Friday 23 October, 2020

Premier: Government has proven its ability to lead through crisis

The strong financial position achieved by my Government has helped our Islands take the reduction in Government revenues due to COVID "on the chin" read a Twitter reference made by the premier Hon. Alden McLaughlin of one of the more poignant statements in his State of the Nation address, delivered yesterday at the Legislative Assembly.

"I cannot think of a time when it has been more necessary for a Caymanian Premier to make such an address as this," he said.

In his speech, the Premier conveyed gratitude to members of his government from political leaders to civil service employees for the leadership demonstrated from the beginning of the crisis to the present time. He also referred to the swift and decisive policies of his administration that helped to save lives, despite the sudden stop of the economy.

"We were able to make timely decisions to intervene and close things down in a way that I believe has saved lives and maintained public health in the Cayman Islands. Secondly, the quarantine and testing and tracing arrangements put in place from a standing start have been crucial in both containing community transmission and providing public reassurance," he said.

The premier drew a stark contrast between the country's economic situation at the beginning of the year and what would ensue within mere weeks.

"For the first three months of this year," he began. "The country was doing exceptionally well.  Cayman’s economy grew by 3.2% in 2019 and unemployment was at a low 3.5%. It appeared that our major challenge was to overcome the problems of success. Inflation was running at 5.7% and the government was acting to deal with rising prices. Commuters were spending too long in traffic jams so we had embarked on highway improvements to ease congestion."

"But in the space of mere weeks," he continued. "The situation changed out of all recognition.  We have estimated that growth for 2020 will decline by 7.2% with unemployment rising to 6.9% and inflation falling to 0.4%. A similar story is seen across every country in the world.  Indeed, many economies both in this region and globally are faring much worse than Cayman."

He indicated that given the inability to predict the future global impact of the virus, planning has been difficult.

"The world around us, including our major trading partners, is filled with uncertainty.  Given the turmoil of the last seven months, the normal patterns of our society and our economy have been seriously interrupted.  As such it is not easy for us to understand exactly how things will develop as we move into 2021. Equally, there is so much left unknown about how events will unfold from here that it is difficult to plan properly for what is to come," he said.

However, despite these difficulties, he laid out his vision for several key sectors of the economy, including financial services and tourism as well as the need to diversify into the creative and digital industries.

Information was provided on the development of the educational sector, despite the difficulties faced as well as social support provided to the unemployed and vulnerable and to local businesses.

And all of this progress, he highlighted, has come about with no need to take on debt other than a $403 million line of credit as an "insurance policy" which is not likely to be touched this year.

"As we sit here today, Cayman has taken its income reduction on the chin. We have provided considerable support for families and business.  And our national debt has increased by……. zero. Not one dollar has been borrowed.  To take two other examples. In the same circumstances, national debt in the United Kingdom has increased by around £250 billion since this time last year and now exceeds £2 trillion, larger than the size of the UK economy. Meanwhile, in America, the Government has borrowed an eye-watering $3 trillion since 1st March," he said, comparing Cayman's position to that of the most powerful countries in the world."

The premier concluded his address by re-acknowledging the many unknowns that lie ahead. "I do not know exactly what the future holds for Cayman," he said. "But there is a saying widely repeated in the tech industry that goes “the best way to predict the future is to create it.” 

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