Minister hopes no need to use $330M of credit

| 21/09/2020 | 36 Comments
Cayman News Service
Finance Minister Roy McTaggart at Friday’s press briefing

(CNS): A consortium of local banks has been given the green light to supply the Cayman Islands Government with access to CI$330 million at a fixed interest rate of 3.25% and a flat arrangement fee of CI$2 million to put the line of credit in place. Finance Minister Roy McTaggart said the bid from the consortium had been approved by the Public Procurement Committee and he was pleased to see the banks joining forces to work with government.

The CIG had sought access to CI$500 million, but despite the competitive rate offered, the consortium was the only bidder and had offered this lower sum.

“In the short-term to medium-term this will be sufficient,” McTaggart said. “This gives us a significant cushion to weather out the trials of COVID.” He noted that the government will draw upon this credit only when it is needed and only after government has exhausted its own reserves,

At Friday’s press briefing, the minister expressed confidence that government is very unlikely to touch the money before the end of this administration, but he said that if it became necessary next year, the new government would be able to seek a separate bid for the $170 million, as he would be asking the Legislative Assembly and the Foreign Office to approve the full CI$500 million in any event.

While the COVID-19 pandemic has had a massive impact on the economy, the government has been hanging on by using its cash reserves. With revenues falling dramatically and spending increasing, the administration is said to be running a deficit of around $25 million per month, which it is covering from money it has in the bank.

But it is clear that the government will need access to more cash in the coming months as public spending will be a significant factor in keeping the economy alive, given the collapse of tourism and other challenges that the ongoing pandemic is creating.

The minister said that if and when government uses any of this line of credit, it will be converted into a loan over 15 years.

Explaining the details, McTaggart said that CIBC FirstCaribbean International Bank is the structuring and administrative agent for the consortium and is covering CI$94.3 million (US$115 million), while Butterfield, which is covering CI$117.26 million (US$143 million), and RBC, which is covering $30 million (US$30 million), acted as lead arrangers. Cayman National is also covering CI$94.3 million (US$115 million).

“The terms submitted in the bid are keenly competitive,” the minister said. “These facilities demonstrate that the Government of the Cayman Islands continues to be regarded as a high-quality sovereign, as is reflected in our Moody’s rating of Aa3.

“The Cayman Islands Government tender followed all required procurement guidelines. It is very pleasing to me that we are seeing local commercial banks come together and submit a single bid to the government of the Cayman Islands, thereby demonstrating their confidence in the government and the country as a whole. This is a win for government and a win for the people of the Cayman Islands,” McTaggart added.

Premier Alden McLaughlin claimed his government’s “strong fiscal management” and healthy surpluses had given the necessary buffer needed to help navigate this health crisis, and he echoed the minister’s sentiments that we would not need this money before the end of the second quarter next year. He said that if things went well with the global management of COVID-19 and, with the help of a vaccine, tourism bounced back, the CIG might never need to touch the money at all.

McLaughlin described it as an “insurance policy” and said that formal approval will be sought by the Foreign, Commonwealth and Development Office and then an appropriation bill will be taken to the Legislative Assembly. “This appropriation will include the possible CI$330 million loan under this line of credit as well as provide the ability of government to borrow an additional sum up to CI$170 million, if it becomes necessary,” he said.

At the expiration of the 18-month line of credit, any amount advanced and unpaid money will be converted to a 15-year, fixed interest rate amortising loan. Both the line of credit and the long-term loan are priced at 3.25% per annum, which is the current prime rate offered by local banks.

It if is used it will be to cover government’s increased expenditure to support the vulnerable and business entities across the Islands that have experienced financial hardship as a result of the pandemic.

The finance minister said there were no specific plans to use it to expand the public sector and create more jobs to help those in need but he said that across the civil service many departments have been approved to hire staff where necessary. But ramping up the civil service in any appreciable numbers would have to be a decision for Cabinet, he said.

He noted that if “you start to ramp up the numbers, when things do get better, it’s hard to take them down when those issues get dealt with”.



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Comments (36)

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  1. Anonymous says:

    Looks like a Biden to me. One day u hear taxes might come if, next day, hope u don’t have to use line of credit, next day doing well only losing 25M. A bunch of jokers.

  2. Crab Claw says:

    Don’t the banks get their money from the feds and the local population they are paying the locals .005% on a saving account and getting the money from the feds at .25% and locals free when they deposit it into their accounts but our government excepted an interest rate of 3.25% come on they could have sent that rate offer back to the banks and asked for a better offer, they got the same rate as anyone walking in off the street this is just wrong.

  3. Anonymous says:

    Ask the Chairman of the Board

  4. Anonymous says:

    CIMA just raised circa $36mm in 12k newly registered entities p.t the private funds law – where’s all that cash gone/going?

  5. Anonymous says:

    Just open the borders. Enough fear mongering about covid. Covid has less deaths in 2020 in the USA than pneumonia.

    https://www.statista.com/statistics/1113051/number-reported-deaths-from-covid-pneumonia-and-flu-us/

    dont believe? this chart gets updated daily.

    Enough with this stupidity.

    Covid……..seriously

  6. Anonymous says:

    civil service depts have been approved to hire staff where required????
    are we living in some type of alternate universe?
    if you will not even look at the expenditure reduction during the biggest economic challegen ever….. we need direct rule asap.
    roy is either ingorant of basic ecomics or does not understand it….which is it?

  7. Anonymous says:

    audit is urgently required on this ‘deal’ and the overall performance of the civil service in lock down

  8. Anonymous says:

    So we’re hoping the for a vaccine (when?) or that the virus magically goes away. Short of that, we burn through our savings, then we burn through our credit, then what?

    Send McKeeva to Vegas with 300 million, have him put it on black or red. Odds are about the same or probably better than the above. We either buy more time or face reality and stop kicking the can down the road.

    • Anonymous says:

      he is heading in a different direction. If that is not going to happen there is will be unrest.

  9. Anonymous says:

    …the most mind numbingly idiotic mission in human history

  10. Anonymous says:

    if this government has it, they’ll find a need…maybe to defend a criminal who knows a lot of secrets? maybe reimburse all those who lost out on port deal ‘commissions’?

  11. Real Stuff says:

    Get rid of all these expats that are sucking the island dry with their cries of no “no work” and waiting on Govt handouts and other freebies.

    Stop allowing these people to be a burden on these islands.

    I know three that just recently came, claimed in their paperwork they had jobs, but are now on the street looking “Day Work”.

    WORC and CBC have been informed via email with all pertinent information and still 3 weeks on they out on the street begging jobs and waiting on Govts next handout.

    The “Sponsor” is a well known expat with residency and a bussiness here. He gets paid 300 every two weeks to file the paperwork.

    • Anonymous says:

      Troll distraction

    • Anonymous says:

      Because gov is addicted to wp fees. Modern day slavery.

    • Anonymous says:

      I don’t understand why you have dislikes for telling the truth? Perhaps the cyber warriors are out?Changing minds is easier than killing people I guess.
      Less messy for sure.
      If you have to thumb someone down for telling the truth, your moral compass is pointing due South.
      To become an expat in Cayman, it seems the only qualification is to hate Caymanians.

    • Anonymous says:

      winston churchill said it best. “a government trying to tax itself into prosperity. Is like a man standing in a bucket, trying to lift himself up by the handles”

      smart guy.

    • Anonymous says:

      Get rid of all those Caymanian unemployables with their cries of “expats took my job”and waiting on government handouts. They contribute nothing and take all they can. Even before Covid. Cayman is going downhill fast and Keeping these lazy, unedumacated, whiners will bring the end of Caymanian rule sooner. Wait. Let them eat. Let them spend the peoples money. UK rule sooner come.

    • Real Stuff says:

      History has proven that when the truth is spoken the criminals jump up and whine.

      The only reason to give a thumbs down or negative comment is because you yourself are either part of the problem or your benefitting and profiting from the problem.

      Facts of life.

  12. Anonymous says:

    Normally when a fully-leveraged household runs into the red, there is a basic analysis of cost flows and a reduction in discretionary spending. Not so with this regime. Trying to spend its way out of debt…the hole just gets deeper and deeper.

  13. Theo Bodden says:

    Legalize growing and sales of cannabis and the sales tax that we would make from that would hold us forever.

    Or, y’know, can keep the incentive alive to try and smuggle 950 lbs of it from Jamaica, including pistols while we smoke nicotine laced tobacco.

  14. Anonymous says:

    They better stop waiving Dart duty fee’s then they may have some decent money to spend for a good cause but yet they ignore the poor man plead for help.

    • Anonymous says:

      How about dci fees?

      How about they stop handing licenses to everyone so new “companies” stop uncutting existing business in every industry in cayman!!

  15. Anonymous says:

    They should hire more civil servants to sit there, do nothing and collect a pay cheque.

    Money week spent!

  16. Anonymous says:

    Sounds like a deal for the banks and our trusted government to make a LOT of money!!!
    Quote, “but he said that across the civil service many departments have been approved to hire staff. ” Why?

    • Anonymous says:

      2:29. To help the private sector. I have been holding private sector hands for years. I love my job but I wonder how some of the private sector workers got their jobs.

  17. Anonymous says:

    Gotta pay for all that pre-election paving somehow.

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