For the last several years, we have all heard about the
“debt crisis” that exists within the Cayman Islands public sector.
We’ve heard many stories, accusations, and innuendos about
who is responsible for this problem and, unsurprisingly, we are hearing it once
again being bandied about on the general election campaign trail.
What we haven’t heard much about is what anyone is going to
do to address the ticking time-bomb that is the $261 million balloon payment on
the Cayman Islands public sector debt that comes due in November 2019. That is
just about six-and-a-half years away, which – in government time – really isn’t
According to Deputy Premier Rolston Anglin, who gave some of
his ideas on the subject last week, there will be no “sinking fund” established
to help pay off that debt. The country can’t afford it.
As of right now, and continuing through to the 2015/16 budget
year, the Cayman Islands will not be able to pursue any long-term borrowing at
all. If we, as a country, make an assumption that afterward all will be
hunky-dory and the UK will take its foot off the public sector’s neck with
regard to the government budget, we will be gambling with the future.
So, to sum up, big debt, no savings, possibly no borrowing
allowed. And we have to pay.
We realise to most people around the world, large debts run
up by governments became the norm in the latter half of the 20th century and
continued into this century. Nobody much minded because it didn’t touch their
lives. It was some vague problem that some vague government official would deal
We’ve now seen what happens when this world-view is applied:
Namely, Greece, Ireland, Spain and Italy. Ask any resident of those
once-wealthy European countries if they feel out-of-control government debt is
something that affects their daily lives.
This looming debt, in our view, is the first and foremost
issue that any new government needs to address. It can’t be put off any longer.