‘Delays’ blamed for decrease in gov’t revenue

Budget shows healthy surplus nonetheless

The Cayman Islands government is forecast to fall $31 million short of its projected operating surplus in the current 2012/13 budget, according to a report issued late Wednesday.  

That drop from a budgeted surplus of $82.3 million to a now-projected surplus of $51.1 million is entirely due to a decrease in expected revenues for the year.  

The government’s Pre-Election Economic and Financial Update lists several areas where government revenues came in lower than anticipated. They include:  

$11.3 million less than budgeted due to continued delays in the construction of the Special Economic Zone. Another $2.6 million did not come in due to project delays affecting the implementation of the Special Economic Zone grant fee.  

$2.2 million less than budgeted due to legislative delays and “other timing issues” from a tourism departure tax. 

$5.1 million less than budgeted from work permit fees partially due to delayed implementation of fee increases.  

$2.6 million less than budgeted partially due to “timing and delayed implementation of revised fees” for new fees on motor vehicles in the islands. 

Other government revenue measures were not implemented at all during the 2012/13 year and will be implemented for the next budget. Those measures were expected to raise an additional $33 million for government coffers.  

They included; various fund directors fees, compliance fees for all other financial directors, fees for licensed security investment businesses, fees for directors of regulated entities and master fund registration fees.  

It wasn’t all bad news on the revenue front for government; a number of fees were forecast to come in higher than anticipated. Those included a $2.5 million increase for the grants of term limit exemption permits, nearly $13 million in stamp duty, land transfers and share transfers from land-holding companies mainly due to a few larger property transfers and $2.4 million more than expected from annual permanent residency fees.  

 

Cutting costs 

The Cayman Islands central government service managed to cut $600,000 from its operating costs, according to projections through to the end of the budget year on 30 June, 2013.  

However, that relatively small reduction doesn’t tell the true story.  

According to estimates in the pre-budget financial report, government has slashed personnel costs from the original budget by nearly $7.5 million due to “attrition and recruitment reasons”. The personnel budget for the 2012/13 is still more than $10 million higher than it was the year before. 

Supplies and consumables costs were cut by an estimated $5.1 million mostly because of reduced professional fees such as marketing and maintenance. 

However, those projected cost cuts were balanced out by higher healthcare costs. “Increased utilisation” of the Health Services Authority will cost an extra $4.2 million, while cost of providing medical care at overseas institutions went up $8.1 million from the original budget.  

 

Debt  

Debt continues to be the Cayman Islands’ main problem In terms of meeting the United Kingdom’s budget goals through the 2015/16 government budget year.  

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

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1 COMMENT

  1. The delay should be blamed on Govt themselves. Your rulers should have hired real professionals to run the Govt like a business. You have no idea what you are doing None of you. Your 4Th world mentality is ruining everything. Most people on the island are very nice people and you are making it with your greed and half thought ideas So hard on them. Do everyone a favor and Quit trying to do things yourselves
    turn over govt operations to a real management company with the islanders as the shareholders instead of the slaves. Perhaps hire that miller guy to run the place or ask someone like the old Ceo of HP.

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