As of press time Wednesday, the Cayman Islands government did not know whether its 2011/12 spending plan had achieved final approval from the United Kingdom.
According to Financial Secretary Ken Jefferson, the Cayman Islands has met all of the UK’s demands with regard to central government operating expenses for the coming year and is proceeding on the basis that its new budget is ready for legislative review.
However, by early afternoon Wednesday, Mr. Jefferson said the UK’s formal approval of the 2011/12 budget had not been given and noted he was unsure when or even if that might occur.
“Recent communication from the [UK Foreign and Commonwealth Office] has made it clear that the [office] expects the government of the Cayman Islands to produce a budget for the fiscal year 2011/12 that has operating expenditures which do not exceed the forecast level of operating expenditures for the 2010/11 year,” Mr. Jefferson wrote in an email to the Caymanian Compass.
For the 2010/11 fiscal year, which ends on 30 June, operating expenses were forecast to be $490.2 million.
In the budget plan for 2011/12, which starts on 1 July, operating expenses are $489.9 million.
“Hence, the 2011/12 budget complies with the position stated by the [Foreign and Commonwealth Office],” Mr. Jefferson said.
The financial secretary noted that the communications between the Cayman Islands government and the UK had occurred between Friday – the date that Premier McKeeva Bush gave his budget address in the Legislative Assembly – and Tuesday; a day before the budget was set to be debated in the LA.
Mr. Jefferson said the UK’s main thrust during the discussions was on central government operating expenses in Cayman. However, in his budget address Friday, Mr. Bush noted that those expenses, when including the amount Cayman will have to pay to service its debt for the 2010/11 year, rose to $522.6 million.
In the upcoming year, Cayman’s central government operating expenses [$489.9 million] plus its debt-service costs [$33.8 million] would total approximately $523.7 million…just over $1 million more than last year.
“They are virtually the same,” Mr. Jefferson said, noting that debt servicing payments typically are not counted within the central government’s yearly operating expenses.
The Caymanian Compass contacted Governor Duncan Taylor’s office for a statement regarding the situation and had not received a response by press time Wednesday.
On Thursday, the governor’s office sent the following statement: “The Governor’s Office can confirm [UK Overseas Territories] Minister Henry Bellingham and the Premier discussed the budget before it was presented last Friday. The Cayman Islands Government developed their budget in line with those discussions, and with the intention of meeting the targets set in their published medium term plan.”
The governor’s office statement did not indicate whether the UK had, or even intended to, approve Cayman’s 2011/12 budget plan.
The budget documents themselves were presented to LA members on Saturday, although they were not immediately tabled – made public – in the house after Mr. Bush’s budget address at 7pm Friday.
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.
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?”
“The 2011/12 budget complies with the position stated by the [Foreign and Commonwealth Office].”
Ken Jefferson, financial secretary
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