We refer to the article on page 1 of the Caymanian Compass of 5 December 2005 in which McKeeva Bush ‘slams spending plan’.
He said the Government’s proposed spending of $233.6 million in capital projects over the next four years ‘leave the country in big debt. Future generations are going to have to pay for this.’
This is good advice. We wrote similar advice to Mr. Bush when he went on Government’s spending spree for three and a half years up until his Government was removed last year.
Why did not Mr. Bush accept and follow his own advice rather than leaving massive debt, which as he says ‘future generations are going to have to pay for …’
The present Government has put emphasis on core Government borrowings, which the estimated actual for 2004/5 was $164 million and for 2005/6 forecast at $211 million. The 2005/6 Budget Annual Plan and Estimates shows that the entire public sector debt, ie including the statutory authorities and subsidiaries, was $271 million in 2004/5 to rise to a forecasted $348,809,000 in 2005/6. Added to this is the unfunded pension liability of $130 million.
Therefore total estimated borrowings and pension liability total $401 million in 2004/5 and in 2005/6 are estimated at $479 million. It appears that this may not include guarantees given by Government to the statutory bodies and subsidiaries which are contingent liabilities.
We do not know the interest and payments of principal on the $348 million of total debt but we believe that the percentage of recurrent revenue to service those payments must be close to if not over ten percent (the accepted maximum) (10 per cent) despite the UDP’s extension of the payment period to 15 years or more.
Statutory authorities and bodies should only be created sparingly as they are a way for the minister responsible, normally through a board of directors or equivalent, to have influence in the running of the authority, its finances and staff.
A minister cannot do this under our Constitution but if we get full internal self Government (full ministerial Government) the minister gets this power.
This excessive power to politicians contributed to wrecking other Caribbean islands’ economies.
The entire Public Sector debt in 1992 was $57.1 million (includes $16.7 committed but not then drawn), in 2000 was $107.4 million, in 2001 was $128.2 million and now forecast for 2005/6 at $349 million.
This clearly shows that 1992 to 2000 the total Government debt of $107.4 million had only increased by $50 million or $6 million each year. From 2001 to the forecast for 2005/6 the increase will be $242 million or $40 million each year.
A large part of this increased debt was borrowed by the UDP Government with a large increase in statutory bodies’ loans.
The debt up to the year 2000 was medium term 7-10 years (two Governments could repay). The UDP Government changed its new borrowing to long term 12-20 years making future generations pay. (It takes four Governments to repay)
When Mr. Bush talks about ‘leave the country in big debt; future Generations are going to have to pay for this,’ he knows. He contributed to it.
The PPM Government has started on heavy borrowings, which will add further burdens on future generations.
John McLean
Truman Bodden
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