IN SEARCH OF A CRYSTAL BALL FOR CAYMAN
The first cautious steps towards the re-opening of the economy have been met with a combination of relief mixed with a sense of lingering anxiety.
The delicate balance of shoring up the economy against a backdrop of ensuring that it doesn’t come at a cost to public health is a fine line being walked by government and the business community.
Government has to date had the good fortune of falling back on stable finances and a previously growing economy.
But with all of that now under threat of a possible fading prospect due to the COVID-19 pandemic, the government’s efforts to prop up the economy, for all its good intentions, is nevertheless faced with a harsh reality over circumstances that it has little control.
Its interventions to date targeting all sectors of the society - from workers, the business sector and the government’s own financial well-being - are at the mercy of forces well beyond its control.
The sooner an approved vaccine is developed and safely deployed, the better it would be for Cayman and the world.
Until then, the situation will continue to require a degree of adapting to changing circumstances both at the government, business and personal level.
The limited re-opening of the borders - as cautious as that may be - is not expected to result in any significant upward shift in the tourism sector especially and certainly nowhere near the previously anticipated growth prospects.
It's likely to be more of a stabilisation effort.
Considering that Cayman is starting off on this recovery path from a much stronger position than many of its regional neighbours (and many other countries), there is nonetheless the lurking concern in the background of how long can the jurisdiction continue to avert the full effects of what might be coming down the turnpike.
One only has to gauge the concerns in the ‘big countries’ as they continue to grapple with the huge economic and public health challenges thrown up by the pandemic.
Cayman’s ability to secure a standby loan of around CI$400 million, being a 50% guarantor of loan fund of CI$200 million for medium and large businesses, providing grants and loans for small and micro enterprises, as well a generous scheme of early access to pensions have been innovative in cushioning the effects of the downturn.
Other concessions by businesses to their customers have also had the welcome effect of cushioning Cayman from potentially worse economic upheavals due to the pandemic.
It also speaks well of the jurisdiction’s financial and economic stability up to this point.
But is it just a matter of buying time?
The road ahead will require deft navigation in financial management at the personal and business level, and economic management at the government level as some concessions run out and some bills become due.
As with every other country, time - and a COVID-19 vaccine - are of the essence. The longer it takes to find a safe vaccine and distribute it, the greater the pressure becomes on governments and economies.
Hon. Premier Alden McLaughlin remarked just a few days ago his hope that with around CI$400 million accessed under the early pension withdrawal scheme a considerable amount of that would have been circulating within the local economy.
There’s also a hopeful outlook for the planned Global Citizens programme for overseas-based professionals to relocate to Cayman for a time and work remotely from here.
That scheme could very well be the lynch-pin on which, at least for the short term, the revival of Cayman’s tourism is built on. But it’s still untested ground for Cayman and it's unlike 'regular' tourism in many respects.
The financial services sector is reported to be doing better than expected according to some reports. That includes the local banking sector which, according to the Hon. Minister of Finance Roy McTaggart, are reporting that so far they are not experiencing any defaults in payments. However, he did not mention that the banks’ loan payment holiday expired at the end of September. The true test for payment default will be realized in the coming months leading up to Christmas.
But as the Finance Minister observed, while it seems as though at the moment that things are very stable, that could change.
With the borders being gradually opened, it would be more than an academic pursuit to monitor the number of people going out against those coming in, especially who’s coming and going.
With the Overstayer Amnesty started in April coming to an end this month, that also raises the question of work-permit holders and others either filing for extension or departing.
On the one hand, the latter leaves an employment void but at the same time counter-balanced by the creation of vacancies with the hope that Caymanians can be re-skilled to fill those roles in time for those respective sectors get back on line.
It has also been observed that in the equally important construction sector, once re-started development projects are completed, an unclear future awaits their planned occupancy. Also developers may be hesitant to begin new projects in an era of uncertainty.
The coming months are going to be critical in keeping the economy on an even keel under the circumstances.
The pressure is building to salvage this year’s peak tourism season, including any extension of the limited numbers of visitors allowed to enter.
That brings with it a myriad of challenges for the tourism planners and the tourism property owners.
Still at Level 2 of lockdown, although with most restrictions lifted, it could take a while to get to that hugely anticipated Level 1-All Clear.
The current October Phase One border reopening with its elaborate COVID safeguards, might very well be an extended phase as Cayman continues to gingerly step back to a normality which largely depends on what happens beyond its borders.