Growing debt to cost almost CI$44M in 2024/25
(CNS): The Cayman Islands Government expects to spend around CI$44 million over the next two years financing public debt. At the end of 2023, the public debt stood at CI$453.1 million and is expected to fall to CI$430.2 million this year. However, the forecast for the end of the new budget cycle in 2025 is for the government’s debt to climb to a new high of CI$495.1M. Despite the anticipated growth in borrowing, the government will have a debt-to-GDP ratio of 7.3%, which remains under the 10% limit set in public finance legislation.
According to the budget documents, an increase in borrowing will cost the government around $44M over the next two years in financing fees. Officials said that while the goal is to try to fund capital projects and investments using operating surpluses, the projected surplus for both 2024 and 2025 will not be sufficient to fully fund the growing list of infrastructure projects the CIG is planning.
The new UPM’s government said it continues to follow the same debt management policy, using fixed interest rates to ensure certainty in financing costs and an amortising debt instrument so that the principal is repaid over the life of the debt. During 2024, the CIG will borrow an additional $27M but has a limit of up to $123M in 2025.
The government already has access this year to borrowings of more than CI$105M from a previous loan that it has not yet used in full. But in 2024 and 2025, the anticipated cost of its projects and investments will exceed CI$278M, and so additional funding of at least CI$150M will be needed.
In her budget address last month, Premier and Finance Minister Juliana O’Connor-Connolly said that Cayman’s debt as a proportion of its GDP and operational revenue was an “enviable metric that few countries in the world can match”.
She said the government would continue “to keenly monitor its cash reserves and cash needs and will only draw down on the loan funds if and when it is absolutely necessary to do so” over the budget cycle. As a result of existing and new borrowings, the CIG is expected to incur financing costs of up to $18.4M in 2024 and over $24.7M in 2025 to cover the interest payments and other financing costs associated with the core government’s portfolio of debt.
“Government will continue to honour its obligations to repay debt, and approximately $49.9 million and $58.1 million will be repaid in 2024 and 2025 respectively,” the premier told parliament.
But on top of the debt that the government is carrying, it has two major areas of post-retirement benefit obligations for public sector workers. The public service pension plans have varying degrees of past service liabilities based on the contributions to the pension funds and the accrued length of service of the participants. However, the extent of the obligation remains unclear as it is not all recognised in the government’s financial statements.
Officials claimed that the Public Service Pensions Board is able to fund all of the monthly pension benefits from its existing resources, with the regular receipt of monthly pension contributions from core government and other participating public sector entities.
However, the post-retirement healthcare liability for public servants and their dependents is not recognised on the government’s balance sheet. A healthcare liability actuarial valuation, completed in March last year, estimates that the post-retirement healthcare obligation stood at $2.1 billion at the end of 2022.
The CIG works on a “pay-as-you-go” basis with respect to post-retirement healthcare liabilities. Currently, no long-term assets are set aside for this liability, but the government said that civil servants, pensioners and dependents continue to receive uninterrupted healthcare provision.
See the 2024/25 Budget Plan and Estimates in the CNS Library.
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Category: Government Finance, Politics
Dear JuJu, please step down. You are doing nothing but screw this place up. I’m not sure if you’ve noticed, but we have AK47 gun battles going on, drive by shootings, daily robberies, knife violence, daily shootings, and you want to build a $50 Million (FIFTY MILLION) dollar school on a cliff for 200 kids.
We need this crime spree ended now or your financial services will walk, leaving you with about 4 tour operators fighting over what conch has yet to be poached. STEP DOWN WOMAN!
Juliana has no problem with spending, wasting and giving away the country’s money. I realise it was easy to convince her underlings that spending 50 millions on a school for 200 students is the financially responsible thing to do. Obviously not one of them questioned why so much. I am not against a new high school building considering the one they have is old and run down but surely it must be possible to build it for less. Now that there is no surplus one would think they would have a little constraint on spending.
Heaven help us if there is some crisis we need money for. Our government is increasing our debt just when our economy is in rude health. What the heck will they do when our economy is in the tank?
From reading these comments its clear that the general public has no clue how the budget approval process works. For clarity, the sitting government creates the budget and brings it to parliament for debate. This typically happens in Nov, for approve by year end. This is the first time that the budget debate came dangerously close to the deadline. Some might say that it was the budget (and attempt to curtail wild spending) that was the reason for Wayne Panton’s ousting.
Each ministry presents their budget and the opposition see the budget for the first time when it is presented in parliament. They can ask questions and shine a light on wild spending, however because the opposition only has 7 votes they do not have a majority and the sitting government has 11 votes and none of them would vote against their own budget, so it passes. “The I’s have it” is stated after each vote and it would be ridiculous to have each MP do a division of their vote each time because their is no point. The sitting government (UPM) has 11 votes to the oppositions 7. The only thing the opposition can do is question the wild spending and show the people how they are wasting our money on pet projects to get them re-elected. The opposition can not stop the sitting government’s spending only shine a light on it – only the voters can stop it by not voting for them.
Premier is a lawyer.
can she do something to effect better policing, smarter lawmaking and more relevant and just court decisions?!
Now the police is asking the public to help recapture another suspected child molester who the placed on bail.
Time after time they do this.
Then they don’t protect or inform witnesses or victims!
Neither do they enforce the bail conditions..especially of suspected rapists who are not supposed to be near the alleged victims, or near any children for that matter!
Going to Cayman law school and being a lawyer… two VERY different things.
CNS: However, she was a practicing lawyer before she was first elected in 1996. I cannot find any reference to which law firm she worked for, but I have in some dimly lit corner of the back of my mind that it was a firm where Truman Bodden was a partner. I could be wrong about this and will check when I have the chance.
She is not a member of the Cayman Bar? Why?
Maybe she never passed the Bar exams.
One would not hire an accountant who was not a CPA.
One would not hire a lawyer who was not a member of the Cayman Bar.
Just because one takes a couple of accounting or law courses in university does not make one an accountant or a lawyer.
Fact of the matter is that we have a Premier who is not up to the job, proved by the fact that she was a terrible Minister of Education for so many years with terrible results in public education.
People wake up.
Please bear in mind that The Truman Bodden Law School is affiliated and graded in line with the University of Liverpool and the Oxford Brookes Universities in the UK. After three years and gaining their law degrees students must study and get the PPC certification them do the Articles before they are designated an attorney. It is not just ” going to the the Cayman Law School” as you are implying. We have many well qualified Caymanian Attorneys who went through this system. They are as qualified as their U.K. Counterpart. They all get better with experience. Some choose to do the degree only- those are not Attorneys.
Please do us a favor and resign immediately Julianna. Your replacement can be chosen via pick in the hat.
Our politicians and civil servants earn some of the highest salaries in the world, yet we are amongst the smallest countries in the world, this is sheer madness!!.
With the lowest value for money ratio.
We should also have the best infrastructure, the best regulated waste disposal system, the best public transport system, the best managed government agencies, the best teachers, the most highly educated politicians, the best doctors etc.etc. , and the best educated and equipped populace. We should also be able to feed ourselves, have the best open areas and parks, and have some land put aside for “our people” to purchase if / when they so choose. We should be the best but unfortunately we are not. As the saying goes ” if wishes were horses beggars would ride! We lack vision, self awareness, we allowed to many to take our meekness for weakness. I believe it is now too late for us.
😇 Singapore: Asian levels of marriage and single parenting, Asian levels of atheism, Asian levels of corruption, Asian levels of educational achievement, Asian work ethic, Asian levels of crime, Asian levels of success.
🤡 Cayman: Caribbean versions of ⬆️…
So. No one said anything about the increased port fees. I am a bit curious as to whatelse there is that they “forgot” to mention.
How in god’s green earth did this woman become premier? We are doomed. Should have been an early election.
The government needs to get serious about paying down the debt or they’ll end up in the situation the US is in. There is no need for a $50M high school in the Brac. Use that money to pay down the debt, and if it was to be borrowed, then just don’t borrow it.
We need to build the school on Brac so that the Caymanians can move over there and we can complete the gentrification of Grand Cayman where the only housing will be for 1 million KYD and up, the word “unna” is banned, and the turtle centre is demolished with a statue of a big lettuce in its place – commemorating the day PRs who bought their papers with real estate were made able to vote and thus banned the barbaric practice of turtle meat forever.
Welcome to Absurdicaymens enjoy your stay then buy up all the birthright land generational caymanians ga up for sale.
and ppm approved/supported this budget mess….but are now complaining?????
ppm are as bad in opposition as they were in government.
Keep asking….
How many recommendations of the miller-shaw or ernst & young reports have been implemented?
will wait for answers
Juju and company is putting Cayman on a very bath path: Ever greater indebtedness is wrong, wrong, wrong.
For those who hold the debt it great, great, great! Please borrow more, more, more. CIGs greed and ignorance is Awesome and well appreciated.
We are all so screwed with JuJu and her merry band of morons.
Our budget ratios are going to get out of hand and the Uk will step in sooner or later. The politicians will cry about that, a problem of their own creation.
We need elections to be called. No one voted for these people to run the country. No one voted for their made up party to run the country. The people of these islands have been lied to and are being abused.
Which world are you living in. These are exactly the people who were duly elected to run the country. We are very proud of the fact that we have a fair election and then those people who are elected decide who should be the cabinet Ministers and the Premier. You may be confused but i know these are the people who were elected to run the Cayman Islands. In regards to being lied to maybe someone told you something different but these are the facts. The voters elected individuals with no structure or organization and somehow expected a cohesive organized Government.
this is why Dart probably loves this place, – opportunity in crisis, a boon with incompetence.
Did I miss something or has this government failed to have a press briefing where they’re actually asked questions by journalists?
Imagine, after all these years, WE as a people are still voting in OUR “best of the best”. We’ve literally failed in all aspects expect for collecting Revenue from Expats. God help our Islands because we need a change, the public sector is over crowded with people who can’t hold a candle.
cayman has two solutions:
direct rule or let status holders run for office.
anything else is doomed to failure.
They’ve got direct rule back home (and it’s a shit-show over there.)
Direct rule is where the Constitution is suspended and the UK steps in to rule in the place of the legislative and executive arms of Government and often clean house with civil servants and in SAGCs that require a reset (e.g., what happened in TCI after the Michael Misisck fiasco and what almost happened a few years back in BVI).
BVI is in the news again. Governor wants more power over the ministers decisions, particularly procurement apparently. BVI ministers called a meeting of BOTs wants JuJu there.
UK were left no choice in BVI, hopefully Cayman will look and learn.
Cayman has a third option.
Vote for good people.
They don’t want the “good people”. They definitely don’t want the smart, honest, educated, eloquent. .
Just watch who gets Status now we have a board set up.
It won’t be the educated professionals, because they won’t be voting for uneducated unemployables like we have now…Andre excluded.
That’s definitely not an option right now when there is nowhere near enough good people to form a government. Ask Wayne P how that works out.
Wayne created most of his problems himself. He had an option and didn’t take it up.
The difference is the millionaire is pending his own money JuJu is spending ours, so cares more about having the money to spend on vanity projects and convince the electorate that the UPM is a “giving” party than wasting money on avoidable interest.
Trust me. By the time JuJu and her band of useful idiots are done this will be a hell of a lot higher.
When you add the minimum wage earners, FATHERLESS CHILDREN that have PR and Cayman Status that send there earnings home WHEN reach retirement age and CANNOT TO PAY THEIR WAY TO CONTINUE TO LIVE HERE, they will become reliant on the 30 to 45% of the working population, All HELL WILL BREAK LOOSE, DOG EAT OUR SUPPER in 10 to 15 years. Who will we BLEAM then? We are going to hell in a sand basket in the name of development and those that Politic-Tricks 75% electorate with handouts/promises (sand basket) and greedy Mil, $$$$’s contributors.
THEIR
BLAME
HAND basket.
Remove tax on food imports.
Essentially the country is insolvent if you add in the retirement obligations. Nice gift to leave behind for future generations so you can put your name on a school.
the stop hiring more people, oh wait we are the employer for you know who, so we have to keep creating jobs so they can remain here
well I can find a saving of 50 Mil without any thought at all.
without looking like deer in the headlights.
There is NO reason for CIG to be in debt. NONE. Pay it off. Yes CIG has an exceptional debt to GDP ratio. So what? We shouldn’t have any debt at all. Paying interest is a massive waste of money. This is like a millionaire only paying the minimum off on his credit cards and paying interest on debt he doesn’t need. This is financially illiterate.
This govt is barely literate let alone financially literate.
Well. Spoken Luke someone without a clue in the world.
CIG will inevitably have debt. Debt is kind of unavoidable BUT it’s the levels of debt that concerns many of us.
The biggest problem with CIG always is those projects in the last year and a half of their admin that’s done right before campaigns Starr. Usually they are not “necessities” but party desires to get votes.
You notice when the spends are happening? 2024/25. When is next election again?
Why is CIG being in debt inevitable? Our $1bn/year income grossly exceeds the expenditure actually needed to runthese islands well. We should OWN other country’s debt and receive interest into a SWF not be IN debt. This is absolute financial insanity. Our MPs biggest problem seems to be how to give away and waste as much money as possible every year. Debt financing is the road to ruin.
@7:13 100% correct. It drives me mad every time I read about the financial incompetence of these people, who amazingly are in charge of Cayman’s funds. Cayman should be sitting on a billion dollars of investments e.g. in US Treasury securities and Fixed Deposits and No loans! They should also be adding at least $200M per year to such investments – easily!
It is clear, we are literally witnessing a train reck about happen.
We have a government of the ‘barely literate’ who think that just being Caymanian is a qualification in all things wise.