Government expects another deficit
A CI $573.6 million spending and borrowing proposal to get the Cayman Islands government through the next four months was approved Monday afternoon in Legislative Assembly.
All present lawmakers voted to support the plan, with the exception of opposition MLA Alden McLaughlin, who abstained from the vote.
Financial Secretary Ken Jefferson said the four-month spending plan assumes revenues of some $134.2 million and expenses roughly $172.5 million, leaving a projected $38 million operating deficit in the new budget year that starts Wednesday.
However, Mr. Jefferson cautioned that the temporary spending proposal does not necessarily represent the exact amount government intends to pay out. He said civil service managers were being asked to be frugal wherever possible.
Revenue projections were based on what government earned during the first four months of the 2008/09 fiscal year.
The Cayman Islands budget year runs from 1 July to 30 June.
‘It could well be that the expenditures could be less,’ Mr. Jefferson said. ‘And obviously, operating revenues might not be exactly the same.’
With additional expenses for financing and covering the losses of public authorities, Mr. Jefferson said the deficit could reach into the realm of some $57 million dollars.
The government plans to use some of its available cash balances to cover that gap. The rest will have to come from some of the $128 million officials plan to borrow.
Mr. Jefferson said an analysis done by the Portfolio of Finance and Economics indicated that between $26 and $27 million would have to be borrowed to pay salaries and other recurring expenses during the first four months of the budget year.
Education Minister Rolston Anglin warned the public not to expect miracles within the next government budget year.
‘There will be no overnight quick fix,’ Mr. Anglin said.
The government is expected to end the current budget year Tuesday with an operating deficit of some $74 million, according to Mr. Jefferson. The amount is separate from the budget deficit now projected for the new fiscal year.
The Financial Secretary has been mum on details of how that deficit had grown from CI $29 million in March to $74 million in mid-June, but said he intended to release a statement about the matter later in the week.
Mr. McLaughlin said it amounted to a ‘dereliction of duty’ by Mr. Jefferson not to address those figures in Legislative Assembly.
Mr. Jefferson fired back on Monday, stating that Mr. McLaughlin was playing politics with the budget and that his comments were ‘full of theatrics.’
‘A former minister in the PPM (People’s Progressive Movement) administration, when I questioned the magnitude of an expenditure, I was told that the function of ministries in their Cabinet was to incur expenditure and the role of the Financial Secretary was to find the money,’ Mr. Jefferson said.
‘Perhaps the answer (on the difference between the $29 million and $74 million deficit) is just as simple as that outlook.’
Mr. McLaughlin said that Mr. Jefferson had still not explained what additional spending by government had amounted to the increase in the deficit.
‘He continues to dodge responsibility because he has either been incompetent or is playing politics,’ Mr. McLaughlin said Monday.
Read more on this story in the Caymanian Compass on Wednesday….