Letters to the Editor: Solutions to excessive borrowing

We will set out solutions to the
excessive borrowing and over-expensive building projects of the last PPM
government which have the people of Cayman worried for their children’s future.
Past non-party Governments lived within their means and spent what they could
afford but kept the Cayman Islands financially sound and stable.

In 1993 the Governments debt was
$55million, and in November 2000 when Government changed it was $95 million
debt (and $15 million self financing).

Governments published budget
estimates 2010/2011 for the core Government debt is CI$623 million and total
debt is $696 million. Unfunded pension liability is $178 million with total
debt and liability of CI$874 million or US$1 billion (and this does not include
liability for private land used for the PPM highways still to be paid for). The
maximum prudent debt under the law is about $400-million which is 80 per cent
of the 2010/2011 recurrent revenue of $507 million, so about $400million needs
to be repaid. Any effective short term solutions to these problems will be
harsh to and hurt the Caymanian people.

The best solution would have been
for the PPM Government not to create the debt but that is history now. One
short term realistic solution is for Government to sell and take a lease back
coupled with an option or a pre-emptive right to repurchase the over-expensive
assets. The proceeds of sale must be used to repay existing debt and not spent
on other projects. The PPM Government borrowed excessively on the two new high
schools and the administrative building and super highways which Cayman could
not afford. They committed the present and future Governments to complete the
contracts and pay for these and the massive loans.

The PPM opposition MLAs have objected
to selling “assets”. It is more realistic to say that a sale of the new schools
or administrative building is a sale of “Debt” because they were built on
borrowed money and Government cannot afford them.

The Leader of the Opposition in a
recent TV broadcast talked about solutions to the excessive debt and excessive
expenditures, many of which his Government created. If his Government was that
smart they would not have caused the excessive debt and expenditures in the
first instance!

However, we are against sacrificing
good assets which were paid for by prudent past Governments before the
political party spenders’ era, to pay for the PPM’s financial mistakes. This
may be the price the Caymanian people pay for not voting in businessmen or
women with proven sound financial experience and relevant qualifications who
are independent of political party directorates. Remember the job of a Minister
and MLA is the only important job for which no business experience or
qualifications are necessary. For some politicians a big mouth and unrealistic
promises get them elected.

In the long term Government could
heavily cut expenses, reduce the civil service and/or raise duties and taxes.
This helps turn the deficit into a surplus but is not a short term solution to
the repayment of Cayman’s billion US dollar debt which in 2010/2011 is
estimated to take a whopping $64.8 million each year which is 12.85 per cent of
annual recurrent revenue and is increasing yearly.

Surprisingly, a few PPM MLAs and
recently a PPM supporter in a letter to the press have blamed the PPM’s
excessive debt and financial failure on the past Governments not spending more.
Past Governments before political parties lived within their means and were
financially prudent and only spent what the country could afford and the public
appreciates us. 

Those PPM members and supporters
are living in a fairy-tale world. They should accept responsibility for causing
a large part of Caymans debt and financial problems and apologize to the
public. Political party Governments spend the public’s money but the public and
future generations have to bear the burden and pay the debt.


John McLean

Truman Bodden