UK Overseas Territories Minister Henry Bellingham indicated last week that he had spoken with Cayman Islands Premier McKeeva Bush prior to Mr. Bush presenting his government’s budget in the Legislative Assembly.
The discussions took place before the spending plan for the government’s 2011/12 was revealed in the house on Friday 10 June, Mr. Bellingham said.
“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,” according to a statement from Cayman Islands Governor Duncan Taylor’s office that was attributed to the overseas territories minister.
The statement released to the Caymanian Compass on Thursday did not specify whether the United Kingdom Foreign and Commonwealth Office had actually approved the government’s $490 million spending plan for the fiscal year that begins on 1 July.
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.
The current year’s budget – printed copies of which had still not been presented to the local press by Thursday – does propose a modest surplus of $12 million. However, it still does not meet all six requirements listed under the principles of responsible financial management set forth in Cayman’s Public Management and Finance Law.
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.
“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 continued 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…slightly more than $1 million.
“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.
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