The Cayman Islands Government’s overall deficit was CI$21.6 million as of 30 September, 2010, according to a quarterly review done by the Economics and Statistics Office.
That is very good news for the Islands, compared to September 2009 when economists measured Cayman’s deficit at some CI$125 million.
The figures released on a quarterly basis are different from the budget numbers the government puts out; partly because economists and auditors account for the numbers in slightly different ways and partly because the Economics and Statistics Office looks at the calendar year – rather than the government budget year which runs from 1 July to 30 June.
However, the quarterly economic report for September 2010 does show some positive indicators for government finances, both on the revenue and the expenses side.
“The overall balance has improved due to a current surplus and a simultaneous reduction in capital expenditure,” the Economics and Statistics Office report states. “The current surplus was aided by a 12.2 per cent increase in current revenue coupled with a reduction in recurrent expenditure of 2.8 per cent.”
Capital expenditures – mainly expenses for supplies or construction – dropped by 40 per cent between September 2009 and September 2010, the economics office quarterly report stated.
Government revenues rose during the same period from CI$371 million to $416.2 million.
According to the quarterly report, government earned an additional $34.1 million from new fees; the largest increase was seen in levies on domestic transactions. The government also got another $44.1 million shot in the arm from an increase in sales of goods and services.
Total government spending in the first three quarters of 2010 dropped. Annual spending by government decreased by 2.8 per cent, largely due to a drop in civil service personnel costs and also a decrease in government’s “extraordinary expenses”.
“This resulted from a temporary reduction in civil service salaries starting in July 2010 by 3.2 per cent coupled with a reduction in the number of personnel in the civil service by 1.5 per cent,” the economics office report stated, adding that there were 3,626 people working in the central government service by the end of September 2010.
Extraordinary government expenses dropped mostly because various disaster relief efforts from 2008’s Hurricane Paloma were coming to an end, along with special investigations within the Royal Cayman Islands Police Service.
Government spending did increase in several areas, including its supplies budget, subsidies to public authorities, transfer payments and interest payments.
“Interest payments for servicing the…outstanding debt [were] increased by 79 per cent,” the report stated.
Central government debt is still a major issue for the Cayman Islands, and according to the economics office, it has increased from $180 million in September 2007 to nearly $500 million in September 2010.
Some other interesting notes from the September 2010 quarterly report included:
The local consumer price index rose slightly by 0.5 per cent.
The current work permit number fell by some 13.5 per cent when compared to September 2009
Mutual funds (investment funds) registration fell by 2.4 per cent, but registrations improved over the second quarter of 2010
Bank and trust company registrations fell by three per cent
Insurance licences dropped by six per cent
The number of property transfers fell by 14.5 per cent while total value of those transactions went down by 20.2 per cent when compared to September 2009