Delivering his annual strategic policy statement, Premier McKeeva Bush said the government would continue prudent financial management to stabilise and sustain the local economy.
The government, at the end of the first quarter of this financial year – July to September 2010 – achieved a $15.4 million surplus, although it had been estimated in the budget that the government would have a deficit of about $6 million in that quarter, Mr. Bush said.
From July to September this year, the government’s expenditure was $18.5 million less than the budget had anticipated, Mr. Bush said in his address before the Legislative Assembly Thursday morning, 25 November.
“This is not an accident. It did not happen by chance. It was result of deliberate prudent action by ministries, portfolios and ministers…,” Mr. Bush said in his policy speech, which was titled “The Right Direction”.
Among the
fiscal plans set out in the Strategic Policy Statement was the government’s
intention to divest of $47 million worth of assets and limit capital
expenditure to $25 million a year for the next three years.
Government
also plans to reduce personnel and non-personnel costs and reduce statutory
authority/government owned company losses or increase profitability.
There will
be no new borrowings over the next three years, with the government operating
cash flows and divesting assets to pay for the development of new
infrastructure, according to the policy statement.
With no new
borrowings forecast, Cayman’s outstanding debt could decrease from the current
balance of $629.71 million in 2010-2011 to $603.78 million in 2011-2012;
$577.85 million in 2012-2013 and $551.92 in 2013-2014, according to estimates
in the document.
The premier outlined broad measures that would be taken to boost the tourism and financial sector industries, including making changes to immigration policies.
He said the government would bolster small businesses by reducing work permit and business licence fees for companies with five or fewer employees.
Closer partnerships between the public and private sectors would also be strengthened, Mr. Bush said. He cited the establishment and work of the Tourism Advisory Council, the Financial Services Council and the National Investment Council as “mechanisms to ensure effective dialogue between the public and private sectors, thus allowing all stakeholders to have a voice in our recovery efforts”.
He has appointed a national strategic advisor to head a small group of senor civil servants to focus on the implementation of “key economic stimulus measures” based on the recommendations of the three councils.
Stimulus package
In September, Mr. Bush in a public speech said within 90 days, he would announce measures to get Cayman “back on the path” to success. The Stimulus Implementation Group had compiled more than 250 suggestions and initiatives from various committees and associations to be implemented in this fiscal year. “At the end of the promised 90 days, I will be unveiling this stimulus package, thereby charting the way through the recession and back on a path to economic prosperity.”
To promote growth in the local economy, Mr. Bush said a plan would be required that would focus on reform in the public sector; limits on new borrowings; re-alignment of the existing revenue base; reduction of operating expenditures and consideration of the use of a capital project funding method known as private financing initiative.
GDP
He said that due to the deficit-reduction policy stance of the current financial budget and the shrinking population size, the forecast for this year’s gross domestic product locally was around 1.7 per cent, and according to the Economics and Statistics Office, this was likely to continue to decline, but then grow to 1.4 per cent in 2011-2012 and to 2.1 per cent in 2013-2014.
Mr. Bush said measures taken by his administration in the past year had led to the reduction of the unaudited budget deficit for the public sector to $15 million as of 30 June, 2010. “This represents a whopping reduction of $66 million from the corresponding figures of $81 million for the year ending 30th June in 2009 in the last government.”
He said there had been a $30 million improvement on the revised budget deficit from April 2010, as of 30 June 2010.
Mr. Bush said there was continuing to be an increase in the number of companies and partnerships registered in Cayman, with new company registrations increasing by about 1 per cent and new partnership registrations going up by about 9.8 per cent.
He said he had asked the chairman of the Cayman Islands Monetary Authority to lead a team of industry professionals to develop recommendations on broad strategic objectives for the financial services industry.
Cayman will also target overseas investment and launch marketing road show.
Two billion dollars in major projects are slated for the coming five years, including Camana Bay, Ritz Carlton’s Dragon Bay, new high-end condo developments on Seven Mile Beach, the cruise ship port, the Dr. Shetty’s medical tourism hospital, cargo port, the sewage system and waste-to-energy facility.
The strategic policy statement forms the basis for the 2011-2012 budget.
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