Finance minister: Cayman must consider privatization

Cayman Islands Finance Minister Marco Archer said Friday that the local government must consider privatization of at least some of its existing services as it struggles to bring public sector finances within UK-required limits by 2016.

Mr. Archer said the budget numbers, particularly those involving government’s statutory authorities and government-owned companies, could be used to make a case for privatization.

He said, for the current 2013/14 fiscal year, 18 percent of government’s operating expenditure, or $100.1 million, will go to purchase outputs and services from the statutory authorities and government-owned companies. Nearly 50 percent of government’s capital [construction] expenditures, $24.6 million, will go to statutory authorities and government-owned companies.

“Collectively, the [statutory authorities and government-owned companies] are expected to generate a net profit of $5 million dollars during the 2013/14 fiscal year,” Mr. Archer said.

However, the minister indicated the administration would not support random privatizing of certain public sector services without “careful consideration” and that the government was only taking a “global” look at it presently.

“One example [of privatization] … occurred during the 1960s when the government privatized electricity generation and distribution, essentially allowing for the creation of what is now our sole provider of electricity, Caribbean Utilities Company,” Mr. Archer said. “Therefore, your view as to the pros and cons of any proposed privatization of essential public services in the Cayman Islands may well depend on your view of CUC.“

This last comment elicited some groans and laughs from the 100 or so attendees at the government professional development conference, held throughout last week at the Westin Resort.

Speaking before the group on Friday morning, he said a number of public sector entities are often discussed for potential privatization. The top four on the list include the Water Authority, Cayman and the related sewerage system, the Cayman Islands Airports Authority, the Cayman Islands Port Authority and the Cayman Turtle Farm.

Others, less often mentioned, but still under discussion include the Public Works Department, the National Roads Authority, government schools, hospital and ambulance services, postal services and solid waste services.

“Most of those examples include statutory authorities and government-owned companies which provide a wide variety of services to the general public,” he said. “[They are] probably the best opportunity for privatization in the Cayman Islands.”

Mr. Archer also mentioned that statutory authorities and government-owned companies have currently amassed an outstanding debt of $136 million at “a time when the country faces enormous financial challenges.”

“I am willing to consider the privatization of some government assets on the basis that … privatization may reduce some government costs,” he said. “The process must be managed carefully to ensure that we create opportunities for employment, ownership and wealth creation for current and future generations of Caymanians.

“Given the relatively small population of our islands, it is very much possible that significant, indigenous local participation in any privatization efforts would be limited. This could compromise the desired outcomes as ownership and income earning may be transferred outside the Cayman Islands.”

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2 COMMENTS

  1. A Global View?

    The systematic destruction of our countries economic, the elimination of due process by passing laws that violate peoples rights to fair and legal treatment by enforcement agencies, a law to make illegal wiretapping legal,the privatization of more govt held public services will be another nail in the coffin of our country.

    Without a consumer protection act or any form of Anti Trust laws…CAYMAN RESIDENCES WILL BE BASICALLY SCREWED, by the big developers and money bags..and worst of all by our GOVT and their don’t care attitude!

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  2. Before you introduce such a retrograde to the Cayman people, why not qualify that statement by pointing to the need for a consumer protection agency.

    What will the private sector do that government employee cannot do, except increase the price on our heads. As leaders it is your responsibility to get your staff up to speed, we placed all of you in charge to work and get paid to run these authorities, not to sell out to foreigners. It sickens me to see Cayman being sold out right before my eyes. Caymanians, we built our airport, we developed our electric company, port authority, and everything else that we put in the trust of these people that now want to sell them.

    Instead of soliciting a payroll tax that could have been used to support our infrastructure, they would rather sell Cayman.. Think of it Cayman, all they want is money to play with now, and we will suffer the price increases.. People, many governments subsidize their citizen’s goods and services in order to keep them employed. So if government sells everything to the private sector, what we need them for.. We don’t have an army, navy, or airforce, the police is not even under government management.

    Lets look at CUC, how many government officials had shares in CUC, what did they do with the money they got from the sale. How long did the original purchaser of our utility company hold the asset before it was again sold, and what was the profit earned from the sale. Remember when you sell a company like our electric company which had no competition, we as captive consumers would have been part of the sale.. If you are selling an apartment building full of tenants, VS an apartment empty, go figure.. Those authorities are our Army, Navy and Airforce, make them efficient and leave them be. Please!

    Well if you don’t believe my point, lets look at the ministers suggestions.

    (The process must be managed carefully to ensure that we create opportunities for employment, ownership and wealth creation for current and future generations of Caymanians.)

    He disqualifies this mission statement in his closing remarks.

    Given the relatively small population of our islands, it is very much possible that significant, indigenous local participation in any privatization efforts would be limited. This could compromise the desired outcomes as ownership and income earning may be transferred outside the Cayman Islands

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