(CNS): Premier Wayne Panton has said the Framework for Fiscal Responsibility could prove too conservative for Cayman to invest in the necessary projects and initiatives to future-proof the country and develop resilience to survive the changing climate unless the cap on the debt can be lifted. PACT’s policy goal of a sustainable future and preparing for what is to come will be extremely costly, given the failure so far to curb development.

Panton has stated on a number of occasions recently that Cayman is not currently at risk of breaching the requirements of the “fiscal guardrails” in the Public Management Finance Act. Even though he is seeking to cut spending, the premier stressed this was about building enough resources to pay for the Cayman Islands Government’s priorities and not because the country is broke. He has made it clear that the Cayman Islands is in no danger of losing control of its public finances to UK bureaucrats.

But speaking on Radio Cayman’s For the Record on Monday, he warned that in time, complying with the financial boundaries in the FFR while making the necessary changes to green the local economy and deal with the impact of global warming could become very challenging.

“It’s a set of metrics that were put in place back in 2011 required by the UK, and there are elements of it which are quite conservative,” he said. It does serve the interests of the country, he said, but there are times when “this element or that element is too conservative, and it would be useful to get some leeway”.

He said this was especially of concern when it comes to planning for the challenges of tomorrow and figuring out how Cayman is going to adapt. There will be some concessionary financing from the UK for some of the initiatives to cope with future problems, he said, but if Cayman is to finance the extent of what is needed, the FFR could prove problematic.

Panton questioned how Cayman would be able to fit some of “this extraordinary stuff” that will need to be done into the conservative metrics of the FFR.

The FFR outlines a number of rules the government must stick to when it comes to managing the public finances, such as maintaining a certain amount of money in the bank and not allowing the annual cost to service public debt to go beyond 10% of the CIG’s annual revenue.

Panton said he had told the UK they must recognise that the cap on the debt will make it hard for Cayman to play its part and deal with these extraordinary things that will build resiliency and help mitigate the impact of climate change. The premier said we will need some room in the FFR to lower greenhouse gas emissions, to become more environmentally conscious and to protect nature, especially where it is providing important eco-services.

He said that during some of the talks he has had with UK officials, he has raised the need for flexibility relating to the FFR metrics. “If this means that we are going to go above 10%, at least give us the latitude and the flexibility to consider that, where it involves financing, concessionary or not, to be able to achieve these types of extraordinary things that we need to be able to do,” he said as he related the substance of the requests.

Panton said the FFR was important in helping to manage public finances properly, but with increasing demands on public revenue from all directions, including the additional issues around the climate, it was conservative.

The premier said there are many concerns about the future of the country, and he wanted to open discussions on a national priority project list so people can understand the multitude of things the government believes must be addressed, from a new police station to more schools.

But work relating to the environment and the need to build climate change resiliency is needed immediately, he said. There are some communities now that are already constantly flooding due to an increase in the frequency of king tides, which is only going to get worse.

Flooding as a result of sea level rise and beach erosion is the main problem that Cayman faces, but there are many more potential issues on the horizon. Fulfilling the requirements of the National Energy Policy and Climate Change Policy alone will make significant demands on the CIG’s resources, even if revenue remains stable.

Undoubtedly, the government will need to borrow to fund the measures that will be required, and lifting the cap on the debt service ratio is probably the first step towards the PACT goal of a sustainable and resilient future for Cayman.

See Panton discuss the FFR and other issues below: