The United Kingdom’s permission for Cayman’s annual budget and debt is required under the Cayman Constitution, as read with the Public Management and Finance Law, when the Government is in breach of some of the responsible financial management principles for total government borrowings.
The entire public sector debt is forecast for 2010/2011 at $773,853,000 up from $110 million in the year 2000 when we were ministers in Government. Unfunded pension liability as at 1 January, 2005, stood at $175 million and will be considerably more now, some six years later. Total liabilities for the 2011/2012 budget are $1,204,227,000.
Frightening! Our children and future Caymanian generations will have to repay this massive debt over the next 20 to 30 years. How can they?
The last few years are the first time in the Cayman Island’s history that such a serious breach of responsible financial management principles under the law has happened. It was mainly due to the excessive expenditure, excessive borrowings, contractual commitments and commitments to borrow of the last Peoples Progressive Movement Government. The two new expensive schools, which will probably cost a possible $200 million, are still not complete. To complete them will further worsen Cayman’s financial position and debt.
While good roads are necessary, the over-expensive roads built by the PPM Government and the minister of Works and Roads on private land whose owners have not been compensated or paid for their land is another burden on future generations and apparently not yet fully shown in the Government’s accounts.
One light of hope is that the United Democratic Party has reduced the annual deficit of the PPM Government’s 30 June, 2009, a whopping unprecedented $81 million deficit to $15 million for the year ending 30 June, 2010. A surplus is estimated for the year 2011. This is a very good achievement by UDP, having regard to the debt and payment commitments under contracts, which UDP inherited from the PPM Government and massive debt servicing ($40,721,000 in annual interest and $26,000,000 in principal repayments) and in light of the world economic recession.
The United Kingdom appears to have stopped borrowings for new projects, thank the Lord. It is a pity the UK did not stop the PPM Government’s earlier borrowings, which would have made Cayman much better off financially today.
The UK’s enforcement of responsible financial management is in the best interest of the Cayman Islands and its people and responsible government. There are some who disagree with Cayman’s dependent status but this control over irresponsible government spending and our prosperity and stability shows how important the UK is to Cayman and its people.
If we were an independent country, the Government could do as it wished. It would probably never return to responsible financial management. Most Caribbean countries became independent because the politicians did not want to be answerable to the UK or anyone else who would keep them financially responsible and honest.
Political independence has been a financial and social disaster for many Caribbean countries. The new constitution promoted by the PPM and the Cayman Ministers Association among others, has taken Cayman in one big leap (rather than three sensible timely steps, which is usual) about as far as responsible government can go. Sadly the next major political advancement will mean independence and financial and social disaster as seen in nearly every other independent country especially in the Caribbean.
Do not let the political parties or politicians lead or push Cayman into independence as they did earlier with political parties, which parties have proven to be detrimental and divisive in some ways to the Caymanian people and even some families.