Ambitious capital spending by Cayman Islands government
Cayman Islands Leader of
Government Business,
Kurt Tibbetts
Friday, December 2, 2005
GEORGE TOWN, Cayman Islands The Cayman
Islands government intends to spend $235.6 million (US$282.7 million) in
capital projects comprising mainly new schools, new office buildings, and
equipment for police by June 2009, the end of its fourth fiscal year.
Leader of Government Business, Kurt Tibbetts, said in the Legislative Assembly
Wednesday that the money will be raised partially by borrowing $182 million
over the next three years beginning July 2006. Added to this projected loan is
$63 million in credit financing already in the 2005-2006 Budget approved late
October, taking the total borrowing figure to $245 million.
“This four-year capital programme is the largest in the history of these
Islands. While it is ambitious, it is also essential,” Mr. Tibbetts said and
added, “That programme reflects the continuation of the various capital
projects announced as part of the 2005-2006 Budget including the three new
high schools, a new primary school in George Town, a fire station in Bodden
Town, additional Police assets and the ongoing development of the arterial
road network.”
Money is also to be spent on construction of
a new Court House and Government accommodation buildings.
Announcement of this ambitious spending plan by the Leader of Government
Business came during an address to Parliament in support of a Strategic Policy
Statement he tabled in the House that morning. The SPS is a document legally
required to be tabled by 1 December of each year outlining the philosophy
behind expenditure and revenue measures that will be detailed in the budget
for the following fiscal year beginning 1 July.
“The Government takes the decision to introduce the new revenue measures
reluctantly but realistically,” Mr. Tibbetts said in explaining the policy
position behind the capital spending. “It is clear that Caymanians strongly
desire better education, more resources for the police, better roads to reduce
traffic congestion, and more professional government accommodation. These
things come at a price and we believe that residents are prepared to pay a
little more to obtain these extra services.”
The SPS that Mr. Tibbets put before the House continues to be guided by the
same 11 outcome goals as the previous one which set outlines for the 2005-2006
Budget: deal with the aftermath of hurricane Ivan; address crime and improve
policing; improve education and training; rebuild the Health Services; address
traffic congestion; embrace Cayman Brac and Little Cayman; conserve the
environment; strengthen family and community; support the economy; open,
transparent, honest and efficient public administration; and sound fiscal
management. The Leader of Government Business
indicated that the cost of the loans and management of the new schools will
increase Government’s operating expenses by 11 per cent during the next three
years, taking expenditure beyond what current revenue can handle.
He said that in order to meet these extra costs Government will introduce $25
million in new revenue measures during the 2006-2007 financial year, and a
further $3 million the following year. “To
date no decision has been made on the specific revenue measures to be
introduced,” Mr. Tibbetts explained. “That detail will be presented in the
budget when it is presented next April. However, in deciding on these measures
the Government will carefully consider the likely economic impact the measures
will have”. Consistent with an undertaking in
the 2005-2006 SPS, he said that the new revenue measures will be used only to
fund obvious increases in Government services.
He gave the assurance that this borrowing by
the administration is within the ratio of affordability set out by the
Principles of Responsible Financial Management within the Public Management
and Finance Law. “An operating surplus and
positive net worth balance is targeted throughout the three-year forecast
period. In addition the level of cash reserves is maintained at or above the
required level throughout the period.” Also
he said that the net national debt ratio will remain at approximately 60 per
cent, which is below the maximum of 80 per cent stipulated by law.
Another loan consideration set by the Public Management and Finance Law is the
borrowing ratio that is allowed a maximum of 10 per cent of the total public
debt inclusive of interest payment. Mr Tibbetts said that in the 2008-2009
Budget this borrowing ratio goes beyond the limit to 10.2 per cent.
“However the level of non-compliance is minor at only 0.2 per cent and the
Government intends to manage its borrowing programme after 2008-2009 so the
borrowing ratio returns to 10.0 per cent or below.”
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