Changes to the Cayman Islands Public Management and Finance Law that incorporate a United Kingdom-drafted fiscal framework plan were finally approved last week by local lawmakers.
A third version of amendments to the law, which essentially copied and pasted the Framework for Fiscal Responsibility into a schedule of the finance law, was approved by a majority of Legislative Assembly members.
That approval did not include backbench MLAs Ellio Solomon, Cline Glidden Jr. and Dwayne Seymour. However, Cayman Islands Premier McKeeva Bush’s government was able to pass the bill with assistance of opposition party members, who supported the measure.
The major requirements of the UK-Cayman Framework for Fiscal Responsibility include:
Cayman must “suitably appraise” all public projects before the procurement [bidding] process begins and all projects must have a sound business case, including a risk-assessment completed prior to bidding.
Projects above a lifetime value of $10 million, as well as any projects that use public-private partnerships, must be reviewed by independent legal and financial advisers. These projects will also have to be made public for consultation prior to procurement.
Public-private partnership projects will not be considered if those projects are worth less than $15 million.
Cayman will not borrow fund capital expenditure unless the project will yield sufficient revenues to pay for debt service; or if the government has enough surplus funds to cover the costs of repaying debt.
Cayman will comply with all principles of responsible financial management by the end of the 2015/16 fiscal year (30 June, 2016).
The government will produce timely audits and account statements for all budget years.
If the Cayman Islands breaches of the Framework for Responsibility, it must present a plan to correct such a breach to the UK Secretary of State, which will be reflected in the government’s annual Strategic Policy Statement.
Government estimates show the Cayman Islands’ total public sector debt will remain well above $500 million by mid-2014, despite payments of more than $30 million per year until then.