CAYMAN COPING WELL ECONOMICALLY DESPITE COVID IMPACT
Despite the setbacks caused by the COVID-19 pandemic, the finances of the government and the economy of the Cayman Islands have so far withstood impact relatively well.
That was the message coming from Hon. Premier Alden McLaughlin as the territory moves closer to a phased reopening of its borders after close to six months.
Although the government is running a monthly deficit estimated at CI$25 million to date, the Premier says this is far below what was previously feared in the original projections.
“I can speak with some confidence of government revenues,” he stated reassuringly in a press government press conference on Wednesday.
“Actually government revenues are doing better than we had expected,” the Premier said but tempered his assessment by saying, “but that’s not saying that we are doing well.”
With government finances “significantly in the red”, the picture was one of a better-that-expected performance, which was put down to prudent financial management and fiscal policies.
Premier McLaughlin disclosed that the funding buffer was being finalised with government and a consortium of local banks tentatively agreeing on standby credit line.
When it was initially proposed, the amount indicated was for a contingency CI$ 500 million for government to access if needed.
The details of a are expected to be announced possibly in a matter of days once the agreement is signed.
Stating that “we are going to be in very good shape”, Mr McLaughlin suggested that the agreement could be finalised possibly as early as next week.
“If things don’t get any worse as they are in terms of government revenue, we shouldn’t need that line of credit during the balance of this term,” he added.
INITIATIVES HAVING GOOD IMPACT DESPITE SETBACKS
The government has put in place a range of initiatives to cushion the impact of the economic downturn caused by the pandemic and has announced that some are being extended while new schemes are being launched.
They include an extension for a further three months of the tourism industry stipend provided to Caymanians, retraining and upskilling opportunities in the tourism sector, and a two-year free of charge residential business incubators scheme for up to 12 start-ups art the newly opened Centre for Business Development.
These are in addition to the business support and stimulus programme launched at the height of the lockdown alongside an early pensions withdrawal scheme.
While there are no plans to expand that scheme, a deferral of the paying of pensions contributions will be extended to the end of this year.
Certain sectors of the economy have been performing well as the economy and society adjust to the impact of the crisis.
Among those singles out are the construction industry, bars restaurants and staycations.
The early pensions withdrawal scheme has also seen benefits to the economy and businesses although some anecdotal evidence suggests that much of that might have been spent on overseas purchases.
“It’s not enough to make up for the loss of the tourist dollar,” the Premier reminded, but indications are that ‘local spending’ within the economy has benefitted businesses with some reporting that August was a better month than usual.
“Frankly, I think that more of us are a little more than surprised that as a country we are doing as well as we are,” he enthused.
… BUT THE OUTLOOK NOT LOOKING AS GOOD
However, Premier McLaughlin cautioned that the outlook for 2021 was at best very concerning.
“It is going to be a massive challenge next year and for the next administration,” he said.
General election in Cayman is due by May 2021. Constitutionally, Mr McLaughlin who has been leading the jurisdiction through the health and economic impact of the COVID-19 pandemic is barred from another term as Premier having completed two consecutive terms.
“If you look at what’s happening all around the world, there is going to be real work. We are doing a lot of thinking and planning ourselves,” he said of his People’s Progressive Movement-led coalition administration.
“Because we did that over the course of these past seven years is why we are as able as we currently are to navigate this very difficult current set of circumstances.”
In very sombre tones, the Premier went on to state that “anyone who believes that things are not going to very, very difficult, in the coming years don’t quite grasp the gravity of the situation that the world is facing and is going to continue to face.”