FFR could block spending on climate resilience
(CNS): Premier Wayne Panton has said the Framework for Fiscal Responsibility could prove too conservative for Cayman to invest in the necessary projects and initiatives to future-proof the country and develop resilience to survive the changing climate unless the cap on the debt can be lifted. PACT’s policy goal of a sustainable future and preparing for what is to come will be extremely costly, given the failure so far to curb development.
Panton has stated on a number of occasions recently that Cayman is not currently at risk of breaching the requirements of the “fiscal guardrails” in the Public Management Finance Act. Even though he is seeking to cut spending, the premier stressed this was about building enough resources to pay for the Cayman Islands Government’s priorities and not because the country is broke. He has made it clear that the Cayman Islands is in no danger of losing control of its public finances to UK bureaucrats.
But speaking on Radio Cayman’s For the Record on Monday, he warned that in time, complying with the financial boundaries in the FFR while making the necessary changes to green the local economy and deal with the impact of global warming could become very challenging.
“It’s a set of metrics that were put in place back in 2011 required by the UK, and there are elements of it which are quite conservative,” he said. It does serve the interests of the country, he said, but there are times when “this element or that element is too conservative, and it would be useful to get some leeway”.
He said this was especially of concern when it comes to planning for the challenges of tomorrow and figuring out how Cayman is going to adapt. There will be some concessionary financing from the UK for some of the initiatives to cope with future problems, he said, but if Cayman is to finance the extent of what is needed, the FFR could prove problematic.
Panton questioned how Cayman would be able to fit some of “this extraordinary stuff” that will need to be done into the conservative metrics of the FFR.
The FFR outlines a number of rules the government must stick to when it comes to managing the public finances, such as maintaining a certain amount of money in the bank and not allowing the annual cost to service public debt to go beyond 10% of the CIG’s annual revenue.
Panton said he had told the UK they must recognise that the cap on the debt will make it hard for Cayman to play its part and deal with these extraordinary things that will build resiliency and help mitigate the impact of climate change. The premier said we will need some room in the FFR to lower greenhouse gas emissions, to become more environmentally conscious and to protect nature, especially where it is providing important eco-services.
He said that during some of the talks he has had with UK officials, he has raised the need for flexibility relating to the FFR metrics. “If this means that we are going to go above 10%, at least give us the latitude and the flexibility to consider that, where it involves financing, concessionary or not, to be able to achieve these types of extraordinary things that we need to be able to do,” he said as he related the substance of the requests.
Panton said the FFR was important in helping to manage public finances properly, but with increasing demands on public revenue from all directions, including the additional issues around the climate, it was conservative.
The premier said there are many concerns about the future of the country, and he wanted to open discussions on a national priority project list so people can understand the multitude of things the government believes must be addressed, from a new police station to more schools.
But work relating to the environment and the need to build climate change resiliency is needed immediately, he said. There are some communities now that are already constantly flooding due to an increase in the frequency of king tides, which is only going to get worse.
Flooding as a result of sea level rise and beach erosion is the main problem that Cayman faces, but there are many more potential issues on the horizon. Fulfilling the requirements of the National Energy Policy and Climate Change Policy alone will make significant demands on the CIG’s resources, even if revenue remains stable.
Undoubtedly, the government will need to borrow to fund the measures that will be required, and lifting the cap on the debt service ratio is probably the first step towards the PACT goal of a sustainable and resilient future for Cayman.
See Panton discuss the FFR and other issues below:
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Category: Climate Change, Government Finance, Politics, Science & Nature
Although weather phenomena are complex and difficult to predict, there is a good chance that sea level will rise 70 to 120 cm by 2100. Since the average elevation of Grand Cayman Island is less than 2 meters, even a 1 meter rise in sea level would submerge 20-30% of the island, and a 2 meter rise would submerge about 80%. Flooding from hurricanes, storm surges, and tidal waves would damage far more areas than this. In a worst-case scenario, such events would be so frequent that mortgages and insurance would become unavailable, severely impacting national economies.
Even if every country in the world reduced CO2 emissions to virtually zero by 2050, sea level rise over the next several hundred years would be unstoppable. This is because the CO2 already emitted will inevitably cause global warming. Even the most optimistic projections indicate that sea level rise will exceed one meter by the mid-22nd century, eventually forcing the Cayman Islands to relocate its capital to the higher elevation island of Cayman Brac.
In the short term, new construction in the lower elevation areas of Grand Cayman will be prohibited from occupying the ground floor, and only parking lot use will be permitted. There are also measures such as requiring residential land development above a certain size to be filled with fill, but these measures have their limits. If sea level rise exceeds 1 m, it will be necessary to move the capital to Cayman Brac and promote mass migration of residents.
In light of these long-term climate changes and sea level rise, it is necessary for the time being to gradually reduce investment in Grand Cayman Island, relocate to Cayman Brac Island, and promote migration to Cayman Brac Island. If this concentration of investment in Grand Cayman Island continues, flooding and other damage will increase, and the Cayman Islands economy will become poorer in the future.
Raising the debt ceiling without limit is a path to national decline. If the debt ceiling is raised a little and there are no major problems, there will be calls to raise it further, and eventually it will become unstoppable. This situation has been proven by many histories.
In 1990, Japan had the highest GDP per capita among major industrialized countries such as the US, UK, Canada, Germany, France, and Italy. Subsequently, however, Japan’s fiscal situation worsened because it did not implement fiscal restructuring measures, such as tax increases and spending cuts, to cope with large-scale public works projects and rising social security costs associated with an aging population. As a result, as of 2023, Japan’s budget deficit as a percentage of GDP was by far the highest in the world, and its GDP per capita was the lowest among major developed countries.
The reason this happens is that when fiscal discipline collapses, firms begin to anticipate future financial collapse. A collapse of national finances would naturally lead to a financial crisis, and if companies do not have sufficient cash reserves, they will quickly go bankrupt. To avoid such a situation, companies curtail investments and pay raises and hoard excess funds. As a result, investment funds, the source of the nation’s economic growth, are reduced, and personal salary growth is adversely affected.
Japan is the worst example of this. Seeing that Japan was not going bankrupt anytime soon, major countries took measures to increase their debt by emulating Japan. As a result, their economic growth rates have declined, just as Japan’s did. This is not a phenomenon unique to Japan. It can happen to any country in the world.
Define “Climate Resilience”.
Basically you will find it’s just some arbitrary line of bullshit anyone can come up with.
Anyone that thinks “climate planning” by a bunch of bureaucrats can either change the climate or defy it is living in lala land,
OR
we need to send them to the Sahara so they can start forming green farmland in the region to help feed the world.
Folks I smell a much larger problem about to be exposed in the coming months.
I have a feeling government is posturing on various issue to protect themselves when this comes to light.
Don’t buy Cayman debt it’s about to get junked.
Hang onto your USD
Thank God for the FFR . It was created to save us from ourselves! Madam Gov get the refresher’s handbook on “how the dimwits love to waste funds” and make it a part of your bedside readings each night.
lmao sell me your KYD cheap cheap then
I really expected better from Wayne. Didn’t he run a Global law firm at one point ? This proposal is madness! The FFR was out in place to keep our finances in order and he wants to unleash this bunch of clueless ministers on us without any restraint!? Not today BoBo I will fly to London to demand that this does not happen.
Token face of global law firm
No he didn’t- he only thought he was running things, like he thinks he is running things now.
Wayne fooled the whole bunch of ya!!!
Where did all the money go before Wayne? You and your glutenous pig cohorts are always hungry feeding at the main and side troughs such that we the public never see proportional value put back into any of our infrastructure.
Now you’re pleading poverty? You sound like the former Speaker who claims he’s broke and can’t fund his legal defence. To the wise, you are seen to be deflecting from the sad ugly truth, and it will come back to bite you all. Asking UK for a bly is a death sentence to Cayman!
But I thought we were selling carbon sequestering services Wayne with our natural resources having a $3billion value.
Your problem right now Mr Prsmier is you’ve talked and promised so much s***, haven’t delivered, and nobody’s listening anymore.
https://caymannewsservice.com/2022/05/panton-we-can-sell-caymans-natural-services/
That 3B$ is depreciating fast every day under his watch. We won’t have any natural resources to leverage soon.
This from the man whose government is in the midst of dropping 50 large on a school in the middle of a protected parrot habitat.
Amen, hope the FCO, Governor and His Majesty will not have to step in and squash this public waste of funds.
Brac/Little Cayman need more
1. Reliable communications – especially in Little.
2. Radio stations that actually work.
3. Expedited city water
4. Roads repaved.
5. More reliable plane service than the worn out Saab.
6. Reliable electrical service.
7. More police patrols at night.
8. Term limits for politicians and board members of Government related stuff.
9. Get rid of all the scrap metal, tyres and batteries at the dump. Remediate current dump and put it adjacent to Lewin Drive on bluff.
10. Temporary road workers who are getting public assistance should do part of their work in exchange for government handouts that they receive – or in this case fund them to work year round.
and on and on and on. so many things 50 large could do, other than an overpriced building that serves the neighbourhood politician’s huge ego.
If FFR doesn’t kill this idea let us put it into a national referendum. While Brac will vote for it, kind of think Cayman will say otherwise…….did I mention this is a complete waste of public funds.
And the Brac contributes what to the economy?
Deficits.
The Brac Formula states that massive funds are poured INTO the Brac and ZERO funds come OUT from the Brac into the country’s economy. Simples! Learn it.
Exactly. Other than exporting our young people to Cayman (because of the lack of jobs available) the Brac is a huge money pit for Government funds.
Seems like 90% of households over there work for government
Without Brackers and their businesses, you Grand Cayman people wouldn’t have any decent supermarkets or hardware stores. So be thankful that Brackers come over to look after you.
Hope FFR blocks the totally unnecessary nearly $50 million for Cayman Brac High School.
It isn’t even close to April Fools Day, but figured the Minister for Education was playing a trick on us.
sounding like we are more broke than wayne says we are
This man is lying to the country. The FFR has nothing to do with him managing priorities and not wasting money on flights to Barbados, Kenneths Wonderland Park, the millionaires private terminal, Julies school on the Bluff etc… cut those things and you wont break the FFR. Stop diverting and playing magician Wayne. This is nothing more than a failure to manage your ministers and lead from the front.
Caymanians only no how to serve by spending money on projects of grandeur.
Maybe Cayman News Service, Cayman Compass, and Cayman Marl Road need to ask this question:
“What are Wayne Panton’s business interests and what are his companies currently doing which goes against all of his ‘climate change’ propaganda and empty rhetoric?”
Well they put the word “Clean” at the front of one of them so that must mean it’s great for the environment, no?
AKA Clean Gas? And that propane emissions aren’t even a part of the NEP? Weird, eh?
free money making solutions:
allow sunday trading
bring in weed tourism(to protect the fine caymanian christian ‘heritage’, only tourists and expats are allowed purchase)
bring in casinos at top hotels (to protect the fine caymanian christian ‘heritage’. only tourists and expats are allowed)
treble all traffic fines
treble duty on cigarettes
implement any recommendation of miller-shaw or e&y reports.
sell loss making cayman airways
sell loss making turtle farm
sell goab
double stamp duty for non-resident property purchasers
So what ? Caymanians dont smoke weed?
so we not broke but you do want to borrow more than we can afford or sustain??????
welcome to wonderland.
red alert time!
wayne trying to use climate change initatives as an excuse to break ffr guidelines. absolute nonsense.
the huose of cards cayman economy is starting to wobble with every word spoken by wayne….
In most financial catastrophes nothing is initiated with smaller warning signs prior to the event.
This is usually that by the time the math is done in the background it’s already too late.
Sort of like warning the world that an extinction event sized meteor the size of the moon will hit us in 25 years…….no upside
The FFR is what saves us from the grubby fingers of profligate politicians and their administrative enablers.
Any latitude to the framework will result in a fiscal death spiral and the kind of corruption that pervades the rest of the region.