Report: Gov’t will miss surplus targets

Debt still Cayman’s major problem

2012-13 Budget main
The Cayman Islands government is forecast to end its current budget year on 30 June with an operating surplus of $51.1 million, according to interim budget reports released late Wednesday night.

Despite that significant increase in surplus, the country will still fall more than $31 million short of its originally estimated budget surplus for the 2012/13 fiscal year.

Moreover, the government’s Pre-Election Economic and Financial Update states that the public sector will not reach legal requirements for borrowing limits within the three-year term of its forecast. Government’s costs to pay off yearly debt should be no more 10 per cent of central government revenues, according to the Public Management and Finance Law.

Core government debt is forecast to be at $575.4 million by 30 June, while entire public sector debt is forecast to be $717.9 million.

According to government forecasts, other financial requirements within the Public Management and Finance Law will be met in either 2013/14 or 2014/15. In particular, government cash reserve requirements – they must have at least 90 days of executive expenses in the bank – won’t be reached until mid-2015.

Also, targeted operating surpluses for each of the next three budget years are below initial goals set forth by the United Kingdom’s Foreign and Commonwealth Office. The operating surplus represents how much more revenues government made after expenses are subtracted.

So far during the 2012/13 budget, operating expenses have been kept slightly below what was forecast for the year. Expenses are $600,000 less than forecast as of the date of the report.

However, for each of the next two budget years, government operating expenses are about $25.7 million higher than goals set by the UK.

Please see much more on this story in Friday’s Caymanian Compass….

2012-13 Budget
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