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.”