Capital spending, borrowing highlight budget

The Government plans to spend more than $100 million on capital expenditures in the coming financial year, while borrowing $129.8 million.

Financial Secretary Kenneth Jefferson said this year’s Budget Address was titled ‘Shaping our Future’ when he delivered it in the Legislative Assembly Friday.

‘The 2007/08 budget strives to enhance the well-being of today’s generation and it presents a sustainable and affordable platform for building successes in the years to come,’ he said.

Part of the platform is an ambitious capital spending plan, which includes $35.5 million for four schools; $18 million for the new Government Office Accommodation Project; $9 million for various road works including the extension of the Linford Pierson Highway to Walkers Road; $3.8 million of sports stadia and playing fields; and $3 million each for a new civic centre in Bodden Town and a new Summary Court Building.

Also proposed is $14.4 million for the Portfolio of Internal and External Affairs, which will include $1.8 for a police helicopter; $1.6 million for a marine base; $2 million for a new emergency response facility in Bodden Town; $1.5 million for new vehicles for the Fire Services; and $1.7 million for the construction of a the Hazard Management Cayman Islands.

The capital expenditures also include an $11.2 million equity investment to the Health Services Authority for operating losses.

‘The Government is clearly demonstrating that it sees a future in which education, law and order, adequate health care services for everyone, new and upgraded road infrastructure, secure and suitable accommodation for the delivery of public services and the provision of sporting facilities are important and it is taking actions to make these a reality,’ Mr. Jefferson said.

Although the government will not introduce any new revenue measures to help pay for the capital expenditures, it plans to borrow $129.8 million in the 2007/08 financial year. That figure is $8.3 million more than was estimated in the Strategic Policy Statement delivered last December, but Mr. Jefferson said the variation should not be cause for concern.

‘When the maximum borrowings of $27 million for the 2006/07 year are combined with the $129.8 million of borrowings for the 2007/08 year, the resulting $156.8 million should be compared to the $169.5 million in borrowings envisaged by the Strategic Policy Statement over the two years, 2006/07 and 2007/08,’ he said. ‘The Government is therefore forecasting that borrowings in 2006/07 and 2007/08 will actually be $12.7 million less than envisaged in the SPS.’

Other aspects of the Budget included projected operating revenues of $499.1 million and operating expenses of $462.2 million along with $12.4 million of financing expenses, which will result in a net operating surplus of $17.5 million.

Central Government Public Debt stood at $170.2 million as of 27 April and is forecast to be $295.7 million as of 30 June 2008.

Key economic indicators forecast for the 2007/08 financial year include a Gross Domestic Product growth rate of 3.5 per cent, inflation at 3.5 per cent and unemployment at 3.6 per cent.

Mr. Jefferson said the government’s macroeconomic fundamentals were evidence that conditions were conducive to future success of the economy.

He noted that Moody’s Investors Service had raised its ratings for the Cayman Islands to Aaa and Aa3 in August 2006.

‘These exceptional and high-grade ratings place the Cayman Islands on par with the UK, the USA and Canada,’ he said. ‘These ratings in the 2006 Moody’s report provide an independent verification not only of the Government’s ability and willingness to meet its debt obligations, but they also indicate that the Islands’ macroeconomic fundamentals are solid.’

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