Gov’t budget figures off UK plan

The Cayman Islands government has not met – or even come close to – spending targets established in its three-year budget plan agreed upon with the United Kingdom in 2010.

According to a review done by the Caymanian Compass, central government expenses for the 2010/11 fiscal year were $520.7 million compared with a forecast of 508.4 million in the three-year budget plan.

In the current year, 2011/12, projected expenditure figures were around $550 million – including an additional spending amount of $49 million approved by lawmakers earlier this year – while planned operating expenses according to the UK plan were $479.2 million.

For the upcoming year, which starts on Sunday, 1 July, Cayman’s budgeted expenses won’t exactly be known until a full budget is proposed. That’s not likely to occur before September, with Premier McKeeva Bush expected to bring an interim spending plan before the Cayman Islands Legislative Assembly later Wednesday.

However, even Mr. Bush’s stated expenditure target of $498 million would have been well above $462.3 million set out in the final year of the UK’s three-year budget plan with the Cayman Islands.

Premier Bush said in a broadcast address to the territory Friday that government would propose a two or three-month interim budget to the Legislative Assembly this week. He clarified Monday during a meeting with liquor licence holders that the interim budget would be for two months only.

The interim budget, Mr. Bush said, would provide lawmakers additional time to make further cuts in government spending which – at one point – was a combined $151 million over what government ministers initially proposed.

“Since the world financial difficulties started and reduced our economy, the government has had to render much more social assistance to individuals and families in such areas as rent, financial assistance and scholarships,” Mr. Bush said Friday. “The cost to fight crime also escalated. The cumulative effect was much more financial pressure on the government. We cannot allow our expenditures to rise as they have in the past. 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 for government operating expenditure and $59 million in capital [construction] projects.

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. The capital expenditure budget was also overshot by some $21 million, he said.

The government’s proposed 2012/13 budget, which was sent to the UK government earlier this month, included $59 million in borrowings 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 UK’s Foreign and Commonwealth Office rejected that spending plan, stating the proposed expenditure was “unsustainable”.

Opposition Leader Alden McLaughlin said Tuesday that it would be quite a feat for government to reduce expenses even from $549 million to Mr. Bush’s initially proposed $498 million for the year.

“Quite how he expects to get that down to $500 million is difficult to understand,” Mr. McLaughlin said.

The State Opening of the Legislative Assembly is scheduled to get under way at 10am.

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5 COMMENTS

  1. What part of unsustainable escapes your vocabulary? What part of expenditures equals revenue alludes you? What part of do not borrow don’t you get?
    The UK has been rather clear about what is acceptable and what is not. Blaming it on others is like shouting out that we don’t have a clue how to do our job. In my opinion the UK should send in a forensic accounting team to sort this mess out. Imagine the disaster if these islands went independent? Interim budget is the equivalent of printing money that you do not have.

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  2. Bethinking…

    For your expanded information and knowledge, please Google and read the entire article that I’ve just posted a part from…and posted the website link to it.

    Jersey, in the Channel Islands is in the exact position as Cayman…I’m not sure if they’re under the same budgetary supervision and restrictions but…

    I’ve already mentioned in two comments, the ‘dire unsustainable’ budget deficit, coupled with the recession, that Britain is under.

    It is clear that the political leaders of Jersey do not have the same views as yours of the alrtuistic intentions of the British Govt. towards their economy and financial industry…as a matter of fact, quite the opposite.

    Now do you wonder why that is ?

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  3. McKeeva must plan to use magic to balance the budget. His critics will call it sleight of hand, but when you are 50 million over budget and decide to give away 15 million in solar panels to the poor and 10,000 to anyone who needs it for house repairs, he must have something up his sleeve.

    At least I hope that he has something that he can pull out of his sleeve, because the stuff that has been coming out of his head for the last three years hasn’t been working that well.

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  4. It would be interesting to know what government use as a benchmark when assessing bids on contracts..

    Industry standards would have government in-house evaluators estimate the project, and bidders within plus or minus 10% of the in-house estimate shortlist.

    The shortlist group would then be asked; to qualify their estimate to determine possible mis-interpretation of the specifications.. This review would also serve to determine if something may have been skipped by the in-house team..

    The Means Catalog calibrated to the region cost of labor and material should be every-one handbook and would avoid huge difference in contract bids..

    Further’ cost over-runs due to unforeseen would be substantially reduced when a sit down review of the specifications is done with the shortlist contractors..

    The partnership of government with any entity where there is a give and take of assets should like-wise be evaluated.. No way should there be any misunderstanding as to what is to be given or received.

    The proposed West Bay road exchange is a blaring example of government not doing their in-house review.
    Even the length of the section was not clearly defined
    Least a proper valuation..

    Contractors need to understand that we know what the value of the work is, and that we are working within an accepted industry profit margin. Maybe then we will get value for money and a true cost based budget.

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  5. Budgets are not space science, nor even algebra; they are governed by plain arithmetic, but this Government, led by its Premier/Minister of Finance does not seem to have a clue about its two times table, let alone a National Budget.

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