Cayman Islands says “no” to UK fiscal policy document
Premier McKeeva Bush said his administration has reservations with some areas of the fiscal responsibility document and intends to continue negotiations with the UK government.
GEORGE TOWN, Cayman Islands, Wednesday November 16, 2011 - The Cayman Islands has opted not to sign a fiscal policy document put forward by the UK government that seeks to control spending in the overseas territory.
Premier McKeeva Bush said they have decided to continue negotiations with the Foreign & Commonwealth Office (FCO) in light of concerns with some of the recommendations.
In a statement on the status of the proposed Framework for Fiscal Responsibility (FFR), the premier said his government has reservations about the suggestion that it should only borrow to fund capital expenditure, which will yield sufficient revenues to meet debt services costs.
“The Government and I interpret that paragraph 28 of the FFR means, as an example, that separate juvenile remand facilities which are required in order to comply with the Islands' Bill of Rights - scheduled to come into effect in 2013 - could not be constructed, using borrowed funds, because such a facility will not generate a revenue stream to fund debt service costs,” he stated.
“Further, under the Bill of Rights, the Government must build and maintain schools to provide primary and secondary education, free of charge. If in the future Government needed to borrow funds to finance additional educational facilities, it would appear that the FFR would disallow such borrowing - simply because such facilities would be unlikely to yield sufficient revenues to meet its associated debt service costs.”
The premier further described as “restrictive” a proposal that the entire debt servicing costs of the government, its statutory authorities and companies not exceed 10 per cent of government revenue.
The FFR was developed by economists in the FCO on four basic tenets.
It stipulates that the government should undertake effective medium-term planning, put value for money considerations at the heart of the decision-making process, demonstrate effective management of risk and should drive the delivery of improved accountability in all public sector operations.
The premier said those principles are “unquestionably laudable and sensible”, but stressed that he would only sign a document that is “mutually” agreed to by both countries.
He disclosed that counter-proposals would be discussed with the FCO.
The FFR review is expected to be featured prominently in discussions this week between the premier and a representative of the UK government.