SPS takes optimistic view
(CNS): Despite the continuing international economic turmoil, Cayman’s own economic woes and the government’s cash flow crunch, the government’s strategic policy statement (SPS) submitted to the Legislative Assembly by the premier this week takes a very optimistic position. According to the forecast on which the government’s next three budgets will be based, Cayman could not only be rich beyond its wildest dreams by 2016, with a huge surplus, but cash in the bank, dwindling debt, a slimmed down public sector and be free from UK supervision of its public finances. The SPS does not say how Cayman will get so rich, however, other than through the commencement of the long promised infrastructure projects.
At the close of the 2011/12 financial year government essentially broke even, with a surplus of around $42,000. In a lengthier document than previous years, as a result of the new guidelines provided in the Framework for Fiscal Responsibility that now forms part of the Public Management and Finance Law, the statement is less than specific about how government will move from a break even position to a whopping surplus of $145 million in three years.
It also predicts having more than $400 million in the bank, a total debt reduced to $500 million, and to be in full compliance with the six principles of responsible financial management set out in the law and, as a result, free from the need to ask the UK for borrowing.
In the statement the premier says that the forecast will require continued careful management but claimed that the “path is credible, achievable and will place the Cayman Islands in an even stronger financial position”.
The plan does not include any new revenue raising measures or any redundancies in the civil service, which government intends to reduce through attrition, mergers and centralisation but not lay-offs. The government states that such drastic action could run the risk of “economic shock”. Instead, it claims that the reduction in operating costs will come from increased efficiencies and gradual declining public sector costs rather than massive reductions in government spending.
The growth in revenue is expected to come from the development of “key infrastructure projects” such as the Dr Devi Shetty hospital, the cruise berthing facilities, the expansion of the airport, Cayman Enterprise City and the ForCayman Investment Alliance.
“Overall economic growth of the Cayman islands in the next three fiscal years will increasingly rely on private investment in the domestic sectors in light of heightened financial and fiscal uncertainty in the major external markets and the governments commitments in the Framework for Fiscal Responsibility,” the SPS reads.
The premier goes on to say that construction will contribute to the recovery of the GDP with the implementation of these major projects. Despite the recent setbacks to a number of the planned projects, the government states, “It is assumed that during the period of this SPS this projects would have commenced and will be mostly in the initial construction phases,” which is expected to stimulate demand for services across the economy.
What the statement does not explain, however, is what happens to the forecasts if the FCIA or the hospital and other projects do not start.
Although government sets out its aims for a reduction in the public sector, it is gradual, and given that so many Caymanians are employed by government, the SPS indicates the need for caution to avoid cutting its wage bill only to increase is social assistancebill. The gradual reduction in the size of government is expected to reach 10% by year three and government points to the need for a growth in the private sector alongside the decrease in the public, as it believes the two are not mutually exclusive but rather mutually dependent.
See below for the complete SPS.
Category: Politics
The third world government speaks again. Yes we know that you know that this is what we want to hear from you. If only you had the competence and discipline to make it really happen. But we all know that you don't. The best we can hope for is that you (the "honorable"premeir) stay off island and don't do anymore half a$$ed self consulted business deals on Caymans behalf.
I am very thankful that Mr. Bush is the Premier atleast he is trying to help the economy just look at this favourable Bloomberg article about Cayman Airways, if anything it will be positive for the increased business and profitability http://www.businessweek.com/news/2012-11-13/san-miguel-in-talks-with-cayman-airways-for-possible-investment. Like the Premier or not he is trying his best to keep us from drowning in debt.
Favourable? How? Basically it says beer company with odd range of other businesses including a blacklisted airline wants to invest in Cayman Airways and an analyst who knows the company does not see why the deal makes any sense. Dear UDP Bot we are not as stupid as you think.
This would be wonderful if…the government's Strategic Policy Statement had to be true or accurate. But alas it doesn't. It's merely a statement. Such as "It looks like rain tomorrow." It could rain, it might not rain. All you did was make a statement. And a prediction based on a 'secret formula' you have for predicting the weather. In other words 'gut feeling'. Without the documentation where is it to back up the SPS, or the figures used to arrive the statement where are they…..it's just a wild guess. What I'd truly like to see is performance-based salary enacted for politicians. Meet your targets…..you get paid. Especially the Premier and Minister of Finance. Notice he gets paid. A lot. Whether he's right, wrong or way-off base. But in his benefit he does put on a good performance.
I am waiting for the day when the departments run out of money and won’t be able to pay civil service. Just wait and see! 2 months to go! 80m surplus this year….ha ha ha ha!
What a XXXX of XXXX! I wouldn't believe a word he said…. Just get rid of him and his joke of a government.
I suspect that there is an elections coming up.
Just another day in Absurdistan
Promises promises…remember rollover shorter time, haven't heard anything option to have or have not pension, nothing…..where are all the promises
All the promises are in the cookie jar.
Can we have proof of the $42,000 surplus please? I don't believe it for a minute and I would be willing to bet that civil service pension payments have, once more, not been accrued as they legally should be since they are an expense in the year they are incurred.
plans are always the easier part , it’s the execution of the plans that pose the problems . but nothing wrong with thinking positive . like they say even a broken clock is right twice a day.
How does this jive with completely unreliable accounting reporting standards?
What a crock of…………………
This is just like his budgets, not work the paper they are printed on.
Don't even know why we waste our time reading them. I mean if we found this is the fantasy section at Book Nook or Books and Books it would even be out of place.
Maybe somebody will give us the money. Somebody that lubs us
Tolkein could not have written a better piece of fantasy.
Prediction: The economy will perform worse than expected, government revenues will be lower than anticipated, and spending will be higher than budgeted.
What a marvellous work of fiction & dreaming. There will be no crime, pollution, illegal fishing, waste, & we will all have hover cars, $5m homes, & be retired fit & healthy individuals.
I don't see how all this money will come from such developments that are basically free of duties & taxes & permits & all the other things that apply to the rest of us; how will they produce this money?
Mac-onomics LMFAO !
Is this a pipe dream? No substance, all fluff …. Total joke
No measures, no checks and balances, no accountability, no timeline, no enforcement or collection… Rubbish
Yeah right. And we're going to have this huge surplus and be rich beyond our wildest dreams in 90 days again, yes?
Ah, Cayman is fairytale land for true!
Cayman is fairy tale land, only because the Jackass is walking backways on the wrong side of the fence and grazing on donkey weed.
Is this a genuine prediction as it sounds remarkably like an email I got from Nigeria last week from an 'eminent barrister' promising me 'much monies' and 'Golden times ahead'!
another udp fairy tale……
wlecome to the caymankind wonderland…..
I would have more faith in that Strategic Policy Statement (SPS) if it had been written by Richard Parchment. For a good laugh, here are excerpts from the SPS McKeeva delivered to the LA on November 18, 2009 for everyone to see how well he sticks to his promises:
With apologies to George Bush, fool me one time shame on you, fool me four years in a row… can't fool me four years in a row bobo.
The Premier (Hon. W. McKeeva Bush): Madam Speaker, the financial forecasts and targets included in this SPS indicate that it will be possible for the Government to operate its finances within full compliance with the Principles of Responsible Financial Management, as set out in the Public Management and Finance Law.
Core Government operating revenue is forecast to be approximately
$580 million in 2010/11,
$585 million in 2011/12, and
$590 million in 2012/13.
Core Government operating expenses are forecasted to be approximately
$531.3 million in 2010/11,
$522.3 million in both 2011/12 and 2012/13.
Operating surpluses—after financing expenses—are forecasted to be
$22.8 million in 2010/11,
$35.6 million in 2011/12 and
$41.15 million in 2012/13.
On the balance sheet, Government’s net worth (which is the difference between its total assets and its totalliabilities) is expected to increase steadily over the forecasted period.
Aggregate borrowing (which is the balance outstanding at the end of a financial year in respect of those borrowings) is forecast to peak at $504.6 million in 2010/11 and then decrease to $489.1 million in 2011/12 and decrease further to $470.2 million in 2012/13.
This reflects a deliberate effort on our part to keep the Government’s borrowing levels within the limits prescribed by the Principles of Responsible Financial Management.
Net operating cash flows are targeted to remain strong in line with the forecast operating surpluses. The Government has continued with its policy of maximizing the use of cash generated from operating surpluses to finance its planned capital programme over the next three fiscal years.
Net investing cash flows, or the amount of funding available for the Government’s capital development programme, is forecast to be $69.7 million in 2010/11, $49.7 million in 2011/12 and $49.7 million in 2012/13.
The decrease in the 2010/11 and 2011/12 financial years reflects the expected completion of major projects such as the new high schools and the new Government Administration Building in the 2010/11 fiscal year.
The net financing cash flows reflect the Government’s anticipated borrowings less its repayment of debt principal. Over the three-year period the Government is not forecast to undertake any new borrowings in the 2011/12 and 2012/13 financial years, resulting in a net payoff of the Government debt.
Madam Speaker, as a Government my aim and objective is to bring this debt down, way down some 2013. The country cannot help for now, but we must not embark on this again.
The targeted closing cash balance for all years is forecast to be just over the 90 day of operating expenses required by the Principles of Responsible Financial Management. Madam Speaker, this means our Budgets would be compliant. And that is what we are going to do—be compliant. Not break the law as has happened recently.
It looks to me like Mac and Rolly and God's gift to referendums (Foolio) got drunk and came up with these fantastic projections…
A handfull of people will get rich, at the cost of the poor.
….and Santa Claus really exists.
Maybe MB has a career as a fiction writer ahead of him….
I believe the SPS report, Cayman is already rich. We are the fifth largest financial center in the world, no taxes and the higest standard of living in the Caribbean and I would dare to say in the world. People from all over the world is coming to Cayman to live and work, I don't see Caymanians doing the same. This is why Caymanians should be demanding more from its government. Investors the world over knows that the Cayman Islands is one of the best countries to do business. Caymanians do not realise what we have here and the sooner we realise it and hold our leaders accountable the better.
You need to travel more! You have been on the rock too long.
I don't need to travel anymore, fyi I have been to more places on this earth than you will ever know and there are very few places that can compare to Cayman. Our standard of living and the hospitality of real Caymanians are just two that I will mention. This is why you and your colleagues are here. I am sure if you had found it better elsewhere you would not be here. Tis is one rock that I na intend to leave so you can hog up my space.
Cayman Brac, Jamaica and East End do not count.
Please get out more.