The Cayman Islands’ annual budget and its four-year fiscal plan for the territory has gained approval from the British government, clearing the way for a promised late-September debate – and much-sought approval – in the Legislative Assembly.
According to a statement issued Tuesday by Cayman’s ruling People’s Progressive Movement government, the U.K. Foreign and Commonwealth Office late last week gave the nod to the overseas territory’s four-year fiscal plan only one week after its Aug. 15 submission to London.
“I am extremely pleased that we are able to put behind us the uncertainty and anxiety that has attended the budget process over the past four years,” Cayman Islands Premier Alden McLaughlin said. “The country now has a four-year plan that provides certainty and stability to the government’s future fiscal planning and provides challenging, but realistic targets.
“My government can now look long term at its plans and projects rather than having to focus on short-term, short-sighted annual plans,” he said, alluding to sometimes-piecemeal, often-episodic financial initiatives under previous governments.
The quaternary plan, according to the statement, outlined fiscal targets for the next four budget years “and the strategies that will be employed to achieve them and gain compliance with the fiscal ratios contained in the Public Management and Finance Law (2012 revision).
“The plan favors an initial aggressive reduction in public-sector operating expenditure, significant increases to government’s cash reserves, no new borrowings, continued repayment of existing loans and zero inflationary revenue measures,” the statement read.
It provided no details, however, of how the administration would achieve its goals, promising full details “when the government presents the 2013/14 full year budget to the Legislative Assembly in September.
“The plan shows the government as the facilitator of economic growth through its support for various private-sector initiatives, does not propose any major capital-expansion programs and is not dependent on any revenue-measure packages or ‘silver bullets’ to be successful,” the statement continued.
The Legislative Assembly resumes on Sept. 4.
In both the assembly in late June and during a PPM National Council meeting on Aug. 10, Finance Minister Marco Archer discussed the interim budget – set to expire on Oct. 31 – and predicted an overall 2013/14 program comprising a $542 million operating budget, $640 million in revenues and a $46 million overdraft facility, promising no “significant new revenue measures.”
In a letter to the premier dated Aug. 22, Mark Simmonds, the U.K.’s overseas territories minister, approved the latest budget outline, welcoming the Cayman Islands government’s commitment to fiscal planning and achieving key debt ratios by the end of financial year 2015/16, as detailed in the Framework for Fiscal Responsibility.
Mr. Simmonds also approved “the top-down multi-year approach to fiscal planning taken by the government,” the statement read, which he said, “will be a powerful tool for sustainable public expenditures and revenues.” Mr. McLaughlin expressed his satisfaction with the outcome and Mr. Simmonds’s remarks.
“It demonstrates the positive results that can be achieved when processes are followed and a logical, credible and consultative approach is taken toward fiscal planning,” the premier said.
“Whilst the government has not made many public utterances about the ongoing work to develop this plan, its culmination follows weeks of meetings between the elected government, the Ministry of Finance and key stakeholders across the entire public sector,” he said.
“From those meetings, a fiscal plan was devised that is credible, sustainable and provides the necessary trajectory for us as a country to meet the fiscal targets outlined in the Public Management and Finance Law,” he said.