Gov’t revenue plummets to record low

| 28/05/2020 | 139 Comments

(CNS): Following a very successful start to the year and a bigger than expected surplus in the first quarter, everything changed in just one month for government revenues. Finance Minister Roy McTaggart reported on Wednesday that after spending $68 million but collecting only $23 million, a drop of $26 million on what was budgeted, government ran up a record-breaking deficit of $45 million in April alone.

“That is a very scary number,” McTaggart said, as he outlined the rocky road ahead for public finances at Wednesday’s COVID-19 briefing. “It surpasses any single monthly deficit that we have ever experienced in the history of this country by a very, very wide margin.”

As his ministry now works on re-forcasting the budget for 2020/2021, McTaggart said government had also “burned through 38.5 million of the cash reserves”. And he said the worst was yet to come, noting that government was facing the loss of a quarter of its revenue.

Depending on the success of the stimulus measures, revenues “could contract to between $632 million to $649 million for the year”, he said.

But the situation will be compounded by the fact that government is also increasing spending on COVID-19 related issues, from the acquisition of personal protective equipment to cash support for those in need. “With the increased spending required to manage the COVID-19 crisis, government could be faced with a deficit of $250 million,” McTaggart warned.

The earliest that government can reasonably expect to return to a fiscal surplus will be in 2022, and that is only if everything falls on the positive side of government’s proposed plan. As a result the ministry will be seeking access to a new line of credit and will be calling for submissions from financial institutions shortly to fund the half a billion dollars the finance minister believes may be needed.

“In light of the significant deterioration in government’s fiscal performance and in order to give the country the financial security and build the resilience that we need, Cabinet last week authorised the Ministry of Finance to issue a request for proposal for the establishment of a standby line of credit in the amount of $500 million for a period of 18 months,” said McTaggart.

“This line of credit will be utilized, or drawn down, only if we find ourselves in the unfortunate position of having exhausted all of the cash reserves available to us,” the minister said. He explained that Cayman may not need it but it was sensible to put it in place so the government would have quick access to money if it needed.

However, McTaggart estimated that government currently has enough cash in the bank to meet most of its expected expenses over the coming months until well into next year. He said both the Legislative Assembly and the Foreign and Commonwealth Office will need to approve this giant overdraft facility for government.

Despite the massive decline in government revenue last month, which will also be replicated in May, McTaggart remained optimistic that the implementation of government’s stimulus package and the resilience of the Cayman people will see the country through the coming months of fiscal chaos.

The minister said he remained committed to the prudent management of the public purse. He added that Cayman had become a beacon to the region and in the latest credit report from Moody’s last month, the agency upheld Cayman’s Aa3 credit rating.

“Prudent government planning has left the islands with fiscal space to deal with the economic impact of the coronavirus pandemic,” McTaggart said, quoting from the Moody’s report.

“Arguably, even the world’s largest debt rating agency has confidence in our little islands and our government,” he added.


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Category: Government Finance, Politics

Comments (139)

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  1. Anonymous says:

    Our colonial history refers to public sector workers as “servants”, while this has discriminatory undertones, it has largely been culturally accepted that public sector workers are servants of the people…

    CNS: The rest of this comment is posted here.

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  2. Anon says:

    Be careful what you wish for
    No Expats
    No Tourists
    No Economy

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    • Anonymous says:

      ….but you work in FINANCE or INSURANCE dontcha? Why you trolling for then about expats and tourist and the economy? Because thats all you know outside or your education/college diploma? Get a life bud this is the tropical beautiful Cayman Islands and we are proud people of our heritage. Now embrace!

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    • Anonymous says:

      Time for you to leave. We will do just fine without you trying to make yourself a necessary part of our society when we all know you are an expendible guest. You are kept for our amusement, do not forget that fact!

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  3. Anonymous says:

    8:44 Is it possible to have an income tax With out an Income!

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  4. Anonymous says:

    6:50 I would bet my left nut you have no family in NEW YORK!

  5. Anonymous says:

    9:53 just make your Pick!

  6. Anonymous says:

    Bahamas boarders are opening to tourism to help economy on the 1st of July.
    They found 40% of people surveyed want to travel asap due to being locked up in their home country.
    Maybe we should make sure we have a plan to get our tourism back before all the other Islands steal it away for good while we stay closed till there is a Vaccine.

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  7. Dan says:

    I have never seen such gross negligence in the use of public funds. Why are there four police officers stationed at a grocery store? Why are there helicopters patrolling empty beaches to find snorkelers to fine for social distancing in the middle of the ocean? How can anyone sit there wasting this type of money when there are people going hungry? This government should be disgusted by their behavior.

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  8. Anonymous says:

    You better pray that hurricane season passes without a major storm, or you’ll need more than Seymour’s prayers to avoid becoming the next Haiti.

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    • Anonymous says:

      Actually…. insured losses would bring in millions upon millions of dollars.

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      • Anonymous says:

        Actually make that billions and billions.

        With no loss of life that’s the best we could wish for at this moment.

        • Anonymous says:

          Maybe billions, but it would have to be a really bad Ivan-like hurricane. And with the upgrades made since Ivan (standing seam roofs, higher foundation base levels, etc) plus more knowledge (like knowing where not to leave your car) one insurer told me that even if another Ivan hit, insured loses wouldn’t be as high on Grand Cayman. But, I still agree with your point.

  9. Anonymous says:

    No faith in what this government will now do for Caymanians. None

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  10. Anonymous says:

    This is for the Deputy Premier….are we still paying for the lease on the parked aircrafts? Is the turtle farm in the Brac still being built?

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  11. Anonymous says:

    So why are civil servants still being paid at the same rate with less to do?

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    • Anon. says:

      Don’t paint all civil servants with same brush, some still work every day, 7.5 hours a day, there are still vendors to pay, work to do.

      I agree there are some who do nothing to justify their pay even during normal times but there are some who go over and beyond for what they are paid.

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      • Anonymous says:

        Agreed. Some civil servants have continued to work hard. Interestingly, I have some departments are more responsive than ever. But what percentage?

      • Anonymous says:

        7.5 hours a day? And some of them can’t be bothered to move faster or go above and beyond. I want a job that I only have to work 7.5 hours a day. What a nice life.

  12. Anonymous says:

    30Million to fight Covid, no deaths (that one guy doesn’t count he was gone before covid)

    Better if we handed out 30 million to the community? Well it is our money that CIG spend per say in the bigger scope of things.

    Whats 30million split with the 60k on island? $500 every person has spent.
    Reasonable number, but the long term impact could be much higher for each person.

    Life is priceless per say but the emotional damage on the community is starting to surface.
    Hope this doesn’t go on for much longer.

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  13. Anonymous says:

    Imagine the mess we would be in if the Government had their way and we had signed a 25+ year deal with cruise lines for useless dock like they wanted

    Come 2021 I don’t want to hear a peep from any PPM MLAs about any dock, concrete, wood or otherwise

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    • #PEOPLEPOWER says:

      Cayman will never be able to say thank you enough to the brave citizens and volunteers from CPR Cayman.

      Their commitment to Cayman demanding transparency plus the ability to united the public exposed the lies of Alden Moses Joey Austin McKeeva and the PPM led coalition government of national Unity. CPR saved this country from certain financial and environmental ruin.

      It proved that this government cannot be trusted and people must rise up instead of allowing the madness to continue.

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    • Anonymous says:

      I wouldn’t be so sure. Alden believes that construction is the best way to reinflate the economy.The current construction boom is going to run out when they finish the existing projects since there will be no demand for new build. What then? Why, lets build a new dock!

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    • Anonymous says:

      We need SIPL to come into full swing, some arrests, and charges, all-new Boards, and at least two new political parties comprised of non-conflicted thinkers from the private sector…for starters. It’s a lot. We all need to be singing the same tune for this to happen.

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      • Anonymous says:

        You were going good until you mentioned political parties 😂

        Cayman needs those like Trump needs Obama!

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    • Anonymous says:

      Seven mile/ West Bay Road smells like a Garbage dump or a sewerage system at many spots and sometimes like toxic burning fumes. Lump that in with your accolades of progress

      Our parks look abandon and we don’t even have a proper national park. We should have huge green fields like a golf course for people to ride bicycles thro and kids to run on.

      Instead we hear about iconic towers…

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    • Anonymous says:

      11:04 Preach!

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    • Anonymous says:

      Imagine the mess we’d be in if we had a whole fleet of commercial aircraft sitting idle on the tarmac gathering rust and corrosion and if we had spent 80 million building a new airport.

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  14. Deja Vu says:

    We have see t the same thing before in 2009 at the end of the PPM mismanagement of Cayman’s Finance.

    This is the legacy of Alden McLaughlin no real plan but lots of expensive projects as monuments to political egos.

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    • Anonymous says:

      EXACTLY! And then the next administration has to clean up only for him to blow it all again. UGH!

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      • Anonymous says:

        The next administration isn’t cleaning up anything. It will be filled with populist nitwits who have no idea how to run a government, but they’ll be good at spouting pro-Caymanian/anti-expat rhetoric. We’ll get more of Austin Harris, Kenneth Bryan, David Wight, Barbara Conolly, Bernie Bush and Eugene Ebanks. And maybe Julianna as premier. When people voted for single member constituencies because they were blinded by hatred of McKeeva, this is exactly what they voted for. As the saying goes, in a democracy, people get the government they deserve.

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        • Anonymous says:

          Spot on my brother!

          Single member constituencies for Cayman trumps all other dumb ideas that an idiot could dream up.

    • Anonymous says:

      Every election time, whomever is in power gets slammed, not saying Alden was perfect in this situation, but could you imagine the mess we would have been in if MacKeeva was in power?????

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      • Anonymous says:

        Or Julianna!

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      • Anonymous says:

        You mean like what he did after Ivan? Cancel Miss Caynan, cut civil service salaries, tried to sell govt building and other ways to cut govt expenditure? And I dont even like the guy but right now Im thinking he wouldnt be simply “burning through” our cash with zero plan to replace revenue or cut expenses!

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  15. Anonymous says:

    Lol. They better grant a lot of work permits and business permits to make up the deficit.

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    • Anonymous says:

      Sadly that’s exactly what they will do as it has always been a main source of income for the government.

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    • Anonymous says:

      8:27 Hell no. It is time to stop heavily relying on expats and do more for our people. It is also time to giving more credit to our financial industry and not rely so heavily on our tourism industry. Both are important but look at which industry is still able to function during this time…just saying. More plans need to be made and other revenues for successful income need to be examined.

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    • Not A EZ Road says:

      I don’t think so I just had 2 permits renewals refused and told to look for locals. Tell me this at the end of my only active project. I am a young caymanian and I am now being left 2 guys short just as we are told we could go back to work! And this was not a new hire but a renewal. Am all for locals as I now have 7 out 12 are locals working for me so I keep it balanced. Look for the idea that only locals must get a job to also impact small and mid size company’s. Smh

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  16. Anonymous says:

    People typically don’t plan their vacations at the last minute, the longer we wait to announce the game plan, the more reservations won’t be in Cayman even after we’re open.

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    • Anon says:

      Bahamas opening up July 1.

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    • Anonymous says:

      Alden has said that tourism will not open up until a vaccine is available or some new testing procedure is in place. Where have you been?

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    • Anonymous says:

      at 8:26 pm
      I don’t plan my vacations at all. I don’t spend hours on trip advisor asking hundreds questions that defy the very reason for a new adventure. I just get up and go.
      I wonder if we destroyed economies to save ourselves from, ON THE LARGER SCALE, a virus with 0.0% mortality rate that is easily destroyed by regular soap, what is going to happen when a really tough virus materializes?
      How human race has managed to survive for 200,000 years with no masks, sanitizers, distancing, vaccines and pills?
      This “new normal” is really “new stupid” is driving me nuts. It is not years to life that matters but life to years. I’ll take my chances and have no desire to extend my life by artificial means.

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  17. Anonymous says:

    It’s going muuuuch lower! Government needs to tighten its belt and reign in spending now. Of government needs to spend more on things to incentivize and create employment, but the continuing waste and ineptitude needs to stop now. We can not afford to be wasting a single dollar.

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    • Anonymous says:

      You mean like Moses Kirkconnell waiving the 13% tourist accomodation tax between April 1 and Sept 30 2020 while our borders are closed?

      The only persons that can possibly benefit from this are wealthy people who had the financial means to choose to sit out this pandemic in a $M beachfront condo. Who else does this help? Certainly not any residents or citizens as we dont pay that tax anyway.

      Time and time again, we see exactly who our govt looks to benefit and its definitely not Caymanians.

  18. Anonymous says:

    $500,000,000.00 on top of whatever, for who knows, and before SIPL gets teeth, and before we get woted out.

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  19. Anonymous says:

    Why pay civil servants 100% of their salary so that most of them can sit and home and watch Netflix all day. I don’t think we should pay them nothing, even the ones doing nothing, but cutting their salaries by 20% or 25% would be a reasonable step when our revenues are reduced so drastically. And… find something useful for those who aren’t working much to do – it doesn’t matter if they’ve got a PhD – if they aren’t being useful, find even something menial that they can do to help us through this.
    There’s no way, under the current economic model, for the government to get through this without reducing expenses. At some point, they’re going to consider a knee-jerk solution to changing the economic model through taxation. And that, folks, will be a worse crisis than Covid-19.

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    • Anonymous says:

      6;35. Exactly which civil servants are home doing nothing?

      Who you think has been processing work permits, building plans, safe guarding our children, collecting our trash, manning the isolation facilities, clearing the cargo, arranging the evacuation flights, purchasing the tests kits and medical supplies, drafting the COVID-19 regulations, operating the Courts, prosecuting our criminals, incorporating companies do you really think the financial services center can operate without the civil service, should I go on. Get your fact straight lets give these dedicated workers a raise.

      Yes I am proud civil servant who had been at work every day since March.

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      • Anonymous says:

        I wish I knew how many civil servants are running businesses on the side. I know a number who are doing that. We need to be honest with everyone.

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      • Anonymous says:

        Give civil servants a RAISE? In this climate and fiscal situation?

        That’s insanity.

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      • Anonymous says:

        LOL. One of my friends is a civil servant. He’s been sitting on his butt for two months playing dominoes, drinking beer and watching TV. He “works” about six hours a month with full pay. He’s hoping this lasts a little longer, and then he’ll use his vacation time to do more of the same.

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        • Anonymous says:

          I have several friends in CS who have admittedly done nothing while on full salary for 10 weeks now. No laptop and not a job that can be done administratively.

      • Anonymous says:

        Ummmm, hundreds if not thousands are doing nothing. Most applications that could normally be made cannot. They have e-mail and the lights are on, but no one is home.

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      • Anonymous says:

        Thank you 7:31. 6:35 shame on you. Just look at our teachers. Who have been teaching your children, while taking care of their children and delivering lunches to children in need. I am a proud civil who have never worked so hard in my life. Why should our teachers salaries be cut.

        I am not aware of salaries being cut in the private sector and those persons make much much more than I do.

        I know many of you have horrible employers who don’t take care of you. Stop being jealous because i do have an outstanding employer.

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      • Anon says:

        7.31am But there’s somewhere between 6 and 7 thousand of you, CAL is shut down, the airport is shut down, Planning is shut down, the schools are shut down,the Turtle Farm, the Botanic Park, Pedro’s Castle are shut down, most post offices are shut down, libraries shut down, Museum shut down, Sports Dept shut down and so on.
        You may be proud but you are also deluded if you really think you deserve a raise when so many have lost their jobs, their homes and are starving and you all recd a 5% pay rise in January on top of your inflated salaries, fat pensions with annual inflation adjustments, and free medical treatment for life.
        You and your ilk need to join the real world.

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      • Anonymous says:

        Processing work permits>? Are you mad? According to the answer e got when my business applied they aren’t issuing any as matter of policy, and they adjusted the regulations so that the failure to process renewals didnt mean people were breaking the law through no fault of their ow because they couldn’t get a renewal. Why do that if the works is being done as you suggest.

        Some of the civil service are working for sure, and thanks to them for their efforts. But on one of the earlier press briefings the government said that they 1100 people in the civil service in front line work, and the rest were ‘working from home” So tell me,is it honestly your view that the majority of the civil service are still fully engaged and working? They all magically have laptops and home IT facilities and have a job that can be done remotely? Right. That’s why we have very limited mail service, why I cant get a vehicle title transfer documented, and why people had to beg the Premier to get access to birth certificates and passports.

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      • Anonymous says:

        6.35 I am another Civil Servant like ‘7.31 am’ who has been working from home – in fact, for longer hours than I normally do at the Office (with broken A/C) and also including Notary Services for the Pension Withdrawals free of charge. As you rightly say ‘I don’t think we should pay them nothing’ (which actually, in your ignorance, means – quite rightly- you ‘do think that we should pay them something’ !! ).
        I, like 7.31 am a proud Civil Servant working from home from March. I wonder if you, 6.35 have offered to take a cut in salary ?

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    • Anonymous says:

      Next year it is either cut civil servant salaries or bring in income tax. No other choices.

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    • Anonymous says:

      6:35 Do not attack civil servants who work hard every day for the benefit of these islands. It is a thankless job, yet they still get up and get the work done. Yes, some are taking advantage of this pandemic and not pulling their weight but the majority have been diligently working hard during this time.

      I am all for requesting MLAs taking a pay cut because Lord knows they do not deserve it, but leave the civil servants out of it. They too have bills to pay and families to provide for just like the rest of us…

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  20. Anonymous says:

    What they DON’T mean when they say “Gov’t revenue plummets to record low” is Alden’s and the MLA’s large Gov’t salaries.

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  21. Anonymous says:

    With the borders closed until lord knows when and the main gateways being in the USA, will the Government continue to pay the Airline staff to sit and home until the USA sort itself out? How exactly is salaries being justified in this case? Are we extending the overdraft just to keep our boarders shut? I feel sorry for the next generations that will be picking up the debt.

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    • Anonymous says:

      It’s called furlough. Want the pilots to starve and be on the streets?

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      • Anonymous says:

        For how long?

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      • Anonymous says:

        @6:25 Please look up the meaning of furlough. Bring furloughed does not equal full pay. Then again that’s Cayman Government for you.

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      • Anonymous says:

        There is a slight difference between firing a pilot and asking the to take a reduction on their six figure salaries given they are not actually doing much. Most of the major airlines seem to think that works – and even pilots unions seem to accept that some sacrifices have to be made for the longer term future of the airline. But here in Cayman we have a magic money tree that pays for everything the government touches, so no need to take any of those good housekeeping and common sense steps. And if challenged on it, we just say we need to keep pumping money into the economy, so paying under employed public servants full whack is simply a macroeconomic device. Or we use Alden’s other line – the saving would be inconsequential. That one works too. The amount of money being poured down the drain leasing the 737 MAXs dwarfs the pilots salaries.

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        • Say it like it is says:

          11.27am Just wait until we see the amount of the CAL subsidy this year – it will set a sky high record.But we must not forget the hundreds of airport employees also being paid for sitting at home twiddling their thumbs.

    • Captain Obvious says:

      Sell 1,000 wealthy people citizenship for $1 million each (or 500 for $2 million each or 100 for $10 million each). There – that is $1 billion in revenue. With no threat to Caymanian jobs, in fact, quite the opposite.

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      • Anonymous says:

        Only if they cannot vote.

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      • Anonymous says:

        You say that like people can’t come and buy residency just like that already. Citizenship is another matter.

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      • Anonymous says:

        Selling citizenship is a crooked business that unsurprisingly, entices crooks! Even if it were available, $1mln would not be a competitive inducement, except maybe for fugitives, despots, and oligarchs from countries where the UK have no extradition treaty.

        Antigua and Barbuda; from $100,000
        St Kitt’s and Nevis; from $150,000
        Canada; from $250,000
        Montenegro; from $274,000
        Portugal; from $384,000
        Spain; from $550,000
        Bulgaria; from $560,000
        Malta; from $1m
        US; from $900,000 invested in a business creating 10 jobs
        UK; from $2.5m

        Cayman’s Immigration Law (2003) already has a male gender “wealthy retiree” immigration fast-track that has been in place since 2003 with few takers.

        “Applications under the categories of “wealthy retiree” and “entrepreneurs or investors” will be made to, and decided by, the Chief Immigration Officer. In the case of wealthy retirees, a successful applicant will be granted a certificate valid for 25 years, permitting him and his dependants to reside in the Cayman Islands without the right to work. This certificate is renewable. Persons meeting the criteria for the “entrepreneurs or investors” category will also be issued a certificate valid for 25 years (renewable), and this permission will carry the right to work in the licensed business or businesses in which they have invested.”

      • Anonymous says:

        It is laughable that you think there will be no threat to Caymanian jobs by doing something as stupid as what you have suggested.

  22. Anonymous says:

    Open this island back up ASAP!

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    • Anonymous says:

      So everyone can get Covid?

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      • Anonymous says:

        …yet don’t know they’ve got it (like most of the Cayman cases) ?

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      • Anonymous says:

        Most already did and/or will anyhow. Just like the flu.

        The only thing we’ve done is destroy the economy.

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      • Anonymous says:

        Herd immunity, baby! Let’s get now! All we have to do is let in cruise ships and let nature take its course. Those unhealthy, fat Americans on Carnival are probably crawling with coronavirus. A week of cruise ship calls should do the trick to fully inundate Grand Cayman with Rona. Lock the old and vulnerable folks away for a year and the rest of us will have herd immunity by then. If the old and vulnerable want to go out, that’s their choice – that risk is one them. If they’re not retired and lose their jobs as a result, and they’re Caymanian, married to a Caymanian or have PR, then the government should either provide them financial assistance or give them a job they can do from home for a year. It will be far less expensive than keeping the island shut down.
        Most people who test positive for coronavirus don’t even know they have it and never would have known if they hadn’t been tested. Of those who show symptoms, less than 20% require hospitalization. Of those who require hospitalization, more than 80% survive. It’s a calculated risk I think we have to take.
        Of course, part of that risk is that once you have coronavirus, it might over time be doing things in your body that don’t know about yet. For all we know, a year or so down the line, it might cause you to die of organ failure or something. Since it’s a new virus, nobody really knows what it looks like next year or the year after that. So yes, the calculated risk is sort of like playing Russian roulette with a six-shooter with one bullet it in, but you don’t know if the bullet is live or a blank.

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      • Anonymous says:

        Don’t worry, you won’t get it because you will be at home where it’s safe. Just remember, flu season comes around each year also and it can be deadly so you may as well plan on staying home for the rest of your life.

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      • Anonymous says:

        You mean the non-symptomatic flu. yikes

      • Anonymous says:

        LOL. You cant “get” Covid19. Its a disease that develops AFTER catching the SARS-CoV2 virus.

        You can have SARS-CoV2 virus and never develop Covid19 disease (hence be asymptomatic).

        Not to cause panic by reference but the simplest way to explain the difference and link between the two and is like how someone can be HIV+ but never have AIDS.

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    • Anonymous says:

      Fill the morgue! Fill the morgue! Fill the morgue! Wait what?

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