Archive for March, 2010
Civil service to wield own axe
(CNS): The country’s civil servants can breathe a sigh of relief over their pay packets until the end of this fiscal year but they are still facing a possible 8% cut in salaries and benefits in the next. A memo sent from the Deputy Governor’s Office to senior public sector staff yesterday has revealed that government may not be docking wages before 1 June but has left it up to the civil service itself to wield its own axe on human resource costs for 2010/11 by eight percent. Civil servants have been told they must reduce HR by $19,000,000 and they are to decide how those cuts will be made.
Donovan Ebanks (above) confirmed salaries would be safe until the end of this financial year as a result of dramatic operating cuts to the tune of some $49 million in 2009/10 expenditures, but next year would see some tough decisions.
According to the deputy governor’s memo, while public sector employees will hold on to their pay this fiscal year, the civil service has been given a set human resource target budget of $219,000,000 for the fiscal year 2010/11 — $19 million short of the expected HR needs. The government has also mandated that the statutory authorities and government companies cut HR costs by 8%.
“Cabinet has not stated how these savings should be achieved but rather has challenged ministries, portfolios and SA&G-oCs to identify and implement solutions in preparation for the 2010/11 Budget,” Ebanks wrote in the circular.
He explained that decisions had been made over the last week between Cabinet and the UK to set budget targets below those that were submitted by the civil service previously for the 2010/11 fiscal year.
He stated that this would mean that consideration would need to be given to a range of cost reducing options, including the reduction of staff, which would require further operational efficiencies. Ebanks also said HR policies would need to be revised to temporarily reduce allowances, introduce cost sharing for benefits, in particular health care, and temporary salary reductions unless savings could be achieved elsewhere.
The deputy governor confirmed that the current arrangement regarding pension contributions would not change as a result of work carried out to examine this option last year. However, he did say there could be a reduction in health care benefits but they would be done in consultation with stakeholders.
Following the work to reduce this year’s government expenditure by civil servants, Ebanks said the efforts were commendable, but despite the forecasted savings of almost $50 million, he warned that “due to the poor performance in revenue” the operational cuts may still not be enough to prevent cash flow problems in June 2010.
“The situation is being monitored closely and your continued efforts to restrain expenditures are vitally important,” Ebanks wrote.
Pointing out that these were extremely difficult times for the civil service, the deputy governor told public employees he appreciated their hard work in making the savings so far but it was not over yet.
“We must continue to strive for effective and sustainable ways to reduce our costs bringing them in line with prescribed targets,” he said. Ebanks noted that over the next three years the public sector costs had to come down through balanced measures and that the 2010/11 budget was the first step.
Although the memo lists the targets government has set for civil service spending, the memo gives no indications of policy changes or reductions to services which would be acceptable to the elected arm of government. Ebanks indicated that Cabinet has left the goal of cutting to the civil service itself.
Cayman signs fifteenth tax deal
(CNS): The Cayman Islands has now signed its fifteenth tax information exchange agreement after the premier put his name to a deal with Australia on Tuesday, during a ceremony held at the Australian embassy in Washington, D.C. Well past the OECD’s guidelines of 12 deals the Cayman Islands government says it aims to sign several more agreements in the near future as negotiations with several countries continue. Premier McKeeva Bush said the TIEAs demonstrated the transparency of Cayman’s financial services sector.
“The Cayman Islands Government is pleased to have signed this agreement with our Australian counterparts and we look forward to many years of cooperation between our two countries as part of our global commitment to upholding international standards of tax transparency and accountability,” said Bush.
“We believe this agreement will reinforce an already solid relationship that exists between Australia and the Cayman Islands, as Cayman’s excellent professional infrastructure, effective legal and regulatory framework and stable business environment are well-known amongst Australian private equity and hedge fund firms.”
The Premier was accompanied at the signing by three members of the Cayman Islands TIEA negotiating team: The Honourable Samuel Bulgin, Attorney General, Mr George McCarthy, Chairman of the Cayman Islands Monetary Authority, and; Mrs Michelle Bahadur, Director of the Financial Services Secretariat, Ministry of Finance.
The Cayman Islands is successfully concluding negotiations with several OECD and G-20 countries and the Government anticipates signing a number of additional agreements over the coming months.
Credit Suisse says lawsuit withoutmerit
(Associated Press): Defense attorneys want a federal judge to throw out a $24 billion predatory lending lawsuit filed against Credit Suisse Group by investors in broke resorts in the Western US and the Bahamas. The investors contend Credit Suisse set up a branch in the Cayman Islands to skirt U.S. rules and appraised the resorts at inflated prices as part of a scheme to later foreclose on the properties. In court documents filed Monday, attorneys for Credit Suisse said the legal action was based on absurd claims by people who never borrowed money from the bank.
Bermuda’s key installations at risk from climate change
(Royal Gazette): The Island’s airport and power station could disappear underwater that is one of the more alarming predictions from a report on the effects of climate change on Bermuda. Experts at the International Panel for Climate Change, predict that the rise in sea level this century could be up to 0.59 metres but as high as two metres if the ice sheets melt. And a projected two-metre sea level rise would "drown" L.F. Wade International Airport and flood up to 2,000 residential and commercial buildings. The main power plant at Belco, the Island’s only supplier of electricity, would also be swamped.
Chamber calls on UK to get involved with local crime
(CNS): During the recent visit by a delegation from the UK’s Foreign and Commonwealth Office the Cayman Islands Chamber of Commerce told the British representatives that the FCO needed to increase its involvement in the escalating crime problem in the islands. The FCO visitor were here primarily to discuss and review Cayman’s current economic situation and the proposed three year plan as a result Andrew Paterson from the FCO and Carole Pretorious of Oxford Policy Development met with a wide range of stakeholders while they were here last week.
During the Chamber’s Council meeting with the two UK economists the chamber said that it had reiterated its opposition to any form of direct taxation and calling for Government to reduce its expenditure and to move ahead with the divestment of Government assets and privatization of non-essential government services. The chamber has recently offered its backing to the content of the Miller report which advises against any new taxation but instead recommends a dramatic cut in government spending. Speaking at the recent Chamber careers, jobs and training expo the president of the Chamber, Stuart Bostock said government should listen carefully to the expert advice offered in the report.
Although economics formed a key part of the discussion the affect of crime on the economy was also a talking point. “The Council used the opportunity to express their concern about the escalating level of crime and called upon the FCO to increase their involvement through the Governor’s office to address the situation as a matter of urgency,” the Chamber said in a statement.
Blair under pressure over his UK taxes
(Telegraph): Tony Blair is facing questions over whether he was planning to avoid paying taxes in Britain on his growing wealth. The Conservatives released a dossier on the structure of the former prime minister’s companies which they believed could allow him to take advantage lawfully of offshore tax havens. Blair has set up a complicated series of firms through which he is paid and his charitable work is funded. The structure has confused accountants and solicitors, although a spokesman for Blair said it had nothing to with tax but was a regulatory formality.
The former prime minister is thought to be earning tens of millions of pounds a year from advising foreign investors and making lucrative speeches. Several of his "corporate entities" do not have to publish full accounts and do not disclose where their money comes from or where it ends up.
IMF warns governments to crack down on banks
(Reuters): Key Group of 20 leaders and the International Monetary Fund have urged governments to redouble efforts in tightening up financial rules as some countries lag in curbing bank pay. World leaders congratulated themselves in Pittsburgh last September after agreeing to a sweeping set of reforms that apply lessons from the worst financial crisis since the 1930s. Turning pledges into coordinated action is facing resistance over timing and substance from some banks and countries. "One of the lessons of the crisis is that facing global challenges we need to have global answers," said IMF Managing Director Dominique Strauss-Kahn. "This lesson is about to be lost," he said.
Accounting tricks under investigation by SEC
(BBC): The US financial regulator has launched an investigation into accounting tricks by Wall Street firms designed to mask heavy losses. The Securities and Exchange Commission (SEC) has written to financial firms to see how widespread the use of accounting tools such as Repo 105 is. A recent report accused collapsed bank Lehman Brothers of using this device to hide the true extent of its losses. Earlier this month, a report by a court-appointed examiner criticised Lehman Brothers for using Repo 105 to give the impression that the bank was reducing its levels of debt, when in reality it was not.
Cruise calls down as air arrivals up
(CNS): The latest figures from the Department of Tourism suggest that the number of people visiting the Cayman Islands and staying overnight is increasing. However, bad weather cut cruise passenger arrivals making it the worst February for almost a decade. At the airport 711 more people flew in to Cayman over last year an increase of over 2.6%.from 26,482 to 27,193. Meanwhile, only 128,994 visited George Town by boat compared to 136,809 in 2009. The main reason was that while far more cruise passengers were projected to come poor weather saw a number of ships drop Cayman from their ports of call.
The high number of Nor’westers this winter has already impacted cruise figure but weather forecasters are predicting another cold front which could mean even more ships being unable to dock and adding more fuel to the argument to move the port project forward to build cruise berthing facilities.
The ships can sometime call at Spotts when Nor’westers cause problems in George Town however Spotts can only accommodate up to four vessels and depending on changes in the wind direction the cruise ships can not always depend on being able to anchor at that location.
Although the air arrivals are not all tourists the increase in people visiting and staying longer will provide encouragement to others in the tourism industry that still say this is the area of Cayman’s tourism product that the country should be focusing on and not the cruise industry.
According to the DoT’s detailed statistics the increase in the number of visitors over February 2009 came from the United States in particular the North East and Midwest regions.
Tickets still available for games say organisers
–(CNS): Updated 2:35pm -The organisers of the CARIFTA games said today that there are still tickets available despite rumours stating they were sold out. Chairman of the CARIFTA Committee Rayle Roberts said the word on the street is not true only Grand Stand 3 day pass tickets had sold out. "We still have tickets available for the Mackie Seymour Stand and the bleachers," he added. A list of ticket vendors can be found on the CARIFTA website which is www.carifta2010.ky More than 500 young athletes from 25 different countries will be coming together in the Cayman Islands this weekend for the games at the Truman Bodden Sports Complex. The region’s most promising young sports-persons will be running, jumping and throwing their way on to the medal table in front of what seems set to be a capacity crowd.
More than fifteen years since the annual competition, sponsored by the Caribbean Free Trade Association was last held in Cayman, the games draw considerable attention as they have been a testing ground for many of the Caribbean’s greatest athletes. Usain Bolt and Merlene Ottey as well as Cayman’s own Cydonie Mothersill, Kareem Streete-Thompson and Ronald Forbes all cut their athletic teeth by competing in these prestigious regional games.
Athletes compete in two age categories for boys and girls, Under 17 and Under 20, for track and field events including sprint races, hurdles, middle distance track events, jumping and throwing events, and relays. The CARIFTA Games will also serve as a qualifying meet and springboard for Caribbean nation athletes competing for a spot in the first-ever World Youth Olympic Games in Singapore in August.
Three months after experiencing the earthquake, Haiti is expected to send a team to participate in the games. Organizers of CARIFTA and representatives from both private and public sector organizations in the Cayman Islands have been working together to raise funds to donate to the Haitian team, to assist with offsetting the country’s athletic federation costs of participating in games. Fund raising efforts will include a silent auction which will feature a pair of autographed track shoes signed by Usain Bolt, current World Record holder and past CARIFTA athlete.
For more information on the 2010 CARIFTA Games and the Cayman Islands, please visit http://www.carifta2010.ky/ or http://www.caymanislands.ky