Foreign and Commonwealth Office is prepared to force the Framework for Fiscal Responsibility into local legislation if the Cayman Islands Government fails to live up to the commitment it made following the budget approval from London in August. Photo: CNS

Sources have told CNS that the UK is not going to allow the premier to alter the framework via additional clauses or by removing any of its content and is expecting the document to be passed into law during the forthcoming sitting of the Legislative Assembly. If not, it will push the FFR through via an Order in Council. However, CNS has learned that the legislation being drawn up will include changes to the original agreement.

The FFR which the premier signed in November 2011 commits the CIG to certain parameters, rules and systems regarding public finances. It also draws the statuary authorities back into the debt ratios ruling government borrowing, thus ensuring that the entire public sector spending is tightly controlled within a rigid framework. It means that authorities, such as the port and the airport, and government companies, such as Cayman Airways or the Turtle Farm, cannot borrow outside of the Public Management and Finance Law limits and will need to gain UK approval for any projects they engage in.

The premier has said publicly that he dislikes various elements of the framework and wants to change parts of it as well as introduce additional clauses. The UK, however, has been unequivocal about that and is insisting that the bill it expects to come to the Legislative Assembly in November is exactly the same as the document signed by the premier almost one year ago.

Despite this rigid position being taken by the FCO, the legislation is currently under review as McKeeva bush intends to make some alterations. The final bill has not yet been completed and there is no certainty that the document will be drafted during the forthcoming sitting, which opens on 5 November. Government has not said how long this meeting will last and no FFR bill has been circulated ahead of the meeting for public comment.

The constitution requires government to publish any new law it intends to present to legislators 21 days before the House sits. The premier has, however, ignored this provision in the past and so may still choose to bring his version of the legislation to the LA next month. Nevertheless, given the insistence by the FCO on the need for the FFR to be enshrined in local law exactly as Bush signed it, any law brought by the premier could be overridden.

An Order in Council is a statutory provision which forms part of the UK’s reserve powers as the colonial master of the Cayman Islands, enabling it to legislate for any of its overseas territories when it deems it necessary. The move is a last resort and is generally reserved for when the UK feels its interests are at risk.

In the case of the Cayman Islands, the mounting public debt and continued government operational deficits have led the UK to take steps to protect itself from the potential liability for that debt. Having relinquished some control in the 2009 constitution over financial matters, it has begun to claw back that control via the framework agreement and the recent conditions attached to the approval of the 2012/13 budget.