The address, which comes ahead of the annual budget, is titled “Responsibility in times of austerity”, in which Mr. Bush told lawmakers in the Legislative Assembly, “We can no longer afford to do business as usual”.
Mr. Bush said he had reluctantly signed a Framework for Fiscal Responsibility with the United Kingdom on 23 November that requires Cayman to curb excessive expenditure and come back within legal debt limits within the next three years. “I have had to sign this, and it was a bitter pill to swallow, because the past government, like other countries, engaged in over-expenditure and over-reliance on debt financing,” the premier said.
June 2016 is the date the Cayman Islands Government is required to become compliant with borrowing ratio limits, as stipulated by the Framework for Fiscal Responsibility.
Mr. Bush said all government departments, statutory authorities and government-owned companies would be required to comply with those limits and all public entities would have to consult with central Government before making any borrowings.
He said the government did not intend to implement “any major new revenue measures over the next three financial years”, but reserved the right to revisit this policy if the economy did not improve in line with current projections.
The Strategic Policy Address forecast that the government will earn approximately $560.8 million in 2012/13, $572.6 million in 2013/14 and $587.4 million in 2014/15 – marking an annual growth of 2.3 per cent. Mr. Bush said these figures were based on projected economic growth as well as the implementation of developments including the cruise port project, Cayman Enterprise City, the Shetty Hospital and the ForCayman Investment Alliance.
He said operating expenses were forecast to be $497.9 million in 2012/13, $502.9 million in 2013/14 and $508 million in 2014/15 – an annual 1 per cent growth.
He said it would be a challenge to keep public expenditure in this range due to “three areas of urgent need: improvements to education infrastructure; the need for improved policing and border security; and the implementation of the human rights provisions of the 2009 Constitutional Order”.
If the government and its associated public entities keep within the spending limits and revenue measures forecasts, the government would obtain operating surpluses of $23.5 million in 2012/13, $31.5 million in 2013/14; and $42.5 million in 2014/15.
The address carried no specifics on how the “austerity” measures would be carried out.