Up Front
Good FinancialNews
Since the new Government has taken office just under 150 daysago, the best news they have had since, has come to hand, in theform that the United States Federal Reserve has dropped theirlending rate to 4.5 percent and a British Government officialhas predicted that the Cayman Islands is in a good position tobe dropped from the Financial Action Task Force (FATF) blacklist.
This is no doubt good news for Cayman'sfinancial industry on both fronts because in all likelihood,local lending institutions will be compelled to follow suit ofthe United States Federal Reserve initiative, dropping the localprime lending rate to 10.5 percent, which would be the lowestin over a decade.
And with Cayman being dropped from the FATFlist, it would take the black eye off this country's squeaky-cleanimage. A position it has worked for over the years, both in thefinancial sector, as well as on the tourism front.
Cayman Net News has learnt that the Britishofficial, Mr. Michael Kerney, was quoted as saying in 'The Tribune'this week that the Bahamas, Panama, Liechtenstein and the CaymanIslands are good contenders to be removed from the FATF blacklistbecause they have since strengthened their anti-money launderinglaws.
\Mr. Kerney, a financial policy officialwith the British Foreign and Commonwealth Office, said that itis important to the FATF in June, when reviewing the 2000/2001list, to remove countries that are on the list that should comeoff.
\\He continued by saying if some countriesare de-listed it sends out a signal that if you are on this listyou can get off this list. He also stated that if some countries,which have changed their laws, are not taken off the list, itmight suggest they need better enforcement of their new laws.
\However, he said some countries have donelittle or nothing to improve their laws after appearing on theblacklist, making it even more important that the FATF recognisethe efforts of those countries that made improvements.
On the other side of the coin, the US FederalReserve stunned financial markets on Wednesday (18 April) by slashinginterest rates for the fourth time in four months a movethat signaled that country's Central Bank's intensifying concernabout the rapid deterioration of the US economy.
According to sources, the Fed's cut shouldstimulate the market as well as capital spending and corporateprofits as there was a concern among policymakers about the riskof a full-blown recession.
Insiders in the local financial industrywere worried, as well, because it is generally understood thatif the United States catches such a cold, Cayman sneezes.
In other unsettling news that has impactedthe tourism industry, the current Tourism Minister, Hon McKeevaBush, announced that the tourism figures for the years 1998 -2000 were miscalculated. In some cases as much as 18.5 percentless this figure may have resulted in US$66 million notspent in the economy.
"I have for year expressed my concernthat there appeared to be an inconsistency between the numbersreported and the level of economic activity, which took placewithin our islands," said Hon. McKeeva Bush, the Ministerfor Tourism, during his statement read in the Legislative Assemblylast Thursday (12 April).
Although expressing disappointment but their confirmation that the tourism figures were skewed, manytourism operators are hoping that the new summer package announcedwill provide them with a fresh start on the next season, whichthe Minister promises to be a blockbuster.