Government budget woes persist
The Cayman Islands central government has carried an overall deficit into the end of December during each of the last four years, according to the territory’s 2011 Annual Economic Report.
The report, published on Wednesday by the government Economics and Statistics Office, indicated that while government revenues rose to $546 million during calendar year 2011, expenditures also increased to $626 million – leaving an overall deficit balance of just more than $80 million.
The statistics office report does not coincide with the government’s budget year, which runs from 1 July of one year to 30 June of the next. Also, economists looking at the government’s budget figures might not consider all the same data as accountants in drawing their conclusions; however, the figures used by both should equal out in the end.
The $80 million overall deficit figure may sound high, but it is the lowest deficit figure government has seen since 2007, according to the Economics and Statistics Office. In December 2008, the overall fiscal balance was $149.9 million in deficit; in December 2009 it was $203.6 in deficit; and in December 2010 is was $88.5 million in deficit.
Revenues for government increased in 2011 largely due to increases in local fees.
“The increase was mainly from financial services fees/licences, work permits and residency related fees and traders’ licences,” the statistics office noted.
For instance, import duty earnings from gasoline and diesel imports went up $6.5 million between 2010 and 2011 and more than made up for the reduction in other government fee categories including cruise ship passenger charges and other import duties.
Work permit and other residency fees made up a greater share of government earning than they ever had before, according to the statistics office.
“Work permit fees … increased by 3.2 per cent to total $58.5 million despite a reduction in work permits,” the report stated. “This increase emanated from enhanced enforcement effort to collect revenue from previously delinquent sources, which included outstanding fees associated with permanent residence.”
Licensing fees on the financial services industry also generated an additional $4.5 million in revenues for government during the 2011 calendar year.
On the spending side, government increased both its supplies and consumables budget as well as increased subsidies it provides.
Of the $131.6 million spent on subsidies, 80 per cent go toward public sector entities.
Payments made into the social support network of the Cayman Islands increased by 4.4 per cent last year. Those payments included “social benefits to protect a target segment of the population against certain social risk” and topped out at around $31 million; higher than it has been in the past four years.
Personnel costs for central government fell by about 4 per cent in 2011, to $216 million. That’s a significant drop since 2008, when government personnel costs were $245.2 million.