Temporary budget will be proposed

Premier McKeeva Bush said in a broadcast address to the country Friday evening that government would propose a two or three-month interim budget to the Legislative Assembly next week.

The interim budget, Mr. Bush said, would provide lawmakers some additional time to make further cuts in the government spending plan which – at one point – was more than $130 million over what government ministers had initially proposed.

“We cannot allow our expenditures to rise as they have in the past,” Mr. Bush said. “We must cut the expenditure, because the last government put us in this intolerant situation. We must reduce expenditure if we are ever going to control our finances again.”

Mr. Bush said he initially set budget targets in January of $498 million in operating expenditure and $59 million in capital [construction] work.

The initially proposed operational expenses, which were overshot by $130 million, were cut to $549 million total – still about $50 million above what was first proposed. In addition, Mr. Bush proposed borrowings of $59 million and an increased ‘overdraft facility’ – which would allow the government to borrow to cover expenses if it came up short at the end of the year again.

The United Kingdom’s Foreign and Commonwealth Office rejected that spending plan, stating the proposed expenditure was “unsustainable”.

“They require further reductions to operating costs,” Mr. Bush said. “This will take us time to achieve.”

The interim budget, which Mr. Bush said would be brought to the Legislative Assembly on Wednesday following Governor Duncan Taylor’s Throne Speech, will secure financing only through the end of September at the latest. After that, Mr. Bush said the additional spending cuts had to be agreed.  
 
“Such decisions must be made in a careful and measured way,” he said.

A communication sent to Cayman Islands lawmakers late Friday afternoon confirmed that the government’s State Opening and Budget Address would occur on Wednesday, 27 June.

Governor Duncan Taylor also issued a proclamation Friday indicating that the new session of the Legislative Assembly would be held Wednesday.

The dates leave lawmakers just four days before the end of the current fiscal year, so the interim spending plan would have to be approved in that time.

Mr. Bush had told the Caymanian Compass Tuesday that he hoped to have a budget ready to present to the assembly by this Friday, but he acknowledged that his was not the last word on the matter.

The United Kingdom’s Foreign and Commonwealth Office must approve government’s spending plan for the 2012/13 year, which begins on 1 July, before the Legislative Assembly does. In simple terms, the UK approval is required because of concerns about Cayman’s cash reserves and the country’s debt-to-revenue ratios which do not meet requirements in the overseas territory’s Public Management and Finance Law.

Mr. Bush acknowledged Tuesday that Overseas Territories Minister Henry Bellingham “didn’t like the borrowing” the premier had proposed in the 2012/13 spending plan. About $40 million had been earmarked for various projects including completion of the government high schools on Grand Cayman, the building of a juvenile prisoner remand centre and the provision of solar panels for low income households, Mr. Bush said.

Furious behind the scenes preparations within the civil service were going on all week with meetings continuing late into the night in attempts to reduce government spending to acceptable levels, the Caymanian Compass has learned.

On Tuesday, Financial Secretary Ken Jefferson sent out an email to chief officers which indicated the government required further cuts including the reduction of equipment and supply budgets by more than 10 per cent and the elimination of most vacant positions existing within the service ahead of the 2012/13 year.

Opposition Leader Alden McLaughlin said Thursday that he was aware further requests for budget reductions from certain departments had been made, but he was not able to specify what those included.

 

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4 COMMENTS

  1. The foreign office evidently is committed to Cayman maintaining some simmelance of sustainability. They know the world financial crisis is far from over.

    Study Jamaica and its over dependency on borrowing and we will see how over borrowing can/has adversely effect a country..

    Cayman governments have successful planned the majority of their citizens to a high standard of living, but is it sustainable without having to sell the fort. I expect the solar panel proposal was a sacrifice anode expected, but final action very telling.

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  2. Caymanian-on-guard,

    I had one of my last comments on this topic questioned by Old Hand…and Caycompass has seen fit not to post my response to his question of my clarity of mind and position when making those comments but let that go…

    The entire gist and purpose of my comments is to inform Caymanians and others on this forum…

    Just what a financial mess England is in right now.

    No one not living here would know the true nature of the situation and how dire it is; they have absolutely no clue how bad things are here for the average person and family.

    And…the British officials responsible for the oversight of Cayman are certainly not going to tell you.

    This puts their statements and rules for Cayman in true perspective.

    Cayman’s political leadership should not need lecturing and fiscal restrictions from British officials…

    If they themselves, were intelligent and reponsible political leaders but, the the truth is…

    Both they and Britain’s current political leaders are cut out from exactly the same cloth.

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  3. Firery: England has been there and done that; The demand on their citizens are quite different from that of Cayman. One aircraft carrier alone can cost four Billion to commission.

    So as I see it they have an excuse, having to maintain a standing army/Navy.

    Also I believe we are in a unique position of being taught, tested and corrected by a very experienced teacher, who may or may not be in the best financial position but still committed to it’s charge. I can only speak for myself, but I have no problem following England; and very glad they are on point and on over-watch.

    Cayman on the other hand is like a spoiled 16 year old, with no real worldly responsibilities, has all the trappings of a successful support system, but will not put one cent in savings.. Oh! and sells all the toys for chicken feed when allowances are depleted.

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  4. Sometimes it is difficult to understand what Firery is saying, but has he studied poverty in parts of the UK? and compared their position with the poorest people in Cayman?
    It sounds like he wishes to be cut loose and manage his own affairs – and if that is the case, let it be so.

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