Gov’t owes more ‘balloon’ debt payments

A review of the Cayman Islands government’s bond obligations over the next several years shows the public sector will owe a substantial amount of ‘balloon’ or ‘bullet’ debt repayments prior to its $261 million payment in the year 2019.  

According to records reviewed by the Caymanian Compass, the government has five separate ‘bullet’ loan repayments due between mid-2015 and early 2016 for borrowings from the Cayman Islands Development Bank.  

A ‘bullet’ or ‘balloon’ debt payment is one that is owed all at once, rather than over a period of years. The government’s 2009 bond issue is one such example where $261 million is due in November 2019.  

The five bullet loans taken out on behalf of the development bank have maturity [due] dates listed as: April 2015 ($20 million), June 2015 (two payments totalling $11.8 million), July 2015 ($5 million) and January 2016 ($5 million). That equates to $41.8 million due between the last quarter of the 2014/15 government budget and the first half of the 2015/16 budget.  

The first payment of $20 million is due two years from now.  

The development bank, founded in 2002, is a statutory authority of the Cayman Islands government. It’s primary function, according to its website, is to “promote, facilitate, mobilise and provide financing for the expansion and strengthening of the economic and social development of the Cayman Islands through lending”.  

The agency is mandated to lend to anyone of Caymanian birth or status who qualifies for a loan in Grand Cayman, Cayman Brac or Little Cayman.  

With regard to the country’s ongoing debt repayments, the United Kingdom has advised the establishment of a ‘sinking fund’, essentially a cash savings account where accumulated funds are used to help pay off debt in future years. However, concerns were raised last week by Deputy Premier Rolston Anglin, an accountant by trade, about whether that amount of money could be removed from the local economy. 

“I think we just have to be honest with the public,” Mr. Anglin said. “There isn’t any real possibility that we’re going to be able to have that money extracted from the economy.”  

The development bank and the 2019 debts are the only balloon repayments identified on government’s list of ongoing debts.  

Right now, the Cayman Islands government is paying more than $30 million each year to service its debt repayment requirements.  

0
0

9 COMMENTS

  1. Well Mr Anglin, how I see it there are so many Mr and Mrs FIX IT running for election, let them FIX IT.
    My suggestion would be to allow you guys another four years to complete what you began. Hauling up and replanting is not going to do anything for the tree without another four years nursing. All of you need a chance to complete, and it is the only way I see forward.

    0

    0
  2. Its going to be a really big job and someone will have to do it. I do not see trainees solving the problem the country is in now. Sincerely we need those who know. If Cayman does not see this then they are plain selfish. What are we going to do with new faces to learn at a time like this. Cayman we have a time where the know how, must complete this job.

    0

    0
  3. Pretty much the same bunch has been kicking the debt can down the road will continue to do so because they want to get re-elected !!
    It’s a flaw of today’s government party politics !

    0

    0
  4. Hunter I disagree. The PPM raised/allowed the debt to grow from 246m to 432 (186m) and the UDP from 432 to 736m (304m)= core and non core debt.

    The govt can not currently pay its own pension plan- it is short by 186m!!! The pension plan is deemed to be further short using old actuarial and investment models. Why no revisions? Because it would be short by ALOT MORE.

    The turtle farm loses 11m annually and Cay Air 20m.

    Why is it that the civil service gets 12% pension and medical that is FULLY COVERED while industry gets 10% and the employees cover half.

    The govt is losing between 50-80m annually (if you add it all up and do not selectively report items in isolation).

    Lets all wake up. The same old same old is not going to cut it. Time is on the clock and the country needs a group that can firstly stablize the situation, then mobilize (painful) action, before the country loses its autonomy.

    Enough rhetoric from past politicians. ANYONE can do better than what has been provided for the past 8 years. We need meaningful change.

    0

    0
  5. The way I see it, is that the Government nor the people are willing to make the hard choices that it will take in order to get out from under this. It shows in how thing over the past few years have turned out for instance the fight against projects that would have brought money in or even the negative reaction to divesting things like the Sewer Authority and Administration building hell people didn’t even want to close or sale the turtle farm. I can understand all the concerns about not changing the environment and the Caymanians people pride when it come to the way thing were and are. But the sad fact is that something is going to have to give eventually and when the bill collectors come knocking at the door you may not like the things that may be forced of you at the time, such as hefty direct taxes or big rich paying the debt for you and taking control..

    Proud people can still lose their home if the right choices are not made early enough that will allow them to keep it. There are plenty of examples in this world of people who lived high on the hog for a lot of years only to eventually hit rock bottom because they didn’t prepare. Read the article below it’s a great example of a people who thought they had it all..

    http://www.nbcnews.com/id/46883766/ns/us_news-life/t/tribe-billion-debt-after-casino-bonanza/

    0

    0
  6. There is a core identity issue here where most voters expect to get things for free and the politicians know this and pander to this nonsense.
    Non payment of pensions is standard practice by employers in Cayman and until someone gets hit with a serious fine or heaven forbid goes to jail nothing will change.
    Good luck thinking the normal Caymanian will ever pay an income or property tax.

    0

    0
  7. Revenue generation is not the problem- govt expenses, mismanagement of business lines, and corruption are. The latter is easily fixed- do not vote for anyone remotely tainted.

    If elected officials committed to reducing their budgets by say 7.5 percent (as industry has over the past 3 years), give (for free!) the turtle farm away to an outfit that knows how to run it honestly and properly, govt employees commit to reducing their pension/health care in line with industry (10 percent and pay their proportionate fare share of 5 percent), raise the govt employee retirement age to 65 (in line with industry), revamp the educational system using the 10,000 cost per Caymanian student for a much better product (or just send them to private school) etc etc

    There are lots of ways to balance your checkbook before expecting more from us which just hurts the country and our people at the end of the day. Industry has had to do more with less- now it is govt’s turn before we are all ruined.

    Who is willing to do that? Please come forward.

    (past candidates that have failed previously need not apply)

    0

    0
  8. I certainly agree that no newbies should be allowed to be in the next government as it will be a very difficult situation for any new government. However, I also don’t agree that the likes of Cline Glidden, Rolston and his antics, and do-nothing Julie should be the ones to attempt it. It is McKeeva Bush’s ideas that seem to be coming to fruition and being successful. There is a surplus budget and tourism is at an all time high and Bush was at the helm of both of those areas. The Shetty hospital is being a good source of work too so let HIM continue what he started. I certainly don’t believe that the PPM will change their ways being so closed minded and big spenders. While the high schools and roads look nice look at the situation they put us in. We are one serious disaster away from bankruptcy because of them!

    0

    0
  9. Eye- just to be clear because we are being misled.

    There is NO surplus budget. Revenue has been historically around 500m while expenses have been running above 600m. How does one create a surplus from that? You would need greater than a 20 percent swing from either side and that change would be dramatic. You would notice (and I am not talking about a few garbage trucks they can not afford to fix).

    The government LOST approx 80m last year and thus far this year their expenses are over budget. There has been no windfall increases in revenues so at the very basic level it is impossible achieve a surplus.

    I have heard the govt promoting that they have paid down the debt by 13m (but what they leave out is the other side of the transaction that in fact they borrowed another 80m more just to maintain status quo.

    Do people not see that the UK Govt is becoming more actively involved because we are forcing them to?

    The political veterans are seriously compromising the country and the future of our kids.

    I don’t doubt that they do not mean to or that they fully grasp the severity of the problem. The borrower is servant to the lender. Always has been always will be and no sugar coating is going to change that.

    There are a number of candidates who have financial backgrounds but yes are political newbies. There are a number of candidates who are not corrupted by the system but are also political newbies.

    At the very least they can not do any worse. Yet there is a high probability that they will do much better.

    The answer appears crystal clear to me.

    0

    0

Comments are closed.