Saunders defends new CI$350M borrowing plans

| 08/12/2021 | 64 Comments
Cayman News Service
Deputy Premier Chris Saunders chairs Finance Committee

(CNS): Finance Minister Chris Saunders (BTW) defended the PACT Government’s plans to borrow just under CI$350 million over the next two years, pointing out that the pre-election forecast financial statements released by the previous administration had outlined plans for borrowing around $330 million over the next two years, and had projected a deficit of more than CI$90 million.

During 2022, the current government will be borrowing just under CI$299 million and no more than $50 million in 2023. Refuting allegations by the opposition that the borrowing was a result of PACT’s failure to make hard political decisions, the minister said that, in the face of the uncertainty caused by the pandemic, this was not the time to cut public spending.

As he wrapped up the budget debate Friday evening, Saunders said the borrowing was to fund capital projects, such as schools, the mental health facility, improvements to the prison, buying land for conservation and public use, and to support government companies, including the Airports Authority and the turtle farm, both of which have suffered significantly as a result of the collapse of tourism.

Challenging the opposition to tell the public what they would cut, Saunders said that cuts had been made so that priorities could be addressed. He pointed to several things given up by the planning minister so that the social development minister could have the money he needed to address significant problems in social welfare.

Saunders noted that much of the borrowing would be used to fund projects left by the last administration. But when it came to the vote in Finance Committee on Tuesday, the four opposition members present all voted against the borrowing, though none of them said what they would cut to eliminate the need to increase the debt.

Former premier Alden McLaughlin (RED) had continued his criticisms of the borrowing during Finance Committee, even though it had been his administration that had negotiated the line of credit that Saunders is using for the PACT borrowing plans. He said that over the eight years that the PPM had led government, they had paid down the debt and funded all capital projects from general revenue, and called the “massive borrowing” unwise.

“What has been lacking… in the budget process is a lack of fiscal discipline and a lack of willingness to make hard choices about what should go ahead,” he said. “You cannot cater to the whims and fancies of every minister and end up with a good budget.”

However, Saunders reminded McLaughlin of the pre-budget fiscal report and the borrowing requirements in that, as well as the massive deficits that PACT has avoided.

According to the budget predictions, the additional borrowing will increase public sector debt from just over CI$262 million at the end of this year to a little over CI$509 million at the end of next. As a result, government will be paying CI$14.6 million in interest and fees on borrowings in 2022.

See the budget documents in the CNS Library.


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Category: Government Finance, Politics

Comments (64)

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  1. Anonymous says:

    Saunders is practicing the type of politics that put that good country to our southeast in disaster. If left alone, he will F this country to a point of no damn return.

    IF ever there was a need or reason to have a recall vote, PACT is that reason.

  2. Anonymous says:

    Jay Ebanks got $350,000 for 180 DoA animals, several times real cost, citing “nutritional security”. 120 yearlings at <$1000 each, and 30 goats, where Bucks and Does at high end cost <$300 each. I guess there’s $125,000 in shipping costs?

  3. Anonymous says:

    And i supportED them.

  4. Anonymous says:

    The Cayman Islands have one of the lowest GDP to debt ratios on the planet. Revenue is trending in the right direction. If the government spends wisely there is nothing wrong with borrowing.

    BUT, if this government doesn’t figure out a way to support the growth of its citizens, especially the younger generation, these islands will go downhill fast and it will be impossible to recover.

    • Anonymous says:

      Lowest GDP to debt ratios on the planet. Except of course that a) the GDP is not evenly distributed amongst the public, and without any form of income tax, not readily available to government to use a taxation base to repay government borrowing b) the debt excludes all those difficult to calculate and eye watering numbers, like civil service pension obligations.

    • Anonymous says:

      Agreed. But they are not spending wisely. We are already headed downhill fast.

  5. Anonymous says:

    Next we will here that as the executives in a $1 Billion dollar ‘industry’ they need to triple their own pay. Just watch.

  6. Anonymous says:

    So that means two more years of business as usual and then the bankruptcy. Great plan if your not a Caymanian.

  7. Daniel Johns says:

    Here is an idea, how about no giving breaks to developers, who desecrate these islands with projects designed for the rich… How about you no longer give them 100’s of millions of dollars in breaks.. hmmmm

  8. Anonymous says:

    Consult the history books, big defecits never end well.

    Here is how this plays out:
    1. The projects are delayed, and over budget as govt officials are incompetent at executing large projects. That’s why they’re in govt, they couldn’t cut it in the private sector.
    2. The govt runs out of money and blames the rich for not “paying their fair share”. Note that they will not define what fair means but are certain the rich are benefiting from the current system.
    3. The govt tries to tax the richest members of society so they leave to the next country that has no tax. Remember if they came here they can just as easily leave.
    4. Tax revenue ends up falling as the taxpayers start leaving and you are left with uncompleted projects. The politicians and their friends who they hired to do the projects are rich though regardless of the failure to complete the projects.
    5. All throughout this process these politicians will win reelection because their rhetoric sounds good to people who are unaware of history.

    Hoping we see some common sense soon but not holding my breath.

    • Corruption is endemic says:

      You forgot the part where money disappears and some people involved never work a proper job again.

      I can’t mention names on here but this has happened in recent memory to some people who have a habit of getting caught for DUI with someone other than their wife in the car…

    • Anonymous says:

      #leggewasright

      • Anonymous says:

        And our Governor, our Police, our Ombudsman, our Attorney General, and our anti-corruption commission, do nothing.

  9. Anonymous says:

    Always spending other peoples money.

  10. James says:

    Serious questions need to be asked about PACTs decisions. It appears that every minister is acting alone and getting what they want. Overspending and putting our futures at risk. All we get is immature comments from Kenneth and Saunders, they must think we all fools.

  11. Anon says:

    The bigger problem is the revenue will dry up. The stamp duty will never recover. We are killing the golden goose. Nobody wants to deal with Travel Cayman, or 3 tests per visit, or low staffing levels of unmotivated Caymanian workers. Bye bye tourism, bye bye stamp duty, see ya later economy. I bet this ends ugly. Soon back to whoring yourself out to cruise ships for Pennies.

    • Anonymous says:

      The golden goose is actually the finance industry – the most expensive work permits and company registration fees are the biggest chunk of government revenue.

      But these decisions will inevitably kill that golden goose as well, as PACT will eventually try to tax it more. Then, like Bermuda, that industry will leave and the country finances will be in shambles. Same as it always is.

    • Anonymous says:

      Low staffing levels at travel cayman. Lol what, there is like 100 of them atleast.

      They just dont do any work, big difference!

    • Orlando Bob says:

      Certainly true that Travel Cayman is making it damn hard for tourists to come to the Cayman Islands.

      Toughest rules in the Caribbean and far tougher than USA and Canada for those who are fully vaccinated.

  12. Anonymous says:

    “Finance Minister Chris Saunders (BTW) defended the PACT Government’s plans to borrow just under CI$350 million over the next two years.”

    This is VERY concerning but what is even more worrying is the size of our budget. Cayman is 74 square miles with 60k people. There is no way in hell, our expenditures should be excess of 900 million per year. It’s frightening that these mindsets get access to the Country’s cheque book. I feel helpless reading this reality.

    • Anonymous says:

      And to think in 1976 it was around $10million and Vassel Johnson was concerned that we were over extending ourselves.

      • Anonymous says:

        That was before there was eight thousand civil servants.
        He would have been lucky to have had eight thousand voters at that time.
        Then the locusts came. Hey, don’t shoot me down. It’s the truth. I saw it with my own eyes.

    • Anonymous says:

      Re Anonymous 08/12/2021 @7.24 pm. since the you say the expense should not be $900m per year, what should it be? Is there a formula for the budget? What should we cut back? Remember we also have tourist visitors. 502K in 2019.

      • Anonymous says:

        @7:06 AM

        If you believe that we will see a robust tourist season like 2019 over the next 3 yrs…You are hopelessly optimistic.

      • Anonymous says:

        Tax everyone, like the rest of the world. Problem solved.

        • CaymanStrong says:

          With a comment like it doesn’t sound like you live in Cayman. We do not have direct taxation on our income but we have indirect taxation here in the form of import duties on items that are imported. The stores here set the prices for profit and also recoup the duty charges. If I make $100k a year and want to buy a 65″ TV it will cost me 22% duty. If I make $50k a year and buy a 42″ TV I still have to pay 22% duty. There are higher %’s for vehicles and other items. It all works out in the end based on how we choose to do it and not how the rest of the world want to dictate to us or someone reading the news and trolling us.

      • Anonymous says:

        @7:06pm this is Anon 7:24pm. What you just demonstrated with your question is exactly my concern with the government. There is being fiscally responsible and there is being fiscally negligent and reckless. You would fit right in with PACT in the latter. Here’s a clue in case you’re struggling – spend less than you earn and start by cutting wastage, then you will arrive at what your expense budget should be.

  13. Anonymous says:

    Incompetents authorizing deficit spending on wasteful irrelevant projects – same old same old

  14. anon says:

    We have always borrowed to fund capital projects, mainly because such a large proportion of Govt. revenue goes to meeting civil service salaries, pensions and medical costs.

    • Anonymous says:

      Not really. There has been no borrowing for capital projects during the last two governments. And they put money aside for any economic downturn. Plus repaid a lot of debt. Yes it us easy to spend money. This Government is borrowing $20 million. More that the emergency line of credit arranged by the last Government. And they are spending it on capital so that they can use Government revenue for a myriad of other things. This philosophy would have left us in a very bad place had this Government been there these past eight years. We shall see how it goes. I pray for the best.

    • Anonymous says:

      Boom. Correct

  15. Corruption is endemic says:

    WTF this was to be an emergency fund if needed.

    It converts to a 15 year term loan after 18months.

    So that is over $2.3m/mth or almost $30m each and every year to be paid back with close to $100m in interest over the life of this.

    What projects need to be funded or is this all just handouts?

    Also please just shut the Turtle Farm down, at least the money losing Boatswain’s Beach part.

    • James says:

      Exactly, an emergency fund because of covid. We will be in a very scary position in 3 years. I hope everyone sees what’s going on. Our children won’t have a future if this continues.

  16. Anonymous says:

    Why no also basic universal income, Bernie Saunders?

    • Anonymous says:

      Lighten up on the thumbs down. I’m sure it’s a tongue-in-cheek comment.

      • Anonymous says:

        Not so sure it is. We are already paying people who claim to once had a job in tourism $1500 a month, no questions asked about whether they have found alternative employment in the meantime. But a hop and skip to just paying it to all Caymanians for being Caymanian. Voila – universal income. For voters that is.

  17. Anonymous says:

    PPM lecturing people on fiscal responsibility and value for money as their entire tenure in Government is marred with projects years late and tens of millions of dollars over budget.

    Caymanians have criminally short memories

  18. Caymanian says:

    Negotiating a line of credit and using it are two different things. You can prepare your business in case a recession lingers longer that maybe you can handle so that a bank might extend you some overdraft leeway. This does not mean you should go out and buy a new sports car.

    Yes. They did but it’s not to say that over the course of a year you can’t course correct to put you back into the black OR things work out better than you anticipated.

  19. Anonymous says:

    Saunders is correct that Roy and Alden planned to borrow and had negotiated that breathing room with FCO. That doesn’t mean that everything should stay from their budget. Closing the Turtle Farm would be the easiest decision to make, as would scaling back the payroll girth of CIG. The schools, airport construction, CAL’s unpaid CIAA fee shuffle, and mental health facilities were all part of previous budgets…what happened to all of those tens of millions?

  20. Anonymous says:

    Loving it here, but when are y’all going to legalize weed? A lot of my Cayman friends fly out to where I’m from and give us tax revenue by visiting legal dispensaries..

    I just want to enjoy a spliff on the beach as I would with a regular tobacco cig, is that too much to ask? Take my money! So much revenue potential being missed out on.

    • Anonymous says:

      Lol – weed will bring in a few hundred K at most, maybe a mil.

      not worth it for the hastle.

      • Anonymous says:

        Then why is tobacco worth it? Cannabis tourism is a thing – tobacco isn’t. It can be argued that combined with medical cannabis, there’s significantly more revenue potential than with tobacco laced with nicotine.

  21. Crab Claw says:

    So those free lunches really do cost something, Socilusm never understands accounts.

    Is there any way The Cayman Islands can get some sort of funding for their national budget from the tax information collected under all these tax agreements that they are involved with on behalf of the many other tax authorities of its jurisdiction account holders other than just the trickle-down that is paid to the accounting firms to process the paperwork because those funds don’t seem to benefit all but just a few?

  22. Anonymous says:

    another spineless finance minister who is doing nothing but spending us into recession.

  23. Anonymous says:

    Good so now bail out the poor they will reinvest twicefold. Rich only hold and harbor with greed.

  24. Anonymous says:

    Simply put, sure the PPM weren’t expecting all the extra handouts. That aside shouldn’t he be trying to do better not make it worse?

  25. Anonymous says:

    “Saunders said the borrowing was to fund … buying land for conservation” – I call foul on this. (a) that’s what the Environmental Protection Fund is for and (b) successive Governments have not actually bought land and protected it so I don’t believe this one will buy so much that they use up the Environmental Protection Fund and have to borrow money to buy land to protect it. Clearly the Finance Minister was just trotting out the list of stuff he figured people would not object to. You know, schools, etc. (Though how Turtle Farm and CAL made that list? I guess they were just too big to ignore.)

  26. Anonymous says:

    The PPM also initiated the pay raise….did not mean the PACT had to accept it.

  27. Anonymous says:

    It’s not real money, just credit issued by the crown in order to keep authority over these Islands and it’s peoples.

    These money wasting nobodies unable to get a real private sector job are only too willing to put on a suit to pretend they rule over you.

    Keep voting fools.

  28. Anonymous says:

    An emergency line of credit was prepared for the worst case scenario to support core functions and critical projects ongoing.
    Using the money to fund capital expenditure is a policy decision, typically to be constrained by actually prioritizing planned works rather than wanton debt-funding.
    It’s not clear that the emergency credit terms are appropriately suited to funding capital projects, so this may not represent best value (even if you agree in principle to public expenditures to help spur economic growth and activity).
    Chris is astoundingly naive in his purported understanding and grasp of this subject matter.

    • Anonymous says:

      I suspect that they have to agree to all wonton spending to keep PACT together.

    • Anonymous says:

      They need to cut their over high payed big wages. In other places during the pandemic the high Government officials cut ther wages, here in Cayman they raised it twice. And then they say they are looking out for the people. Stupid voters.

    • Anonymous says:

      Saunder’s career history would confirm the last line of your comment.

    • Anonymous says:

      And if PACT had started cutting programs and projects instead of borrowing the PPM would be saying they were introducing austerity when they should be borrowing to continue growth

      There is a fun thing you realise when you study economics and politics, there is always something to criticise people about if your entire goal is to criticise them

      The PPM and their supporters are still not over the fact that they are not in government and will continue to whine about everything they can for the next four years

  29. Anonymous says:

    PPM and PPM supporters always count on people forgetting just as Saunders points out here,

    1) the PPM were the ones who negotiated the line of credit

    2) the PPM were projecting huge deficits for the next year

    • Anonymous says:

      Deficits can be met by restricted spending.

      It is also not the job of the Opposition to define what they would have cut (to pre-empt that potential response) as (hope Chris reads this because it’s clear he doesn’t understand it) they do not make the policy decisions of today.

      Were they in government now, they would have had to make decisions to cut or to spend, based on their policy positions and priorities.

      What is at question here is the decision making of PACT for this budget. They’re acting like an Opposition in their rhetoric rather than a government because it’s all they know.

    • Anonymous says:

      The PPM lines of credit were to create a ‘safety net’ when confronted by the unknowns of the Covid pandemic.
      Whereas pact/UDP are not taking any steps to control spending and have instead embarked on their re election campaign by increasing hand outs.
      The 34 or more senior positions created by pact/UDP are costing us over $3 million a year , with no cap on spending.

    • Anonymous says:

      True but irrelevant. They are overspending, wasting, and squandering our future.

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