Governor Duncan Taylor said Wednesday he didn’t “want to tempt fate” when it comes to the Cayman Islands’ budget situation.
However, Mr. Taylor told a group of reporters that the local government is “likely” to end the current fiscal year in June with an operating surplus; that means the government will have earned more in revenues than it spent on services. “We’ve made some very good progress,” the governor said Wednesday.
Although he did not produce specific numbers for the six-month period of Cayman’s 2010/11 budget year, the governor’s statements are backed up by preliminary reports from government economists.
The Cayman Islands Government’s overall deficit was $21.6 million as of 30 September 2010, according to a quarterly review 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 $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.”
Partly due to a reduction in salaries and cuts in other areas of personnel costs, Mr. Taylor said – by June – government personnel costs should come down by 15 per cent from two years ago, dropping from $250 million to $220 million. Some of the decline is attributed to attrition of government workers whose jobs have not been filled.
A review being done by the deputy governor’s office, now in its second phase, is also helping to find ways government can cut back. Mr. Taylor said Deputy Governor Donovan Ebanks has “done a rather amazing job” while carrying out the review. “It doesn’t mean we’re out of the woods yet,” Mr. Taylor said. “We still need to look at the size of the civil service in the long term to bring that down in the long term.”
A human resources review completed in June 2010 showed that the size of the central government service had decreased from 3,843 employees in January 2008 to 3,687 in June 2010. Mr. Ebanks previously said he would like to get the central government service down to around 3,500.
In addition to the central government employees, in June 2010 there were 2,194 people working for statutory authorities and government-owned companies – entities funded separately from the government’s general fund. However, some operations require subsidies from the central government if they do not break even.