The Cayman Islands will pass the Framework for Fiscal Responsibility agreement with the United Kingdom into law later this year.
It just won’t happen as quickly as the UK initially proposed.
One of four key principles required by the UK of the Cayman Islands, a British Overseas Territory, prior to its budget receiving approval from the Mother Country earlier this year was the enactment of the framework document into law by September.
Cayman Islands Premier McKeeva Bush and former UK foreign office minister Henry Bellingham signed the agreement in 2011.
According to Cayman Islands Governor Duncan Taylor’s office, Mr. Bush and newly-appointed Minister Mark Simmonds spoke about the issue last week while the premier was in London.
“In a meeting with Minister Simmonds at the [UK] Foreign and Commonwealth Office on 20 September, the premier said that he would bring the Framework for Fiscal Responsibility to the next meeting of the Legislative Assembly, which would not be until 5 November,” the statement read. “[Mr. Bush] also gave the minister an undertaking that the [framework], as signed in November 2011, would be transposed into law that same week, and by no later than 9 November, 2012.”
The framework is an agreement signed between the Cayman Islands and UK governments that sets out a number of spending restrictions, management and audit requirements, as well as bidding processes for the government to follow. It’s believed the conditions of the framework will be embedded into the territory’s Public Management and Finance Law.
What the framework requires
The Framework for Fiscal Responsibility document calls for controlling government expenditure; limiting new borrowing; realigning the territory’s revenue base; improving the performance of statutory authorities and government companies; and reducing government costs by working in partnership with the private sector.
It outlines a number of requirements for delivering value for money with regard to projects and to ensure the government’s procurement process is handled above-board.
“There are five key stages that will be undertaken by the Cayman Islands government in the planning, development and execution of a project,” the framework states, listing appraisal and business case; procurement; contract management, delivery and evaluation.
All public projects must be “suitably appraised before the procurement stage to ensure value for money and that a robust cost-benefit analysis has been carried out”, according to the framework. The appraisals must result in a business case that demonstrates the economic need for the project and lists the risks associated with it.
The document cites strict procedures for non-compliance with financial deadlines. If Cayman fails to do so, it would be required to present for the approval of the UK Secretary of State a plan that will remedy the breach within three fiscal years from the point the breach occurred.
During any time of breach in the framework agreement, the Cayman Islands will be required to obtain, on an annual basis, the approval of the Secretary of State before: Finalising the government’s Strategic Policy Statement; proceeding with any public borrowing or refinancing of public borrowing; proceeding with any project with a lifetime value of more than $5 million; using public assets as collateral as part of any arrangement with a non-government entity; pledging any government revenue stream as collateral for borrowing or debt; or divestment of public assets.
“For the avoidance of doubt, any failure to comply with the borrowing limits or forecast failure to comply within the lifetime of the [Strategic Policy Statement] will be deemed a failure to comply with the Framework,” the document reads.
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