We have a budget

Acting governor signs off on spending plan

It’s official.

Acting Governor Franz Manderson signed off on the Cayman Islands government budget Friday just hours before the country’s spending authority from a two-month temporary budget was to run out.

Mr. Manderson said the official step of gazetting the document would take place Friday as well.

Cayman Islands lawmakers approved the $567 million spending plan for the government’s current 2012/13 budget year earlier in the week, about two months after the start of the fiscal year on 1 July.

The budget depends on a 20 per cent, one-year growth in revenues to make ends meet, according to government budget documents.

The proposal also requires a total of $81 million in overdraft facilities, also known as transitional borrowing, to cover expenses during the lower-earning months of the fiscal year.

An agreement with the United Kingdom has granted Cayman’s Mother Country never before seen levels of influence over the locally-governed budget.

A UK-appointed economic adviser will be reviewing Cayman’s economic progress every quarter and a ‘Budget Delivery Board’, run by Mr. Manderson, will be involved in planning medium to long-term financial goals for the country.

Central government expenses are forecast to be $567 million for the year, while revenues are forecast to come in at nearly $650 million.

“The [revenue] amount represents a growth of 20 per cent when compared to the $544.1 million in revenue forecast for the 2011/12 year,” budget documents state. “The forecast is based on enhancement to current revenue streams and new revenue measures totalling approximately $90 million.”

The new fees and charges, according to earlier statements by Cayman Islands Premier McKeeva Bush, include higher fees for work permits, increases in stamp duties on certain real estate purchases, and increases to certain fees in the financial services sector, among other revenue streams.

The central government expenses of $567 million are made up of $251 million in personnel costs, $95 million in supplies and consumables [including costs for government building leases], $25 million in depreciation expense, $33 million to finance borrowing costs, $108 million in outputs purchased from statutory authorities and government-owned companies, and nearly $19 million in outputs purchased from non-government suppliers.

In addition to those expenses, $32.8 million in “transfer payments” are budgeted in the 2012/13 spending plan. Those include $14.6 million in scholarships, educational support and nation-building programmes, $8.7 million in poor relief and children or family services assistance programmes, $5.6 million in ex-gratia payments to seamen, $1.3 million in benefit payments to ex-servicemen, $890,000 in housing assistance and $264,600 in support to local business associations, among other expenses.

“The government made significant efforts to restrict expenditures,” the budget statement noted. However, rising health care costs, the need to contribute to government worker past due pensions [nearly $17 million], and the ongoing implementation of the constitution, which was expected to cost more than $32 million before work was completed, all served to increase costs, government noted.
 
In addition, significant cost-reduction measures will be enacted within the civil service as the new budget takes effect.

Some civil servants – age 60 and over who continue working with government –  will be given a much larger pay cut than 3.2 per cent of their salary under budget reduction proposals contained within the Cayman Islands government’s 2012/13 spending plan. 

Government staff is to be reduced by a “headcount” of some 360 civil servants during a period of five years, on top of the 162 vacant or new positions that have already not been filled between January 2009 and June 2012. 

There will  be a “pay freeze” for all members of the civil service and a soft hiring freeze, essentially meaning the government will not fill 80 per cent of the jobs it had planned to in the next year. . 

 

1 COMMENT

  1. Hard to see quite what all this shuffling about between the UK Government, the elected ministers, and the Civil Service means, but perhaps it indicates some measure of withdrawal back to where the Governor and the Civil Service (through the Financial Secretary) propose the Budget, and after legislative approval, manage expenditure?
    Oh dear me! Colonialism rearing its ugly – but sensible, prudent and incorruptible head again!!
    I await the usual explosions -with, I hope, this time, some articulate and reasoned points -from the usual suspects.

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