Premier vows minimal borrowing

The
Cayman Islands will only borrow minimally even if the United Kingdom approves
more borrowing after seeing a three-year plan to balance the government’s
budget.

Premier
McKeeva Bush reiterated Monday that the Cayman Islands must remain prudent with
respect to future borrowing.

“We
can’t continue massive borrowing or this country’s going to get into trouble,
which the people are going to have to pay for,” he said at press conference
last week.

“The
Opposition would want for us to continue to borrow significantly to finance our
operations, rather than focusing on controlling heavy expenditures, and the
out-of-whack expenditures,” he said. “This is of course a very dangerous and
slippery slope; one we can’t follow the Opposition on.”

Mr.
Bush said the government was committed to limiting borrowing in the interest of
maintaining Cayman’s high sovereign credit rating.

“We
have seen too many times how a country with out-of-control borrowings can
quickly become laden with a host of economic and social issues,” he said.

Mr.
Bush said the government would also not take the advice of Leader of the
Opposition Kurt Tibbetts and ask the UK to relax the borrowing ratios set out in
the Public Management and Finance Law.

“We
must adhere to the highest standards of fiscal prudence if we are to maintain
this country’s good reputation,” Mr. Bush said. “So no Mr. Tibbetts; throwing
the fiscal rules out the door in a panic is not the way will manage this country’s
fiscal affairs.”

Mr.
Bush said the UK Foreign and Commonwealth Office appreciated his government’s
stance on borrowing when a Cayman delegation met with them in London two weeks
ago.

Before
the UK will allow the government to borrow any more money, Cayman must submit
to the Foreign Office a three-year plan outlining how it will get its finances
in order.  That plan is due by the end of
March.

With
regard to future borrowing if the UK allows it, Mr. Bush said it would be
limited to what was absolutely necessary. 
Giving some examples, Mr. Bush said if borrowing was needed for the
Sunrise Centre for disabled adults or for the Pines retirement home, or for
education, the government would do that. 
But he said the government would not be borrowing $200 million again as
happened under the PPM administration.

“We
cannot go down that road,” he said.

In
a press release issued Monday, Mr. Bush said the government remained fully
committed to the principles of responsible financial management as defined in
Cayman’s Public Management and Finance Law.

“Our
position on this is that we will only accept adjustments to these principles in
extraordinary and exceptional circumstances and we wish to see that there are
significant controls in place to prevent abuse of these principles by successive
governments,” he said. “We must adhere to the highest standards of fiscal
prudence if we are to maintain this country’s good reputation.”

However,
Mr. Bush does advocate reform of the Public Management and Finance Law on other
issues and he wrote a letter to Governor Duncan Taylor on 19 March calling for
a review of that law.

In the letter Mr. Bush set out
three points that he said could serve as a guide for formal terms of reference
for a PMFL review.

Those points included: looking at the
extent to which the PMFL and its related procedures have contributed to the
growth in the civil service; looking at the extent to which the original
objectives of the PMFL were being achieved; and looking at the possibility of
reforming the procedures of implementing the PMFL.

Mr. Bush said it was time to look
at the PMFL systems and fix the aspects that were not working.

“We have been questioning the
effectiveness of the PMFL and the entire framework surrounding it for years and
it has been in place long enough for us to take stock of how well it is serving
us,” he said.

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