Premier Wayne Panton says he has approached the United Kingdom to request changes to the borrowing limits set out in the Framework for Fiscal Responsibility to assist Cayman with challenges related to climate change.
Panton, who is also finance minister, confirmed this to the Cayman Compass following queries on the status of the FFR, which he said remains “unchanged” at this time.
The premier said he is not advocating for a general increase in the debt servicing ratio, but is looking to the UK to give Cayman and other overseas territories some “fiscal space” to deal with climate change issues.
“I am merely seeking to discuss some limited amount of fiscal space if it is needed to facilitate mitigation or adaption measures or to build resiliency in the climate change context. As you are no doubt aware, we are seeing signs of those impacts here and around the world and our beautiful islands have vulnerabilities in line with many Small Islands Developing States,” Panton told the Compass.
The increased figure being sought by the premier and the measures he mentioned were not released to the Compass.
Back in 2016, the Progressives, led by then Premier Sir Alden McLaughlin, sought to make changes to the FFR as that administration was making plans for a cruise berthing facility.
That project was abandoned following public outcry.
The appeal from Panton for an increase in borrowing limits comes against a backdrop of the premier telling public sector heads to help cut nearly $50 million from the collective budget last month and his declaration recently that the country is not broke.
The FFR is a financial management regime that was devised by the UK government in a bid to strengthen the fiscal performance of OTs and enhance the transparency and accountability of their financial decisions.
The Cayman Islands government incorporated the framework, in its entirety, in the islands’ Public Management and Finance Act.
Panton, who recently met with overseas territories leaders in Miami, confirmed that changes to the FFR was also discussed at that meeting.
“I cannot say what the UK’s position is on my comments yet as I indicated that I did not require an immediate answer in light of the fact that we are meeting twice this year,” he added.
The Joint Ministerial Council met in May and is expected to meet again later this year.
Panton said he raised as “a matter for discussion” at the last council meeting, on behalf of all overseas territories that have the FFR provisions, “that costs incurred to address mitigation/adaption and resiliency in respect of climate change impacts (only) should be given special consideration if it did not otherwise fit within our very conservative debt servicing ratio”.
In Cayman’s case, he said, “this might be done by way of an amendment to the [Public Management and Finance Act] but not necessarily so”.
Under the Framework of Fiscal Responsibility and the Public Management and Finance Act, Cayman’s borrowing must not exceed 80% of government’s operating revenues and the cash reserves (or liquid assets) ratio, and its account balances, at their lowest level in a fiscal year, must be sufficient to cover 90 days of operating expenses.
The debt service ratio – which measures the entire public sector’s debt service costs (both principal and interest payments), as a proportion of central government’s revenue – cannot exceed 10%.
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