Good Financial News For The Cayman Islands

Caymannetnews

23 April 2001

This story is reproduced by kind permission of Cayman Net News at: http://www.caymannetnews.com

Since the new Government has taken office just under 150 days ago, the best news they have had since, has come to hand, in the form that the United States Federal Reserve has dropped their lending rate to 4.5 percent and a British Government official has predicted that the Cayman Islands is in a good position to be dropped from the Financial Action Task Force (FATF) blacklist.

This is no doubt good news for Cayman's financial industry on both fronts ­ because in all likelihood, local lending institutions will be compelled to follow suit of the United States Federal Reserve initiative, dropping the local prime lending rate to 10.5 percent, which would be the lowest in over a decade.

And with Cayman being dropped from the FATF list, it would take the black eye off this country's squeaky-clean image. A position it has worked for over the years, both in the financial sector, as well as on the tourism front.

Cayman Net News has learnt that the British official, Mr. Michael Kerney, was quoted as saying in 'The Tribune' this week that the Bahamas, Panama, Liechtenstein and the Cayman Islands are good contenders to be removed from the FATF blacklist because they have since strengthened their anti-money laundering laws.

Mr. Kerney, a financial policy official with the British Foreign and Commonwealth Office, said that it is important to the FATF in June, when reviewing the 2000/2001 list, to remove countries that are on the list that should come off.

He continued by saying if some countries are de-listed it sends out a signal that if you are on this list you can get off this list. He also stated that if some countries, which have changed their laws, are not taken off the list, it might suggest they need better enforcement of their new laws.

However, he said some countries have done little or nothing to improve their laws after appearing on the blacklist, making it even more important that the FATF recognise the efforts of those countries that made improvements.

On the other side of the coin, the US Federal Reserve stunned financial markets on Wednesday (18 April) by slashing interest rates for the fourth time in four months ­ a move that signaled that country's Central Bank's intensifying concern about the rapid deterioration of the US economy.

According to sources, the Fed's cut should stimulate the market as well as capital spending and corporate profits as there was a concern among policymakers about the risk of a full-blown recession.

Insiders in the local financial industry were worried, as well, because it is generally understood that if the United States catches such a cold, Cayman sneezes.

In other unsettling news that has impacted the tourism industry, the current Tourism Minister, Hon McKeeva Bush, announced that the tourism figures for the years 1998 - 2000 were miscalculated. In some cases as much as 18.5 percent less ­ this figure may have resulted in US$66 million not spent in the economy.

"I have for year expressed my concern that there appeared to be an inconsistency between the numbers reported and the level of economic activity, which took place within our islands," said Hon. McKeeva Bush, the Minister for Tourism, during his statement read in the Legislative Assembly last Thursday (12 April).

Although expressing disappointment ­ but their confirmation that the tourism figures were skewed, many tourism operators are hoping that the new summer package announced will provide them with a fresh start on the next season, which the Minister promises to be a blockbuster.

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