Opposition leader Roy McTaggart has criticised government’s plans to borrow up to $350 million over the next two budget years to fund capital expenditures and infrastructure.
Responding to the presentation of the 2022/23 budget, McTaggart said in Parliament on Monday: “I have concluded from my initial examination of it that it is not in the long-term interests of the Cayman Islands. Sound finances to support economic growth seem no longer to be the guiding principle for budget setting.”
He said, “The only guarantee in this budget is that we will end this period much deeper in debt, while significant risks to our economy and government revenues remain unaddressed.”
By failing to think through the long-term consequences of the choices they are making, and by “playing fast and loose with the government finances”, he said the PACT administration was exposing the Cayman Islands economy, its businesses, and its people to considerable future risk.
New debt would mean that by the end of the budget period, government debt would spiral back up to around $400 million, the proportion of debt to government revenue would nearly double and the debt servicing costs would be higher by a third.
Although much of the new debt will come from a line of credit that the previous government set up, McTaggart said, this was intended as a contingency, much like an insurance policy, that would only be accessed if “it was absolutely needed” but “not to be used for a spending spree”.
And while the budget does not include new fees or taxes, new debt would be a burden for future generations.
“That is not a path that Cayman should be treading, not just for reasons of intergenerational fairness, but because it is unsustainable,” he said.
The opposition leader also criticised Premier Wayne Panton’s budget address in which he outlined that Cayman’s middle class and the Caymanian dream was under attack by widening inequality and growing wealth disparity.
McTaggart said he recognised many of the issues raised and agreed that economic growth alone cannot solve the problems.
But, conversely, without economic growth, government would not achieve its ambitions as it will not have the resources to tackle social needs, including income equality.
“The country must have a strong economy,” he said. “In this country, private sector investment is the driver of prosperity and economic growth, not government spending.”
McTaggart said the Opposition agrees that more needs to be done to spread the benefits of prosperity more evenly, and that COVID had made that even more imperative, but government actions should not stifle investment and growth.
“Levelling the playing field must not become an exercise in levelling down.”
The Opposition leader said he found it difficult to understand how the premier could accuse previous administrations of blocking opportunities for Caymanians through their economic policies, when Panton himself was part of some of these administrations.
McTaggart said there was a lot of continuity between the new government and the old government’s approach and the premier’s rhetoric should not mask that.
At the same time, McTaggart questioned whether the government could deliver on the heightened expectations that it raised and if its financial planning was robust enough to handle the risks and pressures on government finances on both the expenditure and revenue side as the COVID pandemic continues.
Related Videos
