Premier McKeeva Bush introduced a central government spending plan of nearly $490 million Friday night during an address to the Legislative Assembly, while forecasting that Cayman would end its current budget year on 30 June in the black.
Mr. Bush said the government was expected to end the current year with a “small surplus” of approximately $4.5 million if all cost-saving measures his government had proposed were followed.
When the current budget was first planned, it was thought government would end the year with a nearly $32 million operating deficit, which means government spending would have outpaced earnings for the year. “This outstanding improvement is not an accident,” Mr. Bush said. “It reflects proper fiscal discipline from this government.” For the upcoming year, the budget forecasts a spending plan of $490.2 million in central government operating revenues and $489.9 million in central government operating expenses.
On top of that, government will spend a whopping $33.8 million to pay off debts, which would reduce the projected operating surplus in the 2011/12 budget to just more than $12 million once other expenses are tallied up.
Mr. Bush said government would also not undertake further external borrowings for the next two years. However, even with that undertaking and paying off debts at more than $30 million per year, government’s public sector debt is projected to be nearly $550 million by mid-2014. “For me, that is still too slow a progress,” he said. However, he said it would be an improvement over the current public debt, which is more than $600 million.
Hedge funds fee
The Cayman Islands government will introduce a relatively small yearly fee in the upcoming budget for certain “master fund” hedge funds that are registered in the country, Premier Bush said. Mr. Bush promised this would be the only new revenue measure introduced in the upcoming spending plan.
The payment of the $1,500 per year fee will coincide with the first regulation of those funds by the Cayman Islands Monetary Authority. At present, Cayman Islands-registered hedge funds pay no fees and are not regulated by CIMA.
Mr. Bush told members of the Legislative Assembly that finance industry representatives were confident “such a fee could be introduced without any adverse affect” to the industry.
The Premier said it was expected the new fee would raise some $4.5 million over the course of the next budget year, which begins on 1 July and runs through 30 June, 2012.
That extra money, he said, would be used as a government rebate to Caribbean Utilities Company customers to offset electric bills.
“This summer’s just beginning and from what I can see in electrical bills, it’s going to be a long, hot summer,” Mr. Bush said.
Where’s the budget?
Although he gave a two-hour speech during his budget presentation that generally outlined government’s initiatives for the upcoming fiscal year, Mr. Bush did not present the actual budget documents and did not make them public in the Legislative Assembly as is customary.
Mr. Bush said this was because the Cayman Islands government was working up until 5pm Friday with UK officials trying to finalise budget plans.
Since the 2009/10 government fiscal year, the United Kingdom government has assumed more direct control over Cayman’s budget process because of debt levels and other financial missteps, which have put Cayman in violation of several principles of responsible financial management contained in the country’s Public Management and Finance Law.
Mr. Bush clearly chafed at this arrangement with the UK.
“It’s really, really tough for me to be directed by a desk clerk,” he said. “It goes against…things that I stand for. I don’t like to be pushed.”
Opposition Leader Alden McLaughlin asked why LA members were present for the budget speech if no budget was there to be presented. Mr. Bush responded that he hoped the majority of the spending plan documents could be given to LA members on Sunday.
Mr. Bush also blasted Mr. McLaughlin and the previous government members for their handling of the country’s budget.
“This situation arose as a result of the past government…borrowing needs arising from a huge capital expenditure programme, and non-compliance with the law,” Premier Bush said. “Now you ask why?”
Debate on the budget is set to resume at 2.30pm Wednesday.
Mr. Bush also alluded to an agreement between the Dart group of companies and the Cayman Islands government that he said has been proposed.
The agreement includes:
Reopening the property that formerly housed the Courtyard Marriott hotel.
The construction of two or more new hotels on Grand Cayman.
The extension of the Esterley Tibbetts Highway into West Bay.
Realignment of West Bay Road near the Courtyard Marriott with the associated extension of the public beach in the area to include the creation of a public park.
The creation of a solid waste management facility at a new location on Grand Cayman and closure and remediation of the existing landfill.