- Home
- Economy, Trade & Investment
- Financial Crisis/ Recession
- Cayman Islands: Remarks by the Premier, Honourable McKeeva Bush, on Meetings with the FCO
Cayman Islands: Remarks by the Premier, Honourable McKeeva Bush, on Meetings with the FCO
- By S Coward
- Published 16-Mar-10
- Financial Crisis/ Recession
- Unrated
........
Revenue base needs to be widened
4. Revenues
On the subject of revenues, The FCO continues to suggest that the Cayman Islands' international reputation would be improved if it were to introduce some form of direct tax in the country as it would be less likely to be viewed as a "tax haven".
The Cayman Islands reiterated the risks associated with taking this course and after discussions, the Government agreed to continue to examine ways to broaden the revenue base but that were suitable to the Cayman Islands consistent with the country's economic model. The FCO did express some disappointment that the Miller Report did not address the question of what revenue measures could be pursued.
5. Private Finance Initiatives (PFI)
The UK reiterated its concerns on the potential risks relating to PFIs, but it also stressed that it was not necessarily against the use of this method of financing. Rather, they said that their main concern is that there is a proper feasibility and cost benefit analysis carried out and that the process is transparent for each project.
Conclusions
In concluding my remarks updating you on the meetings with the FCO, I would add that there were open and frank discussions on the state of the country's fiscal affairs and the various recommendations of the Miller Commission Report. It was generally agreed that the country needed to implement both short and medium term pans to regain fiscal and economic sustainability.
The UK agreed that the Government's approach to maintaining manageable debt levels was the prudent approach. Both the UK and the Cayman Islands agreed that most of the measures
recommended in the Miller Commission Report were valuable and should be pursued.
The FCO would like to see a more aggressive approach to reduction of expenditures. The FCO also expressed its wish to see further efforts to broadening the Cayman Islands revenue base. The Cayman Islands remains committed to examining this issue providing that the country's economic model is not adversely impacted. The UK expressed its willingness to support for the Government in implementation of its plans.
His Excellency the Governor expressed his support and willingness to work with the civil service for which he is directly responsible, in relation to securing the necessary expenditure cuts.
The Government will now prepare a three-year forecast to be submitted to the UK at the end of March. This three-year plan will set out the Government's primary medium term economic and fiscal strategies.
The medium term strategies outlined to the FCO by the Government, as part of the presentation, were well received. These will be refined based on the discussions and submitted as part of the three year plan at the end of March.
The three year plan to be submitted will serve as the basis for the FCO's support of any borrowing needs, which are understood to be minimal. The FCO stressed that it would like to see a plan that utilised a mix of strategies and in particular that the following areas were covered:
i. Expenditure reduction
ii. Broadening the revenue base
iii. Borrowing
iv. PFIs
Both the FCO and the Cayman Islands agreed that the discussions were very productive and on the importance of implementing the strategies agreed both in the short and medium term.
On the subject of revenues, The FCO continues to suggest that the Cayman Islands' international reputation would be improved if it were to introduce some form of direct tax in the country as it would be less likely to be viewed as a "tax haven".
The Cayman Islands reiterated the risks associated with taking this course and after discussions, the Government agreed to continue to examine ways to broaden the revenue base but that were suitable to the Cayman Islands consistent with the country's economic model. The FCO did express some disappointment that the Miller Report did not address the question of what revenue measures could be pursued.
5. Private Finance Initiatives (PFI)
The UK reiterated its concerns on the potential risks relating to PFIs, but it also stressed that it was not necessarily against the use of this method of financing. Rather, they said that their main concern is that there is a proper feasibility and cost benefit analysis carried out and that the process is transparent for each project.
Conclusions
In concluding my remarks updating you on the meetings with the FCO, I would add that there were open and frank discussions on the state of the country's fiscal affairs and the various recommendations of the Miller Commission Report. It was generally agreed that the country needed to implement both short and medium term pans to regain fiscal and economic sustainability.
The UK agreed that the Government's approach to maintaining manageable debt levels was the prudent approach. Both the UK and the Cayman Islands agreed that most of the measures
The FCO would like to see a more aggressive approach to reduction of expenditures. The FCO also expressed its wish to see further efforts to broadening the Cayman Islands revenue base. The Cayman Islands remains committed to examining this issue providing that the country's economic model is not adversely impacted. The UK expressed its willingness to support for the Government in implementation of its plans.
His Excellency the Governor expressed his support and willingness to work with the civil service for which he is directly responsible, in relation to securing the necessary expenditure cuts.
The Government will now prepare a three-year forecast to be submitted to the UK at the end of March. This three-year plan will set out the Government's primary medium term economic and fiscal strategies.
The medium term strategies outlined to the FCO by the Government, as part of the presentation, were well received. These will be refined based on the discussions and submitted as part of the three year plan at the end of March.
The three year plan to be submitted will serve as the basis for the FCO's support of any borrowing needs, which are understood to be minimal. The FCO stressed that it would like to see a plan that utilised a mix of strategies and in particular that the following areas were covered:
i. Expenditure reduction
ii. Broadening the revenue base
iii. Borrowing
iv. PFIs
Both the FCO and the Cayman Islands agreed that the discussions were very productive and on the importance of implementing the strategies agreed both in the short and medium term.
