CIG debt under control but liabilities still pose problem
(CNS): The Cayman Islands Government’s debt currently stands at $429.9 million, with $48.1 million due within one year, according to the CIG’s latest unaudited accounts published earlier this month. This figure is well within the requirements of the Public Finance and Management Act, with a net debt ratio of just 17.5%, while the law allows up to 80%.
However, the area of concern remains future liabilities, as the $2.2 billion healthcare liability is not included in the accounts.
The Unfunded Pension Liability, which is included in the annual accounts, stood at $343.5 million at the end of last year regarding the defined benefits of some public sector pension plans.
Alongside its own debt, the CIG has loaned money to two government companies. One of them is the Cayman Turtle Farm, which continues to run at a loss every year. The redevelopment of the original facility into a tourist attraction has never been able to cover its own costs and has cost the taxpayer millions of dollars over the years.
The government executed an interest-free loan for the farm of CI$10.0 million on 17 January 2022. As of 30 June 2024, the full amount of CI$10.0 million has been drawn down, but a commencement date for repayment has not yet been established, according to the report.
An interest-free loan of CI$50 million was also given to the Cayman Islands Airports Authority for a number of additional capital works to enhance airport facilities. The CIAA has commenced repayments of the principal as per the agreement. As of 30 June 2024, the balance remaining on the loan was $48.3 million.
At the end of 2020, the CIG entered into an agreement with five local banks to guarantee a loan programme, which closed a year later. The amounts guaranteed by the government were equal to 50% of the aggregate of the outstanding principal and unpaid interest.
As of 31 December 2022, ten loans amounting to $5.3 million had been approved, and the outstanding principal on these loans on 30 June 2024 was $4.1 million. The government’s maximum exposure, however, is just CI$2 million. For the life of this programme, one bank has called in one guarantee of just $21.300, which has been paid.
The government’s CI$2.2 billion unfunded healthcare liability remains a major concern and is repeatedly noted in the auditor general’s annual reports on the state of government financial reporting. Because this liability is not accounted for in the government ledger, it has failed to get a clean audit opinion on Entire Public Sector accounts.
Financial Secretary Kenneth Jefferson and Deputy Governor Franz Manderson have both stated on numerous occasions that placing such a liability on the books, especially when the money is not yet due, would undermine the entire public finances and put the public purse into the hands of the United Kingdom’s government.
At a Public Accounts Committee hearing in March this year, Manderson and Jefferson spoke about this ongoing issue, but neither man was able to offer a solution to the problem, which is viewed as a political issue to resolve.
See the latest published unaudited accounts from CIG in the CNS Library.
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Category: Government Finance, Politics
Successive governments have continually dumbed down our voting populace. The result is an escalating debt with few opportunities for Caymanians. It’s time we pay attention to our locals and educate them so they will make the right choice for our country and not a few select people who only cared about themselves.
Drain the sound in 2025 and elect leaders who will provide opportunities for us to take care of ourselves
We need financially prudent leaders to take over this country. If not we will all be poor foreigners in our own island. Please vote smart in 2025 as it will be our last opportunity to steer this ship back on course
I think the unfunded health care liability of CI$2.2 billion needs to be better explained for this to make sense to me.
The amount of beach in that picture is overstated.