OAG: Lack of overall economic plan puts Cayman at risk
(CNS): The failure of successive governments to develop an overall strategic economic plan to finish the much overdue National Development Plan or to manage the country’s population surge is putting its future at risk, the Office of the Auditor General found in a report published Thursday. Even though Cayman’s economy is strong, largely due to the financial services sector and, to a lesser extent, tourism and construction, the high cost of living and poor overall general management of the country’s economic fortunes leave Cayman vulnerable and threaten its economic stability.
Although not stated outright, the report leaves the impression that Cayman’s undeniable economic success is in spite of government efforts rather than because of any proper planning. This is evidenced by the population surge, an exceptionally high inflation rate, over-development and the significant pressure on local infrastructure.
The report notes the ambition of governments over the years to diversify the economy from its dependence on the financial sector, with support from construction and tourism, which the government spends the most money propping up.
However, efforts to diversify the economy have met with little success, and the report raises questions about how sustainable local economic development is. Planning for and protecting the country’s future has been the Achilles’ heel of many governments, as the short-term election cycle appears to prevent meaningful sustainable policy development.
While dozens of reports have been published over the years setting out ideas and proposals for managing the country’s rapid development, from transport to crime prevention, very little action has emerged from any of them.
Currently, there is a rolling strategic plan for the offshore financial industry, which continues to contribute the most to the country’s GDP and generates the most jobs for local people and around half of government revenue.
However, the OAG said the tourism plan has not been well-managed, measured, or monitored. More worrying for the local economy and Caymanians in particular is the impact a lack of plan for the construction and development sector is having on the growing economy, society and the environment.
In this detailed report, entitled Government’s Approach to Sustainable Economic Development, the audit team led by Sue Winspear spell out four recommendations for how the CIG can begin to address the shortcomings.
These include the establishment of an overarching economic development strategy, strategies for the construction sector and options for the long-touted economic diversification from financial services and tourism. The audit also recommends that the government works to improve its assessment of and response to potential risks that could hit the economy.
While Cayman’s economy is performing well, the cost of living is high, which Winspear said is something Caymanians and residents are well aware of. The report also shows that between 2018 and 2022, there was a high correlation between economic growth and population growth, an issue of major concern to many Caymanians.
“The population has a direct impact on the demand for public services now and in the future. Failure to respond to these demands and expectations could adversely affect the economy,” Winspear said. “Government needs to plan better for population growth and how this may affect economic development.”
She said the increasing population will put more pressure on the road network, waste management and internet connection. It will also increase the demand for places in public and private schools, affordable housing and healthcare.
“Successive Governments identified economic growth as a priority,” she said, adding that the government has plans for the financial services and tourism sectors. “However, there is no overarching strategy, a strategy for the construction sector or a finalised National Development Plan to support the implementation of this government priority… Successive Governments have identified economic diversification as a priority. Some successes have been made in diversifying the economy but there are no plans on how to achieve this priority more widely.”
The report states that there are risks to and challenges for the economy ahead, including the need for responsible financial management and managing potential economic shocks such as a global economic slowdown or another pandemic. The report concludes that it is unclear how well these risks have been identified, assessed and managed.
“Despite the economy performing well there are risks to and challenges for the economy. It is unclear if these risks and challenges had been identified, assessed and managed.” Winspear said, noting that a new risk management approach is now being introduced.
A chief risk officer was appointed earlier this year, and the civil service is making progress in this area. A new risk management framework has been developed, which will include internal and external risk assessments. “This should significantly improve the way that Government monitors and manages risks, including economic risks,” the OAG found.
Responding to this latest report from the OAG, Deputy Governor Franz Manderson said in April that a new civil service 2024-2026 strategic plan was launched, making it a requirement for all ministries to create their own plan. In addition, a chief risk officer had been appointed to create a risk framework for adoption across the civil service.
“The officer continues to work in tandem with the senior risk committee comprising of chief officers to monitor and manage risks across the Cayman Islands Government,” Manderson said.
The civil service is entrusted with implementing the policies of the elected government, though the deputy governor fell short of pointing out that the elected branch has not developed a policy to guide a national strategic plan. Manderson leaned into the continued success of the offshore sector and the efforts of the civil service to support that industry.
“Through our collaborative efforts, alongside those of the broader business community, we have successfully positioned the Cayman Islands as one of the world’s leading financial centres,” he said.
“A notable example of this partnership’s impact is the work to remove the Cayman Islands from the Financial Action Task Force grey list, demonstrating how cooperation drives meaningful progress. I am immensely proud of these achievements as we continue to advance our mission of transforming the Civil Service into a world-class organisation,” the deputy governor added.
See the full report here and in the CNS Library.
The original OAG reports on which this report is based are all available on the OAG website.
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Category: Economy, Government oversight, Politics
… as we continue to advance our mission of transforming the Civil Service into a world-class organization…
How’s that work coming along? Do we have a time-line when we can expect world-class service from our “tirelessly” working Civil Service?
It is getting worse. Exponentially.
Almost there. Speaking with Bill Gates. $1 million for an App. Can take care of the whole thing. $500 million in savings will be split between voters, every year, as a dividend.
Right after George Town has been revitalized.
Why is George Town being paved over? Where is all the traffic supposed to go? Where do people park? Why are still more Palm trees that provide no shade being planted? Idiots in charge.
Well done the auditor general and her department. They do not mince their words as good auditors should do.
Just a lack of economic plan? I’d say there’s very little planning for anything.
Waste management, power generation, transport, border control, policing…
For sure. It’s like the AG only perked under the edge of the rug, needs to do a full spring clean.
It is the OAG. The AG is the Attorney General.
there is no-one in cig or civil service with expertise or qualifications to prepare a national development plan.
civil service is filled with poorly educated people with zero ability to tackle these issues.
if we can’t be honest and face these facts we will never be closer to a solution.
There are a handful of them that could do it, they have zero incentive however.
caymanians elect these people so you have no-one else to blame but yourselves.
and to make things worse, you also prevent the most qualified and successful people on island from being elected…
welcome to wonderland.
Ummm. The civil service is dominated by non Caymanians. Just sayin…
another day….another damning report on the the failures and incompetence of cig and the civil service.
Nothing about DG Franz or his army represents anything near world class
Lack of a plan because we don’t have people with the correct skills to create one. Fly by the seat of our pants all the time.
There is nothing world class about the civil service. It is a black hole with hundreds of millions are spent yet the poor results and incompetence are all the country gets back in return.
Lack of economic plan, could have fooled me. I though it was:
Plan A: Spend on everything that isn’t priority
Plan B: Obtain Loan
Plan C: Spend some more on needless $hit
Plan D: Pass on deficit to next administration
any comment Mrs governor?
any comment ppm?
any comment chamber of commerce?
Elect clowns, expect a circus.
“Who would’ve thought?! Plans? We need those?”
Meanwhile, Government has formally discontinued forecasting.
Wha’ a mess!
It all comes down to how much of The Risk can be tolerated before it wakes you up at 3 am.
But we do have a plan run by those who have inundated the entire Ci government run by our great DG or certainly under his watch . The plan is to make Jamaica Great Again ! Unnah try hush ungrateful crybabies !
Franz STOP IT!!!
Sadly some of the untouchables in the civil service have been obstructing Cayman’s success. We are operating far below our potential and the successes we do enjoy are mostly in spite of our civil service. Not because of it.
Hmm, ok 3:22. I get it. I’m not a Franz fan either but the comment about “in spite of our civil service not because of it” could equally ( and in my view more pertinently) read “in spite of our politicians not because of them”.
Who isn’t answering their phones or understanding or enforcing the laws they administer. Where are the security cameras we paid for? Why do we have the license plates we paid for? Why does our public education lag so far behind our private education? It’s the day to day shit we are failing at. The politicians are a separate disaster.
Agreed poster at 7 pm. Politicians ignore the need for economic planning, or could it be that they never even heard of the concept of planning for the economic development of a country. Remember though, that the time for this to have been addressed was decades ago when a civil servant, the Financial Secretary, was responsible for economic development. It was talked about then, nothing was done. Ahhh what a wonderful world this could be.
Franz is certainly part of the problem, but those untouchables you speak of have friends in the elected government protecting them.
The DG promotes loyalty above its station and does not value competence. He protects all sorts of nonsense with no shame. His mismanagement is a root cause of key issues in a bloated and very expensive civil service.
A professional, impartial, independent civil service cannot be effected in this way IF IT IS DOING ITS JOB.
It is accountable to the law and the principles of good governance. No-one else and nothing else.
Franz are big,big part of the problem and should retire. bUt who will be better ???? NOT BUSH
Franz needs to retire or get fired!
He is delusional and supports all the poor results.
No one gets fired from the civil service.