Published 9th March 2016, 8:12am
The Cayman Islands Government has surpassed the Cash Reserves Ratio required by the Framework for Fiscal Responsibility (FFR) during the current 2015-2016 fiscal year.
The Government has also met the Net Debt ratio, another FFR requirement, for the past two fiscal years, and will continue to do so for the current fiscal year ending 30 June 2016.
The Debt Service ratio, another FFR requirement, which is forecast to be in compliance, will be assessed after the 30 June 2016 fiscal year-end.
The FFR is a financial management regime that was devised by the UK Government for its Overseas Territories (OTs) to follow. The main objectives of the FFR are to strengthen the fiscal performance and position of OTs as well as enhance transparency in, and accountability for, financial decisions made by OTs.
The Cayman Islands Government has incorporated the FFR, in its entirety, in the Islands’ Public Management and Finance Law.
To strengthen the Islands’ fiscal performance and position, the FFR requires compliance, by 30 June 2016, with three ratios:
On 5 February 2016, the Hon. Marco Archer, Minister for Finance and Economic Development, wrote to the Foreign and Commonwealth Office (FCO) seeking its acknowledgment that the Cash Reserves ratio had been satisfied in the Government’s current fiscal year. When bank account balances were at their lowest in the year, Government had 116 days of Cash Reserves which bettered the 90-day minimum level.
Minister James Duddridge, the UK Government Minister with responsibility for OTs, replied on 18 February 2016: “I am delighted that in addition to compliance with the Net Debt ratio, your government is comfortably on course to maintain compliance with the Cash Reserve Ratio as defined in the FFR for the remainder of the fiscal year. This is a welcome achievement and a credit to the hard work and professionalism of your government and the Civil Service.”
With respect to the FCO’s acknowledgement, the Hon. Marco Archer stated, “This is clear, independent evidence of the steady and consistent progress the Government has made to improve the economic and financial standing of these Islands.”
The last remaining ratio to be met, the Debt Service ratio, will be assessed after the 30 June 2016 fiscal year-end; it has been forecast to comply with the maximum 10% ceiling.
The significant effect of compliance with the FFR Ratios is that it will return sole control to Government over the preparation of its annual budgets.