Essential

Leader of Government Business McKeeva Bush held an emergency meeting at the Ritz Carlton hotel yesterday to outline the financial difficulties government is currently facing. Over 400 people attended.

He revealed that:

• For the year-ended June 30 2009 the public sector had an operating deficit of CI$81.1 million.
• On August 25 2009 government held net cash reserves CI$65.6 million, of which CI$76.1 was in restricted cash reserves.
• In order to pay the wages of civil servants on payday on August 25 2009 government postponed payments to contractors, and postponed the payment of employee healthcare and pension costs.
• Government is forecasting a cash shortage at the end of September of CI$44.1 million.
• Since government incurred an operating deficit for the 2008/09 financial year, it needs the permission of the UK Foreign & Commonwealth Office (UK FCO) to borrow additional funds.
• Government has agreed with local banks to borrow CI$372 million to finance its commitments until June 30 2010. To proceed, permission must be granted by the UK FCO.
• On August 28 2009 government wrote to the UK FCO requesting permission to borrow CI$272 million.
• On August 30 2009 the FCO advised government they were unlikely to allow the additional borrowing.
• On August 25 2009 he spoke with the FCO seeking urgent permission to borrow CI$30 million to meet current obligations.
• He had received a letter that day from Chris Bryant of the FCO stating that government needed to present a realistic plan to turn around public finances before they could consider a request for additional borrowing. In the letter Bryant stated ‘To give me the confidence that you will be able to service any new borrowing you will have to widen the tax base. I fear you will have no choice but to consider new taxes – perhaps payroll and property taxes such as those in BVI.’

Bush then went on to suggest a number of measures that could increase revenues. These included:

• Widening the channel in the North Sound to attract mega yachts and their rich owners.
• Building cruise ship berthing facilities.
• Building a sewage system.
• Making additional efforts to attract five star resorts to the Cayman Islands.

He also stated aggressive cost cutting measures were required.

The OECD has placed the Cayman Islands on their ‘white list’ of countries that have substantially implemented international standards on tax disclosure.

On Thursday Leader of Government Business McKeeva Bush was in Washington DC to sign Cayman’s 12th Tax Information Exchange Agreement (TIEA) with New Zealand.

In April, following a meeting of the G20 in London, the Cayman Islands was placed on an OECD ‘grey list’ of countries that had not met the required standards on tax disclosure. The ‘grey list’ comprised countries that had not signed TIEAs with at least 12 other countries.

Cayman is in discussions to sign further agreements with a number of other countries such as Australia, Germany, France, and Germany.

Her Majesty’s Most Honourable Privy Council has approved the new Cayman Islands Constitution.

Governor Stuart Jack issued the following statement:

Following the successful outcome of the constitutional referendum on 20 May, the 2009 draft constitution was considered and approved by Her Majesty in Privy Council yesterday (Wednesday, 10 June 2009). This means that the draft constitution is now the Cayman Islands Constitution Order 2009. Although Her Majesty has approved the new Constitution, this does not mean that it comes into force immediately.

I am convinced that the focus and energy demanded by this entire exercise will pay off in a smooth transition that will allow us to enjoy the benefits of the new Constitution without the administrative and legal gaps that would otherwise undermine its effective working. Regular reports on the progress towards implementation will be provided to Cabinet, and the public will be kept abreast of ongoing developments.

The United Democratic Party (UDP) has won the Cayman Islands General Election, 4 years after losing to the People’s Progressive Movement (PPM). The UDP captured the 9 of 15 elected seats in the Legislative Assembly.

Islanders also voted to accept a new constitution. Over 11,000 voters cast referendum ballots, with just under 63 percent voting for change.

The new constitution will introduce a bill of rights, three new elected positions in government, and give Cayman more control over its affairs.

Voting got underway this morning for 2009 General Election.

Polling stations across the Cayman Islands opened at 7 am and will close at 6 pm.

The country’s 15,361 registered voters are also voting in a referendum on constitutional reform, the first referendum ever held in the Cayman Islands.

The first returns will be announced at 9 pm, with updates every 2 hours after.

The Cayman Islands has been placed on a ‘grey list’ of countries that need to substantially implement an internationally agreed tax standard.

The list was published at the end of the G20 meeting in London by the Organisation of Economic Cooperation and Development (OECD).

The ‘grey list’ comprised countries that had not signed Tax Information Exchange Agreements (TIEAs) with at least 12 other countries.

It did, however, avoid being blacklisted and not committed to an internationally agreed tax standard.

The blacklisted countries were Malaysia, Costa Rica, Philippines, and Uruguay.

The other countries on the ‘grey list’ were Andorra, Anguilla, Antigua and Barbuda, Aruba, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Cook Islands, Dominica, Gibraltar, Grenada, Liberia, Liechtenstein, Marshall Islands, Monaco, Montserrat, Nauru, Antilles, Niue, Panama, St Kitts and Nevis, St Lucia, St Vincent & Grenadines, Samoa, San Marino, Turks and Caicos Islands, and Vanuatu.

The sale of alcohol on Election Day (May 20 2009) has been restricted by the Liquor Licensing Board of Grand Cayman.

Under the rules the sale of alcohol will be banned until 7 pm, one hour after the polls close.

Members of Cayman’s Legislative Assembly have voted unanimously to hold a referendum that would see a draft constitution become law.

The referendum will take place on May 20 2009 and requires the approval of more than 50 percent of voters taking part.

The proposed referendum question stated in the bill, requiring a simple yes or no vote, reads, ‘Do you approve the Draft Constitution, which was agreed by the Cayman Islands Constitution Delegation and the Government of the United Kingdom on 5 February 2009, and tabled in the Legislative Assembly of the Cayman Islands on 11 February 2009?’

The proposed constitution gives the people of the Cayman Islands a greater say in international relations, government finances, the police, and the judiciary. It also includes a Bill of Rights.

Air Jamaica is to cease flights to Grand Cayman next month.

The company yesterday released its 2009 Business Plan, designed to stem its losses and face the current global economic crisis.

Under the plan the airline will halt flights from Jamaica to Grand Cayman on February 26 2009. Flights to other destination such as Los Angeles and Miami will also cease.

The company is also reducing its fleet from 15 to 9 aircraft.

The Earl of Wessex, Prince Edward, will visit the Cayman Islands next month.

He will arrive in Cayman Brac on February 5 and inspect the damage caused by Hurricane Paloma and travel to Grand Cayman in the afternoon to present Duke of Edinburgh Awards at Government House.

The visit is part of a 7-day trip to the Caribbean that also includes calls in the Bahamas, Jamaica, and Barbados.