Leader of the Opposition McKeeva Bush criticised Leader of Government Business Kurt Tibbetts Friday for statements he made the day before concerning Cayman’s economic outlook.
Speaking at the Cabinet press briefing Thursday about the recent turmoil in the world’s financial markets, Mr. Tibbetts sought to reassure residents about Cayman’s economy.
‘First and foremost, it is important to say that all our consultations indicate that there will not be an impact on the viability of any of our local retail banks in the Cayman Islands,’ he said.
Mr. Tibbetts also said that a just-released report by the Economics and Statistics Office showed improvements on economic indicators when comparing March 2007 vs. March 2008.
‘I would encourage the media to take note of the positive performance indicators shown in that report, which point, in particular, to the robust performance of the financial services sector as well as a sustained growth in air arrivals, or stay-over tourism,’ he said.
Although global analysts were predicting a tightening of credit standards as a result of the last week’s events, Mr. Tibbetts said there had been an increase in the amount of credit offered to businesses and individuals during the first quarter of 2008.
Mr. Tibbetts made his statement after two days of huge losses on the US Stock Market, which was sparked by announcements that the investment bank Lehman Brothers had declared bankruptcy; Bank of American was buying a troubled Merrill Lynch; and insurance giant AIG was receiving an $85 billion bailout from the US Federal Reserve Bank.
Even though Merrill Lynch has an office with six employees here, Mr. Tibbetts said the Bank of American buyout was not expected to bring about any changes to its operations in Cayman.
Mr. Tibbetts said the Government was in the process of convening meetings with people in the financial services sector to determine if actions needed to be taken in the Cayman Islands to mitigate the situation with the world’s financial markets
Mr. Bush criticised Mr. Tibbetts for saying, among other things, that if all 130 companies, 39 partnerships and seven trusts registered in the Cayman Islands having Lehman Brothers in their name were to no longer exist, the annual revenue lost here would only be CI$244,000.
‘This is proof in the pudding that the PPM are totally disconnected from economic issues’, said Mr Bush. ‘The potential impact of the fallout in the US is great to the Cayman Islands and extends far beyond employment and government fees relating to these companies.
‘The potential impact affects the global economy and clearly has major potential implications for the Cayman Islands.’
Mr. Bush said there were potential negative impacts on other funds domiciled in the Cayman Islands as a result of the fallout of last week’s economic turmoil.
‘The crisis also has a general impact on potential American tourists as their wealth will likely be eroded due to the fallout.’
Mr. Bush said Mr. Tibbetts’ statements were ‘another example that this administration is disconnected from the Cayman Islands economy and its business community’.
‘Recently they have also tried to tell us that the economy is doing great, while there are dozens of local businesses suffering and complaining that economic activity is down.’