PACT REJECTS OPPOSITION CRITICISM OF BOND PLAN

Deputy Premier and Minister of Finance Hon. Chris Saunders has rejected criticism from the opposition Progressives party over the government’s borrowing plans.

Defending the PACT administration’s plans to explore the possibilities of securing a $400 million bond issue to finance government projects, Mr Saunders hit back at the Progressives charging them with hypocrisy.

He issued a statement on Wednesday to ‘reassure the public about the “Refinancing Government debt and borrowing to finance much-needed capital projects is exactly what it says on the label. Nothing more. It has absolutely nothing to do with borrowing to fund the Government’s day-to-day expenses or the creation of a welfare state as claimed.”

The Finance Minister said the government is investigating refinancing options, “including but not limited to a bond offering, to ensure we are paying less interest every year and to invest in our Islands’ long-term future.”

SPENDING PLAN

Listing several urgent projects that are awaiting completion, he said: “Regardless of how the borrowing is structured, any funds raised will enable vital infrastructure projects such as the completion of the Long-term Mental Health Facility; the East-West arterial and other new roads; a new undersea data cable to ensure our continued connectivity to the world; and finally completing the delayed and mismanaged high school construction project, which was started over 14 years ago by the Opposition.”

Mr Saunders also said that funds raised through borrowing would also be used to provide equity injections to vital public services, mainly, the Health Services Authority, Cayman Airways, and a fund to a reverse mortgage product to allow elderly homeowners to use the equity in their homes to support themselves now in their time of need.

Regarding home mortgages in particular, he said, “The idea of reverse mortgages is to reduce government pay-outs for social assistance to the elderly. It is not fair or sustainable for the government to be assisting the elderly when they are equity-rich but cash poor. Letting our seniors access their cash when they need it now, means they can live in dignity without being a strain on the public purse.”

According to Mr Saunders, the funds raised would also benefit the National Housing Development Trust and the Cayman Islands Development Bank to support Caymanian homeownership including $28million of borrowing for equity injection for the National Housing Development Trust and the Cayman Islands Development Bank to assist in the home-financing.

“While the Opposition may not support this initiative, we as a Government recognise that shelter is a basic human right and homeownership is a dream for many Caymanians.”

The Finance Minister also disclosed that the government is also looking into underwriting loans above 30 years to give young people an opportunity to access loans where the monthly repayment is affordable on condition that once they have enough equity built up, they can access funding from the traditional banks.

FINANCIAL STEWARDSHIP

Mr Saunders, who is also the Deputy Premier accused the Opposition of “hypocrisy” regarding the refinancing of existing public debt and future borrowing, given the prior administration’s borrowing history.

He said, “I am aware that the Opposition Leader has issued a statement on this issue and while he is entitled to his own opinion, he is not entitled to his own facts. Under his leadership, the Hon Roy McTaggart as then Minister for Finance secured in September 2020 a US$403 million line of credit at a rate of 3.25% that expires in June of this year.”

The statement referred to a September 2020 press briefing by the Leader of the Opposition Hon. Roy McTaggart where it was stated that the borrowing was sufficient for the “short to medium term” and that provision had been made for up to CI$170 million in further borrowing in the future, which would “give whoever is occupying the Cabinet in 2021, it would give them that authority to borrow money if it becomes necessary.”

Regarding that, Mr Saunders stated, “The PACT government now occupies the Cabinet and believes that with interest rate at its lowest, this is the best time to explore all available options.”

He referred to the example of the Isle of Man which has a similar credit rating as the Cayman Islands, and secured a 30-year £400 million bond at a rate of 1.625%, which he said was is half the rate the previous Progressives had negotiated for Cayman.

SCRUTINY

He assured that no decisions would be made outside of the public arena, despite what he termed the Opposition’s apparent surprise over the Government’s request for information on a potential bond issue.

The information about the PACT government’s bond issue was first reported from a posting on the government’s website.

Minister Saunders clarified, “The request on the government procurement site is for information only to enable us to review all the options available to refinance the public debt. We are investigating multiple opportunities and will choose the option(s) most beneficial to the people of the Cayman Islands, present and future.”

He assured that “whatever proposal we choose will be debated in Parliament, where each Member will be able to have their say on the matter – on both the Government and Opposition benches. If necessary, we also hold public meetings for the public to have their say. The PACT Government is committed to transparency, and to being people-driven first and foremost.”

Finance Minister Saunders also rejected suggested that borrowings would be used to cover the government’s operational expenses, pointing to an improvement in public finances since the PACT Government took office in April 2021.

Minister Saunders was also critical of what he described as the previous administration’s disregard of looming social welfare liabilities, and he rejected suggestions that the continuing COVID-19 support being taken over by the PACT were ‘handouts’, calling the Opposition hypocritical.

“When they were doing it, it was considered a necessary hand-up…We are seeking to ensure that displaced Caymanian tourism workers are hired first by the hospitality industry and find it ironic that this is now being criticised as hand-outs!”

He said the PACT government was committed to addressing the high cost of living in Cayman and has already introduced programmes and waived duties to alleviate it and is working to grow the economy and empower the people by introducing “programmes and opportunities that will grow our shrinking middle class.”