No one could have foreseen the events that left government with a projected $29 million budget deficit for the financial year, Government leaders said Thursday.
‘This operational deficit … includes some $14 million of extraordinary expenditure,’ Leader of Government Business Kurt Tibbetts at the cabinet press briefing last week.
Among the extraordinary spending items Mr. Tibbetts pointed to were Hurricane Paloma rebuilding efforts on Cayman Brac; the ongoing Metropolitan Police Investigation; and the Justice Levers judicial tribunal.
‘Many of those matters are things over which no one has control,’ he said.
Mr. Tibbetts was speaking after government announced on 22 March it had been forced to revise its projected start-of-year budget surplus of $13.5 million into a projected deficit of $29 million.
Government officials said the revised forecast was the result of increased spending and diminishing revenues stemming from the global economic downturn.
Leader of the Opposition McKeeva Bush has insisted those projections were always inflated.
‘Over projections were made in order to make the budget look good,’ Mr. Bush said, responding to news of the deficit.
But Mr. Tibbetts insisted Government could not have foreseen the events that led to the budget shortfall.
‘No one simply knew that nine months into the fiscal year, this is exactly the situation we would be in. No one knew that,’ he said. ‘Anyone that tries to tell you that – especially from the opposite side – is not being truthful.’
In February 2008, Mr. Bush brought a private members motion calling on the government to reconsider and reduce its levels of capital spending and borrowing in light of concerns a global and US economic slowdown would reduce government revenues here.
Mr. Bush said at the time: ‘It does not take an economist to understand that the Cayman Islands are very susceptible to global economic conditions, especially that of the US, and the downgrade of the global economy since the preparation of the budget will result in a reduction in the expected revenue for the country and consequently would change the debt service ratios.’
Rejecting the motion, Mr. Tibbetts responded ‘Not even on the kindest of mornings could the government accept this motion.’