Premier Juliana O’Connor-Connolly has called for Cayman to break free of the “economic handcuffs” imposed by the UK and be given more control over its own finances.
She said more decisions on spending should be taken locally rather than politicians having to go “cap in hand” to the UK.
Speaking on Radio Cayman, the premier said she would like to renegotiate aspects of the framework for fiscal responsibility, known as FFR, which limits how much Cayman can borrow to finance major projects.
The current rules, designed to ensure Cayman runs balanced budgets, can make it difficult and time consuming to fund and execute major capital projects, she explained.
Efforts to use public-private partnerships for big national development project, like the George Town landfill redevelopment, have largely failed.
Already budgeted projects on the horizon include a new $50 million school in O’Connor-Connolly’s Cayman Brac constituency. Meanwhile, the landfill, a cruise pier, a cargo port and a highway extension to the eastern districts remain among government’s long-debated capital projects.
The Cayman Islands currently has to abide by financial rules laid down by the FFR, which requires it to be selective and creative about how it manages and finances these projects.
The rules include benchmarks for how much cash is held in financial reserves and restrictions to ensure the annual cost of servicing public debt does not go beyond 10% of annual revenue.
The framework was devised by the UK government in a bid to strengthen the fiscal performance of overseas territories, including the Cayman Islands, as well as improve the transparency and accountability of financial decisions.
‘Economic handcuffs’
Speaking on ‘For the Record’, O’Connor-Connolly said, “I think that Cayman has proven itself that we can have our own internal FFR and that would be the preferable route that I’d like.
“As we become more financially independent, we shouldn’t have to go thousands of miles, cap in hand, because having an FFR in place and agreeing with it means that there’s an inherent distrust amongst our people that we are not capable of managing our own finances.”
Talking to host Orrett Connor, O’Connor-Connolly described the FFR’s rules as “economic handcuffs” and said that while it had been useful in the past, the barriers that it put up when it came to accessing finance needs to be removed.
She added that changes to the FFR could be made incrementally and that the financial rules wouldn’t be ditched altogether, saying, “There are aspects of the FFR that I think can be very beneficial and I would like to see entrenched in our own domestic legislation [but] I don’t think we should have a big stick over us.”
O’Connor-Connolly’s predecessor Wayne Panton tried to loosen the rules governing the FFR last year when he asked the UK to change the borrowing limits.
At the time, the former premier said he was not advocating for a general increase in the debt servicing ratio, but was looking to the UK to give Cayman and other overseas territories some “fiscal space” to deal with climate change issues.
Accessing finance
Next month O’Connor-Connolly will travel to London for the annual meeting of leaders of the UK Overseas Territories Association.
During her recent visit to Samoa to attend the Commonwealth Heads of Government Meeting, the premier spoke at a session on ‘Reducing Barriers to Trade’ and said it was hard for the Cayman Islands, like many other small island states, to access finances, especially after Brexit.
“One of the barriers that would hinder trade is that there’s not a standardisation from a global perspective as to how Commonwealth countries can access finance, and for us, a small island state, it became even more difficult with Brexit,” she said.
“That’s one of the items which came up with the Caribbean leaders and which we will put on the agenda when we go to JMC [Joint Ministerial Council] to talk about accessing financing post Brexit, so I’m hoping that I’ll have a happy story to bring back to Cayman.”
‘The people of the eastern districts are suffering’
Closer to home, the premier said that environmental impact assessments (EIAs) should not be an excuse for a project not to move forward.
Speaking about the plans to build the East-West Arterial extension towards East End, she said, “There are a lot of road needs in Cayman and some people are not supportive, but when you come from the East End district and you sit two or three hours end to end … yes, you need an EIA. I’m all for that, but the EIA should not be an extended intellectual, academic exercise.”
She added, “I’m not allocating blame for it, I’m just saying the road is needed, let’s get the road and whatever needs to be done, if we need to pay more people to work overtime to get the EIA or get the NRA to do whatever they need to do. The people of the eastern districts are suffering.”
“Luckily,” she added, “we have sufficient funding for that. If the EIA come back and say it has to be like the Tampa elevated causeway, then we don’t have the money … we have to have that balance.”
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Less inflammatory language please madam Premier. The UK may view this as exploring the idea of independence… not in my lifetime please!
Maybe you should stop blaming the UK for looking out for our best interest, and respectfully managing you on our behalf from those thousands of miles away as our mother country. The UK is only protecting the national interests of the Caymanian people both economically and civilly from ourselves or our Governments by standards and practices that will not let us be lead into financial follies by our own Government(s). You want more funds unrestricted? Then maybe you should take a pay cut or work for free to fund these projects that you see that are so important to the Cayman Islands. The people of the Cayman Islands should be financially free of our own Government.
Instead of looking to borrow from banks and other countries the Cayman Islands Government should incorporate infrastructure and municipal bonds for projects that both locals and foreign persons and companies can purchase as investment vehicles and financial products and services from our Government. It’s astonishing to me why Cayman being this dynamic financial services hub and doing great economically has not yet created Government backed bonds, treasury bills and other securities for the market that go towards the funding of projects and infrastructure which is the Government borrowing from the people or public within our own jurisdiction. The Cayman Islands needs to seriously consider these financial products before looking to put us in debt with foreign entities or financiers that do not or never will have our best interest at heart.
Additionally, it not any member of our Government backing up our Cayman dollar or securing its pegged rate with the US. I don’t see any member of our Government as the Head of State. It’s not the Cayman Islands Government or the people taking any risks on their own except for in having to make the payments on loans, so, yes, I fully understand why the UK would employ restrictions on borrowing as they are the ones that are our head of state and taking the risks on your and our behalf. Must be nice to have a mother country peg and secure our dollar in this way. No other country or BOTC has this coveted privilege. Our dollar is not subject to inflation when we borrow and for the UK to secure our currency and guarantee it from devaluation or fluctuating due to borrowing and debt (like Jamaica e.g.) we must adhere to certain restrictions on borrowing which currently is set at a limit of 10% of our GDP. Furthermore, this economic boom may not last too much longer or sustainable into the indefinite future. Caymans GDP may not be as high as it us now as 5 years from now, and interest rates may soar in the next couple of years which will make it hard for the Cayman Islands Government to pay its bills, wages and to pay on loans in the future. We as a nation have to be very shrewd, think responsibly, act more conservatively and do not be lead into financial black holes of which the persons who lead us there will take no responsibility or accountability for.
With the recent give aways and economic disaster on the horizon with the projects slated, the handcuffs i.e. FRR should remain. Actually, the people should also have a mandatory input on capital projects after a certain threshold. Sorry we cannot allow you to have a signed blank check. We have seen the history of run away politicians.
I think the way the current Government is spending money and what it is spending it on is exactly why we need the FRR! “FFS” is all I can say! Yes, you can translate that one for yourselves!