December 6, 2021

The Editor Speaks: No new fees, no taxes & no new borrowing

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And it’s not Christmas.

The Government outlined its Strategic Policy Statement (SPS) in the Legislative Assembly yesterday (Wed) – this being the first SPS to be prepared following the 2015 and 2017 legislative amendments to the Public Management and Finance Law which shifted the Government’s financial year from 1 July – 30 June period to a 1 January – 31 December period and changed our budgeting cycle from an annual one to once every two years.

There is even more presents:
• Reduced Import Duty of 25 cents per gallon down from 75 cents per gallon on fuel used by Caribbean Utilities Company for the generation of electricity;
• Reduced Import Duty of 20% down from 22% for licensed traders on consumer goods for retail sale; and
• Reduced Import Duty of 15% on building materials.

The money to pay for running the country is coming from focusing on “maximizing collection on the existing rates of fees by strengthening enforcement efforts and improving the ease of payment through E-Government initiatives and business process improvements”.

This has been detailed into 8 elements as:

1. A Strong Economy to Help Families and Businesses 2. Achieving Full Employment – Jobs for All Caymanians 3. The Best Education Opportunities for All Our Children 4. Reducing Crime and the Fear of Crime 5. Access to Quality, Affordable Healthcare 6. Stronger Communities and Support for the Most Vulnerable 7. Ensuring Caymanians Benefit from a Healthy Environment 8. Stable, Effective and Accountable Government.

Over the next three financial years the Economics and Statistics Office has forecast that our economy will grow steadily, in-line with forecasts for the world’s major economies, the source markets for our major economic pillars.

Economic growth as measured by the Real Gross Domestic Product (GDP) is expected to grow by 2.4% in 2018; 2.3% in 2019; and 2.0% in 2020. These forecasts are underpinned by the assumption that the three key sectors of the Cayman Islands economy: Financial Services; Tourism; and Business services will all continue to evolve and maintain their global competiveness.

In addition, economic growth will be directly influenced by several large construction projects from the private and public sectors including:

• new Hotel construction and redevelopment of existing Hotel properties along the Seven Mile Beach Corridor;

• development of a new hotel and condominiums in Beach Bay, Bodden Town;

• redevelopment of the George Town Cargo and Cruise Berthing port;

• Completion of the new John Gray High School;
• Construction of a new Long Term Residential Mental Health Facility;
• Procurement of the new Integrated Solid Waste Management System (ISWMS); and
• Completion and opening of the redeveloped and expanded passenger terminal at the Owen Roberts International Airport.

Finance Minister Roy McTaggart said, “Over the next three years, economic growth will create additional jobs and keep the unemployment rate well below the 4% level. Unemployment rates are forecast to be 3.6% in 2018; 3.4% in 2019; and 3.5% in 2020.
“Economic growth and increased levels of employment means that the consumption of goods and services will increase, this in turn places upward pressure on the rate of inflation (as measured by changes in the Consumer Price Index) which is expected to increase by 2.3% in 2018; 2.6% in 2019; and 2.4% in 2020.”

It all sounds very rosy but a lot depends on growth increasing. Just a little ripple and a huge whirlpool could drain away all these forecasts including the reserve.

I don’t see any contingencies in place and I have a horrible feeling CINICO is going to cost a lot more than the forecast debt.

How much of the costly report on streamlining the government has been implemented? Apart from an Ombudsman (Ombudswoman?) to streamline TWO departments whilst adding a third doesn’t seem much of an improvement in reducing costs. I would be very interested in seeing how much money has been saved by implementing the consultants recommendations against the actual cost of the report. Have we got value for money? If we do ever get the figures I’m positive they will show it was value for money. As a past master of producing appraisals many years ago in a different life I know how figures can show what you want and it is the truth. It’s the way you show them. And all of these reports have two thirds telling us all about the Cayman Islands, the people, the discovery, the climate, the direction the winds flow every month over a hundred years, politics, policing, crime, etc. etc. etc, Just by the size of the document you know it is worth the money. See how many pages it has? In other words don’t bother providing the figures. The exercise was justified.

We will have to wait until October to see the detailed budget so watch this space.

I’m going to treat myself to a proper restaurant lunch on Sunday instead of Burger King or KFC. I am forecasting iNews Cayman is going to make my partner and myself very rich over the next three years.

My wife still isn’t laughing…..

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