Cayman budget gap explained

Cayman’s top finance officials have
explained in greater detail how they arrived at a projected public sector
operating deficit of $56.1 million by the end of the current budget year.

The $56.1 million figure is
essentially the government’s best estimate based on current economic data as to
how it will end the budget year on 30 June, 2010.

It is a separate figure entirely
from the one released by officials last week that put government’s operating
deficit at $73.1 million for the first six months of the fiscal year. The $73.1
million is an actual number, based on public sector revenue and expenditures
from 1 July through 31 December, 2009.

Finance officials said they have
received a number of questions about how the budget deficit figure for 31
December could be lower than the one projected for 30 June, six months later.

There are two reasons: first,
Cayman’s highest-earning revenue months are typically January, February and
March – the peak of tourist season and also when the majority of fees charged
to the financial industry come due.

Second, government has estimated
some $9 million in public sector expenditure cuts will take effect between now
and 30 June. Premier McKeeva Bush has said he’s not satisfied with $9 million
in reductions and would seek to further reduce public sector costs.

One such plan to do that is the
possible reduction of salaries for civil servants making at least $3,000 per
month.

Mr. Bush also told the Legislative
Assembly on Monday that January revenue receipts did not meet with government’s
initial expectations.

The revised forecasts done on 23
February were as follows:

*Government operating revenues as
of 30 June were projected to be CI $490 million for central government.

*Central government operating
expenditures were estimated to come in at $516, including the $9 million cut in
spending.

*Additional financing expenses of
$26 million, mainly due to on-going public construction projects.

*Extraordinary expenses of $4
million, including repair and recovery costs from Hurricane Paloma and legal
costs for the Justice Priya Levers case.

*An estimated operating deficit for
statutory authorities and of $6.3 million.

*A $6 million expense reduction in
unexplained “other items”.

The total deficit from central
government operations would be $26 million, according to Financial Secretary
Kenneth Jefferson. However, adding in the other expenses the projected deficit
would total $56.1 million by the end of the budget year.

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