CashNews.co
(CNS): Premier Juliana O’Connor-Connolly has said the Framework for Fiscal Responsibilitywhich gives the United Kingdom the power to veto the Cayman Islands budget if it falls foul of the strict criteria, should be reviewed. She said that this jurisdiction needs to be more financially independent with “our own internal FFR” and described the UK’s power as a “big stick”.
When Wayne Panton was premier, he also raised this issue, suggesting that the FFR should be reviewed because the cap on debt could prevent this country from making the necessary investment in climate resiliency.
The FFR is a set of metrics put in place back in 2011, when Cayman was facing significant difficulties with public finances, to give the UK ultimate control over government spending and avoid any of this jurisdiction’s debt liabilities.
However, the criteria are very strict and severely limit the country’s ability to borrow. Panton described the criteria as “too conservative”, which will make it difficult for future governments to invest in the type of resilience that will be needed as climate change impacts the country more and more.
Appearing on Radio Cayman on Wednesday after returning from the Commonwealth Heads of Government Meeting (CHOGM) conference in Samoa, O’Connor-Conolly noted that Bermuda doesn’t have the same limitations on its public finance act and said Cayman had proven itself over its fiscal prudence.
She said that she would prefer to see the country adopt its own internal FFR. Cayman had “to grow up”, she said, and officials should not have to go thousands of miles, cap in hand, to negotiate over the restrictions.
“Having an FFR in place… means there is an inherent distrust in our people, that we are not capable of handling our own finances, yet each year… we have a surplus… There are aspects of the FFR that… can be very beneficial that I would like to see entrenched, but in our own domestic legislation. I don’t think we should have a big stick over us.”
She said that if it did not work, it would be up to the voters to deal with that. Although she accepted that the FFR provided financial stability, she said that as the country matures, this was one thing she wanted to look at more and encourage Caymanians to have more “belief in ourselves”.
However, since taking up the position of premier, O’Connor-Conolly has been widely criticised for the amount of spending in the 2024/25 budget, in particular, the development of a costly new high school on Cayman Brac. The existing facility, the Layman E. Scott High Schoolcurrently has just 155 students.
In her role as minister of finance, she has also added to the borrowing over the next two years and is currently going through the process of soliciting a bid for a new $150 million loan to cover the costs of capital projects this year and next.
Following the recent Finance Committee meeting in parliament earlier this month, when the government steered through additional spending of almost $52 million this year, the anticipated surplus in the original budget of $44.5 million has been reduced to $16.5 million.
While the government remains within the current limits of the FFR, there are concerns that it is now sailing closer and closer to the winds of a potential deficit.
