Debt turn around promised

| 28/11/2014

(CNS): The PPM administration has announced a reversal of the public debt in a move they described as a demonstration of government’s “financial prudence”. Finance Minister Marco Archer revealed Wednesday that over the next three years government will repay around $127.6 million in debt principal, reducing the debt balance to a forecast amount of just over half a million by the end of the 2017/18 fiscal year. He said the reduction in interest payments would fall to $28.2 million — enough to fund the education ministry’s entire scholarship programme. The finance minister also said that with enough operating cash to cover government throughout the entire year, it would no longer need a costly overdraft facility.

The public sector debt has long been a point of contention, with the previous UDP administration often criticizing the PPM for mismanagement of public-sector funds and driving the CIG into the red.

At its peak, government debt reached almost $800m in 2010/11. A fundamental reason for government failing to comply with the Public Management and Finance Law. Archer said that net debt ratio would fall by the 2015/16 financial year to 9.8%, placing government back in compliance with that aspect of the law. He told the LA that government would repay the existing debt at an aggressive pace.

“This will be achieved through a prudent debt management strategy which includes the setting aside of approximately $18 million of future debt servicing payments in a restricted Sinking Fund during the current 2014/15 financial year. A portion of our future debt repayments will therefore come from this Fund instead of from recurrent revenue,” he explained.

Government has an overdraft facility and the overdrawn balance peaked at CI$22.6 million on 20 December2013 but this was well within the overdraft limit. On 14 January 2014 the government’s operating bank account balance became positive and remained positive to the end of the 2013/14 financial year. According to Archer, government will not require an overdraft facility to fund its operations during 2014/15 and subsequent financial years, since operating cash will be sufficient to fund its operations.

"If there are no natural disasters, the economy performs as expected … the central government is forecast to have more cash in its bank accounts ($514.5 milion) than the total outstanding debt of the entire public sector ($509.7 million)," Archer said, calling it a “monumental achievement” considering where the balance lay a couple of years ago.

Given that the Cayman Islands lost 183% of its GDP in 3.4 billion dollars thanks to Hurricane Ivan, it is certainly worth mentioning the possibility of another natural disaster to knock this plan off track.

The hoped for turn around with government debt also means more support for local small to medium enterprises, with government credit grants and quarterly payments for businesses with less than 10 employees, as opposed to a single annual payment. Archer described SMEs as having the greatest potential for employment and growth in the private sector, while Premier Alden McLaughlin spoke of continuing to attract multinational companies for our private sector.

It was announced that there would be $47 million for capital investments and expenditures in the 2015/16 financial year. Thereafter, they plan to allocate $57 million and $47 million respectively in fiscal years 2016/17 and 2017/18.

These claims all came along side statements of public sector debt declining and of modest growth in financial services. In his speech Archer stated that the consumer price index is expected to grow 2.3% over a 2 year period and unemployment is expected to fall from 5.9% to 4.9% during 2017-18.

On the topic of local Caymanian unemployment rate, Archer said, "We have to be careful for whom we are building this country." He said that Cayman was currently in a "sweet spot" in regards to economic growth.

There was also an announcement that the immense leverage and buying power of CIG would be put through a central procurement office.

Category: Politics

Comments (37)

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  1. Garfield says:

    Too bad the Cayman Islands Government did not go with the Canadian Commercial Corporation airport proposal like Bermuda did. Going with the Canadian proposal would have done wonders for reducing Cayman's public debt at over $500 million over the next ten years.

    Regret that the airport redevelopment is only going to put the Cayman's further in debt.

    • Anonymous says:

      Why expect anything else with the PPM in charge, all they do is spend spend spend and put us futher into the hole.

  2. anonymous says:

    Well a quick response ! Any economists worth his degree would not push a school for free and cause more suffering. There is no profit. It was grossly overpriced and obviously planned for cold climates.

    Plus ,who were they building it for the new caymanians that were going to bring their children to live here . We were in a recession. Why not build a airport or a dock???? That would have brought in revenue.

    Projects need to be what will be good for people and sustainability of the country.

    If they didn't build the new schools would this country be where it is today financially? socially? criminally? We made 2 steps forward and 3 steps back.

    Do I support the present MLA's ,yes I do. As much as I support any other member of my family. But this is not acceptable. Time is of the essence. We need to get something going starting Jan.2015. The new tech. center had a law protecting there technology passed in no time if my memory serves me correctly about a week?  Why can't we have more protection for us too. 

    There is so much they can do while waiting for FCO.

    The EIA  for the piers in GT for one. Is there a plan "B" in case they magically say it can't go there? Will we need another EIA for the North Sound or Red Bay? How long will it take ? Weeks months years? How about the airport? Looks like we got screwed on that deal with Canada. 

    I am still asking, how are you going to build these projects, on top of what we are using everyday.

    I apologise for my mispelled letter on Kurts name .As you know the "u" is next to the "i". Slip of my finger. I learnt spelling in middle school it could of been my arthritis. My middle finger has been used too much please forgive me.

    • Garfield says:

      Screwed on deal with Canada? Why do you say that? Guess you like to see Caymanian public debt rise.

      Why did Bermuda take on the same airport deal that CIG rejected? Suspect Bermudians know something about economics which Caymanians have yet to learn.

      Public / private partnerships are the way that new airports have been built in the Caribbean and South America for the past 10 years. Time for Cayman to get with it.

       

  3. Anonymous says:

    To 1/12 – 05:57 "need to lead the country back to where Jim Bodden left it"!!?? Everything we are experiencing now is the result of Jim Bodden and his bunch of pirates from 1976 to 1984! We are exactly where Big Jim led us – not driving the car but curled up in the trunk. We'll soon be on the roadside hitching a ride!! Totally outside the mainstream in our own land!!

    Please review your history and revisit the largely negative changes that Jim Bodden's leadership brought us – greed, political interference & intimidation, corruption (have you forgotten the cocaine court case?), cronyism, backward education policies, preaching entitlement to Caymanians, disrespect to expatriates, unbridled and poorly planned development (remember which real estate company sold most of SMB?) thus leading to confused immigration policies, Lodge control of Government, arrogance in public office, and more. If you were at any of National Team's or Unity Team's meetings during that period you should recall much of their rhetoric. Remember the "broomsticks" remark in Bodden Town? That spoke volumes of their arrogance and how little respect they had for the public.

    Clearly you are one who was blinded by their warped nationalism and venom, and sucked it all in. Perhaps worse, maybe you are one of many who raised children by those standards and contributed to the present generation of wasters who expect handouts just for being Caymanian, and earned us the disrespect of foreigners. 

    Jim Bodden's leadership took Cayman back by generations and set a poor standard as the norm. Too bad there's not a flock of pigeons constantly crapping all over his statue!!! 

  4. anonymous says:

    PPM built schools when their economists were telling them not too. They just didn't want to build one but three. First price was 50 million per school. Kirk and Alden were highly educated . No money coming back from school. Most kids not even from Cayman. Why oh why did we build so many schools , votes.

    UDP built Turtle Farm, it  needed improvements , but not 60 million. Mac's problem is and has always been bad advisers. 7th grade education, thinks he is doing the best for West Bay. Should have built the cruise ship and airport somewhere East. Would force growth which would create jobs and new wealth. There are people who with new wealth could sustain the country. Tax shelters are done. Wealth mang. downsizing. Even Cuba can't take all Credit cards. 

    What is the new incentive for wealthy people to spend money here? Why should wealthy retirees come here to live? The rest of the caribbean whohave lost banking are offering rich people permanent residency . You buy a condo and boom you get a passport. 

    You go to Panama, over 60 ,you buy a condo 200 thousand you get permanent residency and a ID card that says pensioner. That means you can get 20% off of everything.

    Everything like, air flights, food ,medical, transport it's a win win situation. 

    What really are we offering? High food prices, high fuel, highest elect, no smoking, highest drinking prices. Why would anyone come here to live?

    Now you can't get a job here, no minimum wage, no medical ins ( pre-existing conditions).

    The elected members seem to be befuddled as to what they were elected to do.

    Ironwood dev., cruise ship facility, Dr. Shetty hosp., were really UDP projects.

    PPM:  Gov. admin building, 2 1/2 schools? We as an island need you to step up your game . You need to lead this country back to where Jim Bodden left it.

    • Anonymous says:

      No economists were advising not to build the schools. While accountants may have objected to them since they put us greatly in debt economists understand deficit spending in order to stimulate an economy in a recession. Without the schools unemployment would have been higher and we would all have been worse off. 

      And who is "Kirk"? Kurt Tibbetts has been an MLA for some 22 years and LOGB twice and you still don't know his name?? smh.

      • Anonymous says:

        22 years career politician and what has been achieved? Look at Cayman today, crime ridden, thief infested road to nowhere with 2000 of his own Caymanians that can't get a job, while God knows how many expats can show up and get employment the next day. Even murderer Policemen from Jamaica are a shoe-in for a job. Is it any wonder he got the name wrong? smh

        • Anonymous says:

          Yes, it is a wonder since none of that has anything in the slightest to do with getting his name right. That is not his fault but yours. 

  5. Anonymous says:

    all very good…but the island is sinking…look at property values……look at the amount of foreclosures…..

    the ppm have literally sat on their hands and done nothing…..you might as well thank mac because the ppm are just continuing the last governments policies(without the caziness)

    • Anonymous says:

      You are not making much sense. One  the one hand you say they are sitting on their hands and doing nothing and on the other you say they are continuing McKeeva's policies. Was it his policy to do nothing? You say we should be thanking McKeeva but then admit that his adminstration reflected craziness. I understand you want to badmouth the PPM but make up your mind what you're trying to say.  

      • Anonymous says:

        One billion Cayman Islands dollars missing, and the whole lot of them carreer politicians should be held accountable. But hey, welcome to absurdistan.

  6. Anonymous says:

    The same government that has produced at least a couple of 'budget figures' , some more 'this is where we are ' figures and cant produe a set of audited books in any department better then a 5th grader….same old BS I'm afraid.

    Until Govt produces aset of audited, firm figures to start from everything else is just pie in the sky.

  7. Anonymous says:

    omg there is NO WAY

    we , the people will have to pay again !!

    HIGH GARBAGE FEES are coming for sure and so are TAXES !

    we are all screwed !!

    • Vee says:

      I am in favor of taxes based on a high level of personal income (bonus, salary etc.), ONLY if government then substantially reduces its less fair taxes that are built into the system presently.

      These are great prudent moves by Minister Archer.  It would be so nice if he also was sitting down with two stakeholders in the Financial Services industry who have recently made decisions to exit this country/region.

      What is going on?

      Government needs to know. The people need to know. Government needs to protect its citizens and own income.

    • Anonymous says:

      Don't leave out FATCA they are also coming for their taxes, then we'll all be triple screwed!!!!.

  8. Anonymous says:

    I think that should be 'reducing the debt balance…to just over half a Billion…' with a B, it would be marvellous if it were an M.  Should take about 16 years to pay back everything at the same rate of $30mio per year.  It's still very good, compared to Bermuda who have a $200 mio budget deficit this year, as do most Governments.

  9. haranguer rides again. says:

    Marco is a goddamm genius. Good pick there Alden.

  10. Anonymous says:

    We the caymanian people fall for this garbage every four years. I have but one vote and I don't see any politician that I would vote for. We've been falling for the same stupidness for the last three decades. We spent millions on schools but the kids have a subpar education level. The dump has been an issue for decades and looks like it's going to stay that way. The dock will be finished when cruise ships begin to fly. Banks are pulling out left, right and center. But we're on track?

  11. Anonymous says:

    Well done Marco.  Now can you consider addressing those two fuel companies, becuase controls on CUC isn't much help when there are no controls on the fuel importers and retailers and fuel (energy) controls the health of an economy.

    • Anonymous says:

      You didn’t hear CUC just take out a 50 million dollar loan? We got to keep on taking it.

      • Anonymous says:

        Please Please!!! say there will not be a separate Line Item for the 50 Million!!!! We already have of the Licence Fees, Fuel Cost that doubles the current usage. Help us to survive 2013 and face 2014 with a smile.

  12. Anonymous says:

    Promises, promises and yet more promises. Thank God I've got a UK passport and can bale out when it all screws up.

     

    • Anonymous says:

      Just make sure you learn to speak Polish (moiwe po polsku is a good start) before you make that move because that's about the only way you'll get a job in the UK and whatever you may hear living on the dole over there isn't an option for someone with an OT passport.

  13. Bunface says:

    I hope archer keeps to his word I cant afford to pay anymore taxes…….

  14. Anonymous says:

    PPM helped create the financial mess that forced us into the FFR. Caymanians must never forget that

    • Anonymous says:

      11:54, the only thing we cannot forget are the amount of morons out there like yourself who still don't understand an aboslute iota about anything that goes on around them because their heads are buried so deep in the sand and up their Leaders arse.

      I swear if Mac told you Unicorn's were real, you would die defending that proposition.

    • Anonymous says:

      PPM do not steal from the people or spend through slush funds to buy votes. The whole country will use the benefits of monies spent by them in infrastructure…and nobody got "commissions" either.

    • Anonymous says:

      Don't forget the money pit known as Boatswains Beach / Turtle Farm! More has been wasted there over the past decade than can be accounted for.

      Yes, PPM went over on the new High School….to the benefit of future generations (and by extention, to us all!) Whereas past Governments ignored such needed infrastructural needs for decades….while flying around the World on joy trips.

      • Anonymous says:

        That new school was twice the budget cost because of stupidity.  Its is not even fit for purpose.  Its is not buildings that make for a great education, but good quality leadership, good teachers who are well supported and investment in the teachers continuous development.  If you think you can build a world class education system by changing the buildings then you are mistaken.  If only it were that simple.

  15. Anonymous says:

    The words "financial prudence" should only be used to describe the CIG if they are accompanied by the words "hilarious lack of"

  16. Anonymous says:

    Please investigate whatever department is collecting a budget and cutting paychecks to maintain the district parklands donated by Dart over a decade ago.  I can tell you, there is no appreciable impact of that budget on these neglected parks – wasting away – gardens overgrown and infested with chicken and iguana pests and decaying equipment now hazardous to children and families.  A national disgrace and symbol of government profligacy. 

  17. Anonymous says:

    The PPM must have planted those same money trees they had growing last time a round…$40 miilion a year for the next three years. Where's it coming from? or is this just more hot air and magic numbech to use for the next election which corresponds with thier timeline.

    • Anonymous says:

      You know, I could find the patience to explain this stuff to numnuts like you but what is the point, I can't understand it for you too!

      • Anonymous says:

        What I understand is that you numnuts fall for this same crap over an over, election after election you keep voting the same lying manipulating jokers into office. How can anyone believe the world of a group of people that constantly tell lies and go back on thier word.