Premier McKeeva Bush said Saturday the United Kingdom’s Foreign and Commonwealth Office had given its approval to the Cayman Islands government’s spending plan for the upcoming 2011/12 budget proposal.
The spending plan, which must be approved prior to the start of the new fiscal year onFriday, received final approval from the Legislative Assembly’s Finance Committee on Monday. The budget received formal passage in a third and final reading before the house Monday afternoon.
Mr. Bush said the UK’s approval was contingent upon government controlling its operational spending – keeping it to approximately $490 million for the year, which runs from 1 July, 2011 to 30 June, 2012.
The proposal contains one new revenue measure, a $1,500 per year fee on certain “master fund” hedge funds. The proceeds from that fee would be used as a rebate to Caribbean Utilities Company to offset residential electricity bills, Mr. Bush said.
Following the Premier’s budget address on 10 June, Financial Secretary Ken Jefferson said the Cayman Islands met all of the United Kingdom’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, central government operating expenses were forecast to be $490.2 million, Mr. Jefferson said.
In the budget plan for 2011/12, which starts on 1 July, central government operating expenses are CI$489.9 million, he said.
However, those figures do not include debt service payments, foreign currency exchange costs or any projected debts from statutory authorities and government-owned companies that might arise.
According to budget documents – when those amounts are factored in – the Cayman Islands’ total forecast expenses in the 2010/11 budget year were stated as $520.7 million.
For the upcoming 2011/12 year, which starts on 1 July, total expenses were budgeted at $532.2 million, about $11.5 million higher than the year before.
Financial statements for the 2011/12 spending plan indicate that government’s personnel costs are expected to rise by just more than $12 million compared to the year that ends 30 June.
The budget includes a $6 million increase in health care costs for civil servants, as well as retirees, seamen and veterans.
Premier Bush said his ministry does expect to achieve a small budget surplus by mid-2012.
Cayman’s budget for the upcoming year contains a forecast $3.68 million operating surplus that is expected to be achieved by the end of the fiscal year on 30 June, 2012.
That means the government’s earnings will slightly outpace its expenses by that date, according to budget managers’ estimates
Mr. Bush estimated that budget surplus at $12.1 million by 30 June, 2012. However, the Premier’s figures did not include an anticipated loss in statutory authorities and government-owned companies of some $8.4 million