Although the United Kingdom already has established a number of inroads into the Cayman Islands annual budgeting process, U.K. Overseas Territories Minister Mark Simmonds said the mother country would not be opposed to more input on financial matters.
“One of the things I’ve been discussing with the premier and his ministers…is whether the U.K. could do more to support the implementation of the budget, particularly as it relates to providing capacity in government departments to provide expertise in certain areas,” Mr. Simmonds said last week.
Mr. Simmonds cautioned that he wasn’t implying Cayman’s new government had done a poor job with its first budget. Rather, Mr. Simmonds said his technical staff in the U.K. was “quite impressed” with the budget proposal put forward by the Cayman Islands.
He said this allowed U.K. officials to turn around Cayman budget plans in “record time.”
Concerns about mandates
Enabling more British control of the local purse strings has led to concerns in recent years that the U.K. would mandate some form of direct taxation. Minister Simmonds said that was not going to happen.
“The mechanisms of taxation are a matter for the Cayman Islands government,” he said. However, budget concerns – particularly in the area of accounting expertise and completeness of government financial statements – have persisted for years in the Cayman Islands.
During a 2010 hearing of the Legislative Assembly’s Finance Committee, Deputy Auditor General Garnet Harrison explained, “When the submissions are made, those submissions are not very credible. We end up asking, ‘OK, can we really audit these things?’
“A lot of the problems that exist on the balance sheet… (are) with what is a receivable and what is a payable,” he told the committee at the time.
More recently, the government and associated authorities have done a much better job of turning in financial statements with quality data, according to a report last week from Auditor General Alastair Swarbrick.
However, for reasons that were left unstated in the report, the vast majority of the government financial statements turned in had not been made public.
Of the 41 financial statements compiled for the government’s 2011/12 fiscal year, including statements for central government entities and statutory authorities and government companies, 29 had been completed and audited. Only 12 of the completed reports have been made public by tabling them in the Legislative Assembly.
During the previous United Democratic Party government’s term, stringent budget measures contained in the Framework for Fiscal Responsibility were passed into law at the insistence of the U.K. Among the measures are a general restriction on long-term borrowing and a limit on the use of public-private partnership to fund government construction projects.
In addition, a budget review committee – chaired by Deputy Governor Franz Manderson – meets at least once a month to review government finances. A U.K. economic adviser sits as a member of that board.