete Cayman says:

    The only way the UK will allow more borrowing is for Cayman to introduce taxes.

    I suggest that a property tax of 2.0% on all properties.

    In addition a 4% tax should be levied along Seven mile beach and any other premium land.  The multi million dollar owners should be able to shoulder this small burden.

  6. Anonymous turtle meat says:

    FINANCES     can some boby tell me what mac know about finances.   i would to hear him talking to chis bryant. i wonder why he took the governor with him, i hope he remember that TAYLOR is back on his turf.  probarly the mouth piece SOLOMON will do all the talking. after he has a degree and mack do not

  7. Anonymous says:

    Social Services supporting foreigners – Where is our money going ? 

    Can anyone tell me why, we through, social services are supporting people fromother countries?? How much are we spending supporting these foreigners every year?  If expats can’t afford to live here – send them home we have our own financial problems!

    Social services should be here to help Caymanians only with an exception of an expat who is here on a valid work permit who due to an unfortunate circumstances is tempereraly unemployed then we can assist them for a month or two. After a couple of months if they are still unemployed… send them home.   

    • Young gyal says:

      Good point. They would be quicker to give financial assistance to people that don’t need it, instead of true poor persons. Caymanians go there and they expect them to submit a book about themselves and who they live with; and in the end you’d probably be better off if you never went to them in the first place. The only thing that I don’t agree with is that they shouldn’t feel compelled to assist foreigners here on work permit that are temporarily out of work… sending them home.. priceless! There are over 900 Caymanians here ‘temporarily’ out of work. Like the old people say, charity begins at home!

  8. Ezzard Miller says:

    To Bobby anonymous.
    I get no expense allowances as an MLA I receive a salary and I am allowed under the rules for constituent office allowance to claim $1,000.00 dollars to assist with salaries for the MLA office in the district and an additinnal $375.00 for other expenses like telephone,internet, water and office supplies. My office cost me on average $3,500.00 per month to operate so I pay $2,125.00 from my salary each month. In addition I have invested over $3,000.00 in office furniture, computers, paint etc to make the office pleasant for myself and my constituents who visit there daily.

    Ezzard

    • With any luck says:

      With anyluck you will only need to keep paying these expenses until the next election.

    • Anonymous says:

      Ezzard you are the only politician in that House that gives me a bit of hope. Thank you for what you do and for standing up for us the people. You have more support out here, island wide, than you would imagine. Keep up your "rants" and shoot from the hit tactics and to heck with the critics (of course I know you don’t give a hoot anyway!). We the people agree with you, for the most part, and you have our support.

    • Bobby Anonymous says:

      Thanks for your reply Ezzard. Quick and straight.  Thankyou.

  9. Joe Average says:

    Wasted trip. We have absolutely nothing left to bargain with at this point.  The financial decisions that should have been made months ago weren’t.  Instead there was a cobbled together idea to increase fees across the board ignoring completely the fact that government’s largest expenditure was staring them in the face:  55% of the budget was going to government employees and agencies.  How much more obvious does it have to get? 

    Instead of taking action then it has all been proposed in the past two weeks on the very weak excuse it was because they were waiting for the Miller Report and it’s recommendations.  That doesn’t fly.

    Anyone could have told them back last fall drastic cuts had to be made in expenditures.  The time to have done that was then. Not now.  We can also draw no other conclusion that this government was fully aware of what needed to be done at that time.  Unless they are completely inept, and it would appear they are trying to shift the blame to the FCO, as blaming the previous government hasn’t helped in the slightest.

    It simply made for good press and became boring after the first few weeks. Instead, they played party politics while the situation continued to get worse.  It now also appears to any of us who can think it was a direct result of putting a large voting block ahead of a prudent and necessary course of action. 

    But that wasn’t all.  McKeeva and the Financial Secretary then compounded the problem by producing a fictitious budget. Which the FCO looked upon with curiosity and pure amazement.

    Now, armed with the real truth of the matter, that government expenditure is the cause of the majority of our financial difficulty. They are returning to London. We can only hope that they don’t embarrass us further. By saying the same thing we heard: "We expected more money to come in. But it didn’t."

    The result of this capricious attitude has left us not only embarrassed but in an extremely precarious situation.

    Thanks so much.  Bon Voyage.

     

    ps. don’t write and ask for money.

     

     

     

    • Anonymous says:

      I feel sorry for the Gov.  I can only pray for Cayman… and I’m not even religious! 

  10. Anonymous says:

    Did Macdinejad and Duncan come to an agreement as to whose "turf" they are on in London?

  11. Anonymous says:

    typical and embarrassing as hell yet again. the last 8 yrs has been nothing but a he said she said battle between two group a idiots. now look at us again. in the hands of the uk government once again, cap in hand, begging because we have idiots trying to be clever trying to run things. why do we keep running uk people then go beg at them door again and again ? tell me that? it a crying shame.

    i hang my head.

  12. Macman says:

    I hear tell that he is taking Elio with him!

     

    As soon as Chris Bryant opens his mouth Elio will be shouting "You don’t know how many sisters I have, do you? Do you?"

    Yes I am sure the UK Government will be impressed by our two High School drop outs!….Ah I forgot Elio has howmany degrees?

     

  13. Uncivil Servant says:

    Tell you what Mac, if you give me my 6% of the Pension Contribution to invest as I see fit, you can keep your 6%. Sound fair?

     

  14. Anonymous says:

    What I’m about to say has nothing to do with this topic but can someone from the UDP government say how many of their supports were giving tickets for the charter that left on Tuesday to Costa Rica????

  15. Me Beg Ya says:

    Time for Strip Clubs!

    • Complete Cayman says:

      I don’t see much economic benefit but hey who doesn’t like to watch hooters?

  16. Anonymous says:

    The people that should have been on this trip to England are Mac, Ezzard, Kurt and Mr. Taylor.  That was everyone one in Cayman would have been represented.

  17. Afraid to Strap on a Pair Also says:

    The last time that Mac did his live show in London Chris Bryant was in South America, I seem to recall.  Did anybody pay for tickets to this show?

  18. Rodney Dangerfield says:

    This is going to be excellent. I can’t wait. It will be just like the good old College days. I will share an apartment with 3 of my friends and live on cheap beer and Ramen Noodles for the next few years. I am very much looking forward to it. Party time, excellent!

  19. Anonymous says:

    Once again Mac, you have lead the Island to hell.

    How will you get us out of this one.

    Sorry for all the cayman people Mckeeva once again your GOD, your FATHER, whom u believed, whom you have trusted, whom you could rely on.

    CAYMANIANS DID HE TOLD YOU WHAT GOING TO HAPPEN TO YOU ALL?

    THE EXPATS ARE SAFE HERE. THE CARRIBBEAN IS OPENING UP TO TAKE SOME OF YOU IN, GET READY. 

    UNLESS MR. MILLER AND THE OTHER MLA GOT A BETTER IDEA WE ARE SCREWED.   

     

  20. Anonymous says:

    Mr. Bush, First of all let me start by saying STOP running up in down wasting what little money the Government has left before trying to  fine a solution to the problem at homebefore going to England. Because if you go with the attitude that you have towards the people of this counrty in England we are doom. First of all why hasnt  Mr. Jefferson Come forward and speak to the people of this country explaining what happen to the budget. Yes we elect people to run this counrty but is your JOB to make sure there is a budget that this country can run on as well and this has not been done and WHY is may question.

  21. Anonymous says:

    Could it be that this trip to the UK is nothing more than another paid holiday for the Premier which just happens to provide a facade which will allow the Premier to say after the fact that "the UK made me do it"?

    Somehow I don’t think that the UK will accept the Premier’s plan to stimulate the Cayman economy by building a wall around this personal property at the people’s expense as sufficient to justify more borrowing.

    Even the Premier’s plan to justify increased borrowning by hiring even more personal servants at the people’s expense is not likely to satisfy the UK.

    Similarly, the established government program of giving free fuel to civil servants and former civil servants probably will not be accepted as a good reason for more borrowing by government.

    Perhaps a promise that the Premier and his cronies will spend even more time in 5 star London hotels at the people’s expense in the coming fiscal year will do it – that seems to be as good as it gets with this Premier.

  22. Bushy's beer says:

    Welcome to payroll and property taxes Cayman, if Bush manges to escape the UK without taxes being imposed we should call him Houdini.

    It was a good innings

  23. Anonymous says:

    And our civil servants are still being allowed to dilly-dally and put forward this spurious proposal and that feeble argument???? Time for drastic cuts.

  24. Bobby Anonymous says:

    Can anyone please tell me what the average expenses are per month for MLA’S and a list of what they are for? I as a member of the public would like to know what is being claimed to offset their pay cuts.