Cayman Islands Opposition Leader Alden McLaughlin told members of the media last week that he was “bemused” at government’s financial expectations over the next three years.
There was no formal debate on the strategic policy statement in the Legislative Assembly after it was introduced. Cayman Islands Premier McKeeva Bush merely made a few introductory comments before making the statement public last month.
According to the forecast operating statement within the policy document, the government’s net surplus for the current 2012/13 budget will be $82.25 million by 30 June, 2013; $124.3 million by 30 June, 2014; $138.3 million by 30 June, 2015 and $144.95 million by 30 June, 2016.
The revenue projections in the operating statement show numbers increasing from $649.5 million in the 2012/2013 budget to $669.4 million by the end of the next financial year; $683.4 million in 2014/2015 and $697.4 million in 2015/2016.
“My initial impression is that it is very, very optimistic about projections in terms of revenue, particularly the amount of surplus that are being projected over these three years,” Mr. McLaughlin said. “I’m not sure on what that is based.”
The numbers contained within the annual policy statement are all projections based on how government expects to perform in terms of earnings and expenses.
“Those numbers are critically important,” Mr. McLaughlin said. “All indications right now are that government is in a serious cash crunch, and so quite how they get to … a substantial surplus at the end of this fiscal year, I’m not quite sure how we get there.”
The strategic policy statement points out that the revenue projections over the next three years incorporate a “central risk” scenario, whereby “the calculated amounts expected from existing revenue streams were discounted by 25 per cent in order to allow for unforeseen circumstances”.
Government stated the revenue projections were even more conservative because they assumed no substantial increase in volumes over the medium term and no additional revenue measures being introduced.
The government’s total expenditure for the current 2012/13 budget year is $567.2 million, dropping to $552.4 million by the end of the 2015/2016 fiscal year. The expenditure numbers include a provisional sum of $21.7 million to mitigate potential future increases in healthcare costs.
According to the strategic policy statement, savings would be made through budget cuts and other management initiatives, including consolidating the government’s lease estates through increased occupancy of the government administration building and introducing volunteer firemen to the fire service.
The Cayman Islands government’s budget plan through 2015/16 assumes that certain public-private sector partnership projects will have begun during the period.
Among those projects are the cruise ship berthing facility in George Town, the development of Cayman Enterprise City, the new private hospital for medical tourism – often referred to as the Shetty hospital – as well as a number of tourism-related projects through the ForCayman Investment Alliance and the expansion of Owen Roberts International Airport in Grand Cayman.
“It is assumed that during the period of this strategic policy statement [between now and June 2016], these projects would have commenced and will be mostly in the initial construction phase; namely, ForCayman Investment Alliance and Health City Cayman Islands,” Premier Bush stated in a written copy of the policy address, which is required to be delivered each budget year by 1 December as an update on the government’s budget progress and a road map for future planning.
“The construction phase of these projects [is] expected to stimulate the demand for services in several sectors such as wholesale and retail, real estate, renting and business activities; hotels and restaurants, financing and insurance,” Mr. Bush wrote.