Saunders defends PACT’s fiscal policy
(CNS): Finance Minister Chris Saunders has appeared in a government-produced video delivering a prepared statement in which he defended the government’s fiscal policies for refinancing of debt and funding social services, education and ensuring Caymanians benefit from the country’s wealth.
Saunders said that PACT is considering a bond option, as he believes he can reduce the interest rate of 3.25% that the previous administration secured on a line of credit, which PACT will access over the next two years for infrastructure and cash injections to the hospital and housing.
Based on the still low-interest environment and examples where other jurisdictions, including the Isle of Man, have secured very low rates on the bond market, the finance minister believes Cayman could benefit from a similar approach. But he said no decisions would be made outside of the public arena.
“This government is now investigating refinancing options, including but not limited to a bond offering, to ensure we are paying less interest every year and to invest in our islands’ long-term future,” Saunders said. “The request on the government procurement site is for information only to enable us to review all the options available to refinance the public debt.
“We are investigating multiple opportunities and will choose the option most beneficial… Whatever proposal we choose will be debated in Parliament,” he added, noting that there may even be public meetings as the PACT Government is committed to transparency.
“Regardless of how the borrowing is structured, any funds raised will enable vital infrastructure projects such as the completion of the long-term mental health facility, the East-West arterial and other new roads, a new undersea data cable to ensure our continued connectivity to the world, and finally completing the delayed and mismanaged high school construction project, which was started over 14 years ago by the opposition.”
He said that introducing a reverse mortgage programme for elderly homeowners would cut government spending on benefits to the elderly who are struggling on inadequate pensions.
“It’s not fair or sustainable for the government to be assisting the elderly when they are equity-rich but cash poor,” Saunders stated in the video. “Letting our seniors access their cash when they need it now means they can live in dignity without being a strain on the public purse.”
The borrowing will also help the National Housing Development Trust to build more affordable homes and a new initiative with the Cayman Islands Development Bank to support younger Caymanians to buy a home with longer-term loans.
“We are also exploring the possibility of underwriting loans above 30 years to give our young people an opportunity to access loans where the monthly repayment is affordable,” he explained adding that PACT was committed to increasing Caymanian homeownership, and $28 million of the borrowing was earmarked for the housing trust and the bank.
“While the opposition may not support this initiative, we as a government recognise that shelter is a basic human right and homeownership is a dream for many Caymanians,” he said.
He stated clearly that the money government is borrowing will not be used for general operating expenses, and the day-to-day spending will still come from government revenue.
“We can meet our day-to-day operational expenses,” he said, as he committed to returning the government finances back into compliance with the Public Management and Finance Act by the end of this year, even in the face of the continuing pandemic.
But Saunders warned that the government faces some legacy issues and a looming social welfare liability that the previous administration failed to address, including the inadequate pension and health insurance provisions for the next generations that will retire.
“Many of my colleagues in the PACT Government have been sounding the alarm on both the inadequate pensions system and the lack of healthcare for seniors long before the issue became a pressing one,” he said.
See the full video statement on CIGTV below:
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Category: Government Finance, Politics
My Aunt in the USA lost her house to a reverse mortgage scheme (“scam” – like the one Tom Selleck promotes on tv). Reverse mortgages are geared towards the elderly, with the hope that most elderly in that market won’t understand the intricacies of the program and sign-up anyway. That’s generally what happens, then the naive old folk lose their homes.
Perhaps Saunders has his own reverse mortgage company in the works – with a known tainted ex-bank director on board? Watch this space!
I don’t even want to hear the damn complaining to now, this man spent the past 8 years bugging himself up as some super genius and sweet talker who only appears in December with some really bad fruitcakes. Now you all are acting shocked with his absolute incompetence after you all bought into his facade. Unneh wanted Chris ? Well tek Chris and hush
Chris is making the kind of decisions everyone expects from a person with his intellect and experience. Unfortunately, it’s only the people who voted for him who are impressed with his mumbo jumbo.
Free microwaves
12.42, I think you meant to write “LACK of intellect and experience”.
Zero is a number.
We don’t even know whether we’ll have a central economic pillar in 5-10 years. A 3.50% bullet bond with our risk/transparency/independence profile, in a rising rate environment, is DOA as it lands at the junior underwriter level. This is a fantasy.
Keeping his pledge to ‘mash up the dolly house”.
Do di maths calculations.
The plural for Math in Jamaican is “ Math-dem “.
All of these comments make is seem as if he is forcing you to take on a reverse mortgage. No one is being forced to do this. However, isn’t it nice that the option can be there for those who would like to? Think of the elderly who have no family to pass on their property to as an example. There are people and situations that can benefit from this. If you and your family won’t benefit, then simply don’t partake.
I’ll be excited for this as I don’t want to leave all my property to ungrateful, entitled kids/relatives.
They are smart enough and able enough to find their own way, if I leave anything for them other than the education I provided and paid for it should be a bonus and not expected.
He offers no details. He talks more about the opposition than what he will do with the 400m. Who is playing politics now?
A whole load of blah, blah, blah! His term will be up and over and all we will have to show will be fairy tale headlines!
CIG should apply to the UK Fund and borrow its share to tap limitless green hydrothermal power of the black smokers 10 miles south. We could rid ourselves of CUC vulture monopolists, pay off our standing debts early, fully fund pension and healthcare liabilities, prepare for rising sea levels, and build a rainy day sovereign wealth fund that can pay for the never-ending stipends to Caymanians. Trinidad and Tobago are already seeing their grey hydrogen model crumbling and are shifting into green ammonia frontier market. Pity we can’t see our advantages and opportunities in the context of 2022->2100.
A Bitcoin bond would solve everything.
Turtle coin
This reverse mortgage scheme will result in the government owning many properties and becoming a landlord.
Imagine how incompetent the government is at everything, and then imagine the mess they’d create if they were your landlord.
Valuations on the reverse mortgages will be another area of corruption and a great way to siphon $$ out of the public purse.
Enforcement is hardly their strongpoint. This will end up being nothing more than an even larger handout scheme.
And then sell all to Dart.
Mr. Saunders, You brought a motion to the then- LA on 22 October 2020 seeking to establish a committee of the House to look at the inadequacy of pensions and the impact of the $400M withdrawals that had been allowed. The PPM rejected it https://caymannewsservice.com/2020/10/govt-rejects-mla-review-of-pension-regime/.
You have been in the drivers seat for 8 months and been back to the LA numerous times. Why have you not sought to set up the committee and have some genuine public discussion on this issue?
You were an active participant in the Public Accounts Committee’s public hearings on the effectiveness of OfReg in July 2020 https://caymannewsservice.com/2020/07/pump-price-not-fair-ofreg-deputy/. You have had responsibility for OfReg for 8 months but we have not heard one word from you sir about how the gouging of the motorists will be addressed.
And you want to borrow a stash of $400M to spend as you see fit and whoever is around 30 years from now will have to pay the piper? No Sir.
I suggest that you set up your committee of the LA and hold public hearings. Let the public, the pension people and the financial people all have their say. When you come up with a plan to address pensions, appoint a committee from the financial sector to advise the government on how best to fund the solution. Consider their recommendations and then come back to the public.
Go do your homework and don’t hang no more debt around our necks.
Well said!
I wish Mr. Saunders would pay keen attention to “Hear Me Now” and consider the sensible advice. It’s 100% doable.
The previous Gov’t patted itself on the back for keeping money in the economy by way of the $400m private pension withdrawal. In reality, people who had the $10k and under pension balance depleted their accounts to live off on during the lockdown. Chances are young people will recover. Expatriate workers will have less to leave with. I myself took full advantage of the opportunity to get money out, not because I needed it at the time but because I am in fear of living in poverty when I reach retirement age in the next 10 years when regardless of the balance in my pension account, if I choose to remain in Cayman, my CI $1,000 per month will render me well below poverty. So yes, Mr Saunders let’s have public consultation, discuss ways and means to amend the pension law so that people can better access their money, avoid poverty and welfare.
Encourage education (high school, community college and adult education) to teach home budgeting, bill payment and lifestyle management.
As far as the bullet bond is concerned, if Gov’t doesn’t want to issue a fixed interest rate for the 30 year term but is willing to wager on paying the piper interest rates that have been projected to end up costing double or more than what was borrowed – I want in and I’d love to see my pension fund getting a piece of that pie but as with most capital market deals, Cayman Islands individuals and bodies corporate will be restricted from participating. I’m sure public consultation within the financial industry would produce a number of viable options.
The untenable situation for many retired persons with Life Insurance is an issue also – Life Insurance is a real need in our younger years, but many persons end up letting their policies lapse in their later years as they are not able to afford the payments when retired on small pensions. The Insurance Companies love this as they have collected for decades and then don’t have to pay out as policy is lapsed. They should have to promote policies where people can cash in, during retirement if needed, for a portion of the total sum paid in and less than the sum insured for (say approximately 75%).
Sadly, I’ve met few Caymanians who are fiscally competent. Mainly due to poor education, but also the take today, spend tomorrow mentality that many people on these islands subscribe to.
The entire system of accountability on Cayman lends itself to this mindset as ‘cash is king’ replaces prudent business and personal financial planning. Most ‘business’ people could never survive outside of Cayman due to business regulation, employment law, and a competitive market.
The truck and boat bigger than the house mentality is there for all to see.
Soon we will see this in action as more businesses collapse due to Covid restrictions, easy car finance, and even Time Share ownership realities such as not being able to afford strata payments due to the lack of tourism eventually kicks in.
How on earth they think reverse mortgaging will help when the first inclination of most people is to buy shiny things instead of investments, its certainly going to be a watershed and demonstration in futility. The pension ‘free for all’ is a prime example of the ‘shiny thing’ mentality, with lots of new Chinese built rust buckets now on the road and people in debt up to the hilt with ownership of rental properties they can’t afford.
And don’t forget, Cayman does not hold its own credit rating, so all of this largesse is subject to U.K. oversight.
6.39 Wake up. All over the world you will find the same problems that you seem to believe are exclusive to Cayman.
Saunders, Panton and Roper are going to ruin Cayman. By the time they are done with us, we’ll have so much generational debt, it won’t be funny.
How do we mobilize a vote of no confidence?
It is still not clear why the government is engaging in new and nonessential expenditures during a time when we should be exercising fiscal prudence and restraint. Debt refinancing to give the government some additional room to maneuver is reasonable, however, taking on a significant amount of new debt is not desirable if it can be avoided.
They can donate their salaries to the elderly instead of making the bank take the elderly homes. That’s just another way for foreigners to get the homes. I think it’s ridiculous that people overseas can buy homes here unseen and the locals are competing with them to get a home. What are we getting? The foreigner barely lives in the home if they ever do. The home sits here until they are ready to sell it. All government gets is a one time fee.
the media must never report anything he says until he resondes to this question:
have you read the miller-shaw and e&y reports on the civil service and do you agree with their recommendations?
Chris, while you are fixing Pensions and Healthcare, do not forget to identify a way that we will pay for the massive bond issue you and your PACT peeps are trying to raise. This country will be faced with having to deal with this ill-thought out measure, to the tune of we have no clue. If this is what you call good fiscal management Mr. finance minister, all I can say is- thank God you don’t balance or reconcile my account.
And while you’re at it, can you persuade the restaurant in Eastern avenue to pay long overdue pension contributions.?
And the one next to the fish market.
I wonder if they (PACT) have taken a look at the stock market lately?? Persons who subscribe to these bonds- do so with ONE intention and that is to make a PROFIT on their investment- not lose. The idea to float such a substantial bond now is totally ludicrous and ill-conceived. This country will pay dearly for this at a time when the current Govt and their bank bench supporters are enjoying fat healthy Pensions and being able to carry the title of Honourable. The irony is just flattering.
Does he think we buy this rubbish? What a joke. He makes general statements about doing things for the people and improving housing and health care, no specifics offered. Borrowing 400m but not telling us exactly what for. In the last 2 weeks he has already changed what this 400m was for.
I don’t think he understands what a reverse mortgage actually is. It allows you to borrow against your property without paying anything back and at the end of the term or when you die the bank takes the property. That’s property your children (estate) would inherit. All this plan does is take away property from future generations so we will end up cash poor and property poor. That will be the end of the road for many Caymanians. They will become systemically poor for generations!
You are correct. It is a plan to redistribute property to wealthy Caymanians and expats.
Kayla Young laid what’s here and what’s to come very well in this brilliant story.
“Cayman Gone”
https://periodismoinvestigativo.com/2022/01/cayman-foreign-investors-identity-crisis/
Actually I think you are the one who doesn’t fully understand reverse mortgages. At the end of the term, mortgage needs to be repaid which usually requires the sale of the property, but any surplus remains with the estate of the deceased. No one is taking away property.
If you don’t like the idea of your parents or grandparents property being sold after their death instead of being handed to you, try offering them financial assistance NOW when they need it instead of letting them suffer and waiting to inherit from them!
I was speaking generally moron my parents will not be applying for reverse mortgages, but perhaps you can also comment on the fact that there is no mortgage legislation in place to stop the bank selling the property for just enough to cover the outstanding debt with no residual to pass on to the estate and there is NOTHING we can do to prevent that! Also consider that many children will not have the means to pay off a reverse mortgage that comes due and has to be paid in full unless you go to another bank and borrow! Don’t try and justify this foolishness with miss information
Except of course you could always bid on the property, or discharge by paying the bank back what your parents actually spent? What do you suggest – that the state just takes care of your parents and everyone else in the community pays the tab, but not you?
Straight up truth written by 8:13 in response to the previous poster. Another thought, it is their property and their money. If they need to use their houses or finances to live, who are you or anyone else to say otherwise?
Perhaps he should set out the terms and details so people can understand. Does the bank or government possess the property?
exactly
No, this is simply an equity release system.
It’s crazy that many seniors are sat on vast property assets, yet as they are cash poor, the government is paying them out from public funds.
Let them pay their own way, with the assets they have.
Let’s be honest, most of that equity was not earned, but acquired by sheer luck of timing.
The same Chris that interfered with Minister Turner’s purchase of LFT’s with Bluesky medical etc.? The same Chris who was CFO at a bank that shut down?
Ha! We in for a ride
The same guy who approved the cashing of a check for the the big man from West without following KYC rules.
A few hundred economic dependents , having the vote in Bodden town, have cursed the whole Island with this man.
“Letting our seniors access their cash when they need it now means they can live in dignity without being a strain on the public purse.”
Takes $62400 an hour in wages, moans about seniors being a strain on the public purse. Cheeky Bstard
Bullet bonds good for a tangible asset…bullet bonds not good for hand outs. Simple. What are we achieving with this bullet bond….financial welfare buddy bullet bond boy. Donkey in….donkeys out. Donkeybusiness
For real. Finance minister playing a joke or what. How disillusioned can one be. Let’s create a welfare state and welcome everyone else why we are at it. Flipping joke this place is going. Yup…let’s avoid making tough decisions and bring in a bullet bond. I really wonder sometimes if he looked up what it actually means….
Eeee ear him fren talk ‘bout it in a yard an him think is a good ting fe get vote dem.
And anudda ting mek we just tell em go siddung.
The Fed is literally flagging that it is raising interest rates in March, and probably 50bpts with 1.25 baking-in to the immediate forecast for this year. Nobody is going to take our stinky bullet bond at 3.25% unless they expect default…and guess who likes those trades?
Stop the Caymanians being forced to retire at 65 (does not seem to apply to government members), this is not in effect in UK, let pensioners draw more than 1,000 per month from their pensions, reduce health insurance rates and put a stop to the rip off insurance/medical companies, give discount on utility bills (they can afford it), especially during summer months for running air conditioning (pensioners receive heating allowances during winter months in UK), there is alot more that can be done if some entities/people were not so greedy and lining their own pockets. Do politicians have to be paid so much for so little?
If a pensioner should want income from a reverse mortgage, that should be their choice, not a get out of jail card for the government and it’s obligations and responsibilities to it’s citizens.
But then which governments put it’s citizens before themselves.
Go away Chris with this BS
Or at least have the courage to attend a press meeting so that some questions and concerns can be put to you. It is after all the peoples money you’ve decided to play with.
Cayman is full of qualified financial industry professionals, so I guess you may be asked some questions above your level of comprehension.
Prove us wrong,
All politicians are the same.
I can’t stand them. They just want to remove our freedoms and dip into our pockets…all while dressed up.
There needs to be a law against this.
They make the laws LOL
See all the new suits recently…
“Trust me, I personally lead to the financial ruin of a Class A bank!”
AND i stayed at a Holiday Inn Express last night.
Expense account
I am in agreement with what I have just read.
Now put your words into action specifically the very last paragraph.
Rates are going up globally due to inflation, not down. How on earth could refinancing be a good idea?
It is a bad deal for the majority of people of these islands. Use borrowed money to invest in assets that produce returns for the country.
Thats exactly what this is.
Every investment that lowers the cost of living for caymanians, or allows them to pay their own mortgage (instead of the mortgage of a landlord) lowers the burden on the state, effectively producing a return.
Most people, if not all, should aim, or be encouraged, to become a home owner.
Once the mortgage is successfully negotiated & approved, the 1st 5 to 10 years of a mortgage is most critical, with respect to monthly payments.
Inject those regular monthly payments (and then some 😉) & top-up your “hustler’s” savings account parallel to your mortgage 😄…and watch how pleased you will be with your 15-25 year, long-term investment. Look for an early pay-off, and never be left a mortgage as your financial burden after retirement (>Age 55yrs😊).
No it doesn’t and what he is trying to do is dump the responsibility of repaying his borrowing on a generation 30 years down the line. Same thing Manley did in Jamaica.
Well spotted 5.11.
“Jamaica and Manley” is Saunder’s inspiration , and sadly for Cayman, his Aspiration.
A chip off the old block ! If he loved Manley so much he should have gone to jamrock to live all these years.
You are wrong.
Prove it as being wrong!!!!
Taking on more debt doesn’t lower the cost of living.
Try removing the import duties, offset by spending less. Do we really need to spend $1.5 M a day on their wages?
I suggest that you ascertain how many persons who got a home through the affordable homes scheme kept their commitment to pay the loan and that will give you the answer. And when they don’t pay, guess what happens!
Margin Trading by CIG. What next
or as mckeeva used to say…’we broke’…
1.39pm maybe “we” but never he.
What a moron!
I think there is an easy answer here… instead of a bullet bond, make it a cash-pay bond. That way the amount you borrowed (or invested) stays the same and doesn’t balloon over the next 30 years. Inflation will eat away at it quickly. Is that an option?
All will soon be revealed as to whose advice they have been taking…Stay tuned.
There’s only one local customer that comes to mind for sovereign default paper.
They take $45,000,000 every month in wages, that’s $642 per resident !
I’d rather this money was used to provide housing and support for those who need help.
Time to cut the fat Mr Saunders, you are wasting millions filling your own pockets.
Nonsense
Sounds like UDP and PPM voodoo economics NO thanks
Lord help us. Reverse mortgages are a dumb idea Chris
Reverse mortgages are a way to get the poor out of thier properties, or more like the next of kin. This is what it will happen.
He sounds like a snake oil salesman. I do not think he can be trusted just look at the 20m budgeted to pay for free lunches to all kids set the tone in my mind. Sounds like a socialist from a neighboring island. Spend all the money to buy support no matter the costs long term which then sets expensive expectations going forward.
He must sound like most local businessmen then.
In a previous report from CNS, this was Mr. Saunders first explanation of why they needed to borrow $400 million: CNS 13.1.22 article – Finance Minister Chris Saunders has said the decision to consider issuing a US$400 million bullet bond in the US capital markets will enable government to restructure the public debt over a longer period and offer the flexibility it will need to meet the country’s growing welfare costs.
Saunders told CNS that PACT is considering offering retired homeowners reverse mortgages as a way of helping them access their own equity and reducing their dependence on financial support from government. Given that Caymanians are forced out of work at 65 on inadequate pensions, the welfare bill will continue to grow.
“We are very concerned about the growth in the level of spending on social welfare, especially for the elderly,” he said. “The government wants to offer those who own their own homes reverse mortgages that can support them through retirement. To do that we need to restructure the debt and over a longer period.”
Saunders explained that banks will not offer reverse mortgages to pensioners and that in order for government to do so it needs to borrow over a longer term than the current 15 years, which is why the finance ministry is examining the idea of a bond to enable greater flexibility and probably much better terms. End of excerpt from CNS article 13.1.22
Nowhere in that lengthy explanation did he say anything about infrastructure as a need or justification for borrowing! Nowhere! But now that people have railed against what most regard as the real reason for the borrowing, Mr. Saunders now realizes people do not agree with that angle and so he is now seeking to add some infrastructure costs in with the social welfare agenda in the hopes that people will get onboard with him. Mr. Saunders, we all see what you are up to and it is not in the best interest of future generations. How can it be? You can say what you want, but when our grandchildren have to pay loans that you have borrowed, that is certainly not in their best interest.
You talk about what the previous government did? But may I remind you that you got elected because you said that you knew how to fix those problems. Well we expect you to fix them and fix them within government’s revenue. Government collects over $800 million every year! Use that. Stay within Government’s means, just like you have to do with your own personal income. You want to make the future brighter for the next generation? Then pay off the current $250 million owed by government. Do not borrow more. You say you are smarter and you got elected because you were smarter! Please use your smarts and solve the problems that you have identified within the means of the government. NO MORE LOANS! NO MORE SACRIFICING THE FUTURE of OUR KIDS and GRANDKIDS! We want a prudent, responsible and accountable government, not people who tell us one thing and do another and certainly not people who dig us deeper in debt.
The parent(s) on one minister is rumored to be on the indigent list. Perhaps PACT should ensure that all of their members are setting the right example to the general public.
But we have a law called the Maintenance Law, and the enforcement of it would mean no one has to be on the indigent list. We are corrupt!
Oh s—t, y’all are doomed.
Has Chris been watching markets recently? Interest rates are moving but not in the direction he thinks.
You think Chris cares about all that..?
It’s not his money, same as the bank that suffered under him.
All he and his gang care about is getting re-elected , to hell with the rest of us.
Long term debt at low interest rates is a brilliant plan. In essence, Cayman will be paying back dollars with cents after inflation hits double digits.
Lol. Inflation doesn’t generate cash. At the end of the term we’re still going to owe the best part of a billion back for borrowing that 400m today. Inflation might mean it’s worth less than today but you’re still going to have to find a billion $. Good luck.
Except interest rates are on the way up, & up!
*Attempts to defend.
Can’t defend the indefensible.
Our children and grandchildren will be paying for PACT’s reelection campaigns for generations to come.
Also any property that young Caymanians hoped to inherit , will have been taken by Chris through “reverse mortgage” .. So short sighted , so destructive to the interests of future generations…
This is what will happen. Government will buy the property through a reverse mortgage and when it comes time to collect, the persons grandkids who will be living there on welfare no doubt, will not want to get out. Government will therefore have lost the property they bought through the reverse mortgage, because they will get bad press for throwing the “poor” out on the street. That is a nightmare no politician wants, plus those same people will then go to NAU for assistance and money to rent somewhere else. Chris knows this full well, but he must think that everyone else is ignorant. You wanted the office, now deal with the problem and correct it! Don’t push it off on future generations like you are trying to do. No more borrowing. Pay off what Cayman owes and leave this country better than you found it. That is what we are asking of you.
Chris wanted the office for reasons of personal gain.
He seems to have an agenda of creating as many economic dependents as possible( from you know where) and them have them shoo him in as Premier of
Mini Jamaica.
Alden laid the stage. The mass importation of poverty is destroying us.
Trump used Twitter; these guys are increasingly using “government-produced” videos and mini-documentaries! Re these caucus or Cabinet decisions? These cost public fund$$, what is the approval process?
Didn’t PPM find themselves in hot water for using unapproved public funds to promote their failed Port-expansion project?
Anything to avoid people asking questions in any public forum.
Poor fella is smart, he won’t be able to answer in public, therefore he avoids the public while touting this Jamaica style of recession politics. We are so doomed.
We can all go out to the LA when this crap is being debated and protest. If we allow it it will happen. They cannot handle a little push back.