Archive for September, 2009

Some Caymanians support increased taxes

Wednesday, September 30th, 2009

In accordance with the results of the voting in the latest Cayman Net News online poll, some local support introducing new or increased taxes with a view to help the economic recovery of the jurisdiction.

A total of 556 readers participated in the poll. They answered the question “Do you think new or increased taxes are needed to aid economic recovery?” via the Internet devices located in the Cayman Islands.

Out of these people, 230 or 41.4 % agreed that some increased taxation was necessary, while 309 readers or 55.6% rejected the notion of any new or increased taxes.

Rules for Registered Funds amended by CIMA

Wednesday, September 23rd, 2009

Law firm Conyers Dill and Pearman was recently responding to recent changes to the Cayman Islands Monetary Authority (CIMA) Guidance Notes with regard to Prevention and Detection of Money Laundering and Terrorist Financing.

The law firm has suggested that the amendment requires each registered fund to appoint a Compliance Officer by resolution as well as to ensure that the officer’s role is precisely defined.

According to Conyers Dill and Pearman, funds must appoint a Compliance Officer and a Money Laundering Reporting Officer who:
has sufficient skills and experience;
reports directly to the fund’s governing body;
has sufficient seniority and authority;
has regular contact with the governing body;
has sufficient resources;
has unfettered access to all business lines, support departments and information necessary to perform the function.

According to the Guidance Notes, the role of the Compliance Officer is to:
develop and maintain systems and controls (including documented policies and procedures) in line with evolving requirements;
ensure regular audits of the fund’s anti-money laundering and countering the financing of terrorism program;
advise the Operator of the fund of anti-money laundering/ countering the financing of terrorism compliance issues that need to be brought to its attention;
report periodically, as appropriate, on the fund’s systems and controls; and
respond promptly to requests for information by the relevant authorities.

Cayman does not need UK help

Friday, September 18th, 2009

It has been discussed recently that the media is widely discussing financial problems of the Cayman Islands. As a result of this, the representative of the jurisdiction expressed his opinion with regard to the issue.

According to Anthony Travers, Chairman of Cayman Islands Financial Services Association, the Cayman Islands does not want to borrow money from the United Kingdom and does not need financial assistance from it. He said, “What we do need is for the Foreign and Commonwealth Office to give the Cayman government the nod to borrow £ 278 million from willing banks that are relaxed about our triple A credit rating. Just to put that sum in perspective, it is equivalent to less than half a day’s current overspend by HM government.” He added that Cayman’s “short-term funding issue is hardly a global issue, yet beleaguered onshore politicians single out Cayman as a convenient scapegoat to divert attention from their own inept fiscal mismanagement.”

Travers said, “Despite this current propaganda war being waged by ill-informed factions within the UK and US governments, I don’t remember any reluctance on their part during the recent cataclysmic financial downturn to beg Cayman for assistance in diverting trillions of dollars to their ailing US and UK economies.”

World press discusses Cayman Islands

Monday, September 14th, 2009

Worldwide press have seized on the financial troubles of the Cayman Islands, and in this regard are discussing such topics as bankruptcy, fiscal woes, tax haven and London’s refusal to allow further borrowing to Cayman.

For example, Peter Thal Larsen wrote: “The financial crisis has not been kind to the Caymans. Hundreds of hedge funds have collapsed and global banks have slashed jobs. Things are so bad that the Government of the Cayman Islands is facing a USD 82 million revenue shortfall in the budget. Local officials say they need a big loan or the Government risks bankruptcy”.

Of course, there could be some reason for expressing such an opinion, but, it goes without saying that media often exaggerate. And it should be remembered that currently the Cayman Islands is a stable jurisdiction. To remind, Moody’s has recently given a stable outlook for the jurisdiction.

Moody’s stable outlook for Cayman Islands

Wednesday, September 9th, 2009

Moody’s, a firm that performs financial research and analysis on commercial and government entities, is carefully monitoring developments in Cayman as well as the possible implications for Government’s Aa3 ratings.

According to Moody’s, the outlook, the ratings of the jurisdiction remain stable.

Alessandra Alecci, Vice President of Senior Analyst in Moody’s Sovereign Risk Group, said that, for the 1st time in the history of Cayman, the Government made an explicit request to the United Kingdom Foreign and Commonwealth Office (FCO) in order to increase its debt levels. She said that this request was necessary as “some of the principles in the territory’s Public Management and Finance Law were violated last year, also an unprecedented development given traditional adherence to the fiscal responsibility law”. The main reasons for the violations were falling revenues that can be explained by a drop in tourism and other services’ income and by higher expenditures related to a one-off capital expenditure programme. The United Kingdom turned down the request for increased borrowings until the authorities of the Cayman Islands present a medium-term strategy to ensure that government revenues are sustainable in the longer term.

In Moody’s report that was published in June 2009, Moody’s discussed the deterioration in public finances and the sharp increase in debt levels in Cayman, which reached close to 20% of GDP during the 2009 fiscal year (double the size just a few years before). This level of debt is still highly affordable, but it is higher than the average debt ratios in Cayman Islands’ Aa peers.

According to Moody’s, the Aa3 rating and stable outlook incorporate the expectation of a significant improvement in fiscal outturns once the capital programme is completed in the jurisdiction.

No property tax or income tax to be implemented in Cayman

Friday, September 4th, 2009

On September 3, 2009, leader of Government Business McKeeva Bush vowed that the Cayman Islands would not seek to implement a property tax or an income tax with a view to help the country get out of its current financial bind.

According to Mr Bush, going this way would change the uniqueness of the jurisdiction’s economic base. Therefore he promised not to support those 2 suggestions.

He also said that the current administration would not assent to a value added tax (VAT), either.

On September 7, 2009, Government officials are to bring a proposal to the UK’s Foreign and Commonwealth Office. The proposal is to provide details of Cayman’s short, medium and long–term plans for financial viability. The approval of a foreign office’s is needed to the Cayman Islands for borrowing more money.

It is worth mentioning that the jurisdiction ended its last fiscal year on June 30 with an operating deficit of more than CI$ 80 million and, if no budget cuts are made and revenues continue to fall, it is predicted that there would be a $132 million gap by that time next year.