Leader of Government Business Kurt Tibbetts is urging government agencies and private citizens to tighten their belts as budget prognosticators forecast the onset of lean times in Cayman.
‘The financial markets are far from back to normal,’ Mr. Tibbetts said Thursday. ‘Government is keenly aware that its revenues are bound to be reduced as a result of the global economic environment.’
Mr. Tibbetts said government would be receiving updated financial estimates Tuesday that would allow it to better determine the country’s position. However, he said there were already signs that the economy is being affected by the global upheaval.
New company registrations in the Cayman Islands have fallen by 10 per cent in the first nine months of this year when compared to January-September 2007. Globally, the number of registered hedge funds is forecast to drop some 20 to 30 per cent.
‘(This) will obviously affect Cayman’s book of business,’ Mr. Tibbetts said.
The Cayman Islands has already seen a sharp drop in cruise ship tourism numbers so far this year. But Tourism Minister Charles Clifford said that was due mainly to a decline in demand for the Caribbean market in general, as cruisers from the US chose to take trips to other destinations like Europe.
Tourism officials have speculated that Caribbean cruise numbers may actually benefit in the short term as US visitors choose closer, less costly destinations for their vacations.
‘(Cruise lines) have indicated that their European strategy, while it’s opened up new markets…the strategy hasn’t quite worked as they expected,’ Mr. Clifford said. ‘So, they’re beginning to bring some of those ships back to the Caribbean.’
Mr. Clifford said cruise calls projected for 2009 and 2010 have begun to track upward, particularly those from Carnival cruise lines. However, he said rough economic times in the US would certainly impact cruise visits.
‘We’ve seen some of that impact already,’ he said.
The Cayman Islands government takes in significant yearly revenues from both company registrations and cruise ship arrival fees.
Government is already looking at reducing the number of construction projects it is proceeding with and could look to curtail spending on some of those.
However, Mr. Tibbetts said major projects such as the construction of three new high schools and a government office building would not be halted.
‘These and other government projects are providing significant employment and are pumping millions of dollars into the local economy each month,’ he said. ‘This will continue for at least the next 18 months to two years.’
Mr. Tibbetts also suggested that government spending on its annual budget could be reduced in the current fiscal year as well as next year.
He did not specify in what areas there might have to be cut backs, but noted that government would not introduce new taxes.
‘It is very possible that government revenue will not be what was projected,’ Mr. Tibbetts said. ‘Instructions are being filtered down throughout the central government service that we need to be looking very carefully at the operational budget.’
An advisory group consisting of Cabinet ministers and private sector business owners was being formed to help government assess the potential affects of the global economic crisis and how Cayman should deal with those issues. Mr. Tibbetts will chair the group.