The Cayman Islands government will present its full spending plan for the 2013/14 fiscal year Monday morning in the Legislative Assembly.
The proposal follows the approval in June of an interim budget that takes the government through to Oct. 31, four months into the budget year. The plan will have to be ratified by the end of the month in order for government to maintain spending authority after this month.
The Cayman Islands government has committed to the United Kingdom that it will not seek any long-term borrowing from the current fiscal year through the end of the 2016/17 budget, effectively extending the existing borrowing ban for another year.
The original plan approved between the U.K. Foreign and Commonwealth Office and former premier McKeeva Bush’s administration called for the ban on long-term borrowing to extend through June 30, 2016. At that time, the Cayman Islands government had hoped to be within all operating principles of responsible financial management, including debt service and overall debt ratios required under law.
According to recently released government budget records, Cayman’s core government public sector debt stood at CI$573.7 million on June 30, 2013. Entire public sector debt, including amounts held by government-owned companies and statutory authorities by that same date was just shy of CI$712 million.
The ban on long-term borrowing will not prevent the government from acquiring a certain amount of short-term debt to help make ends meet within a given budget year. For instance, Cayman has been granted approval to borrow up to CI$46 million within the 2013/14 fiscal year to cover for the lower revenue-earning months. Any use of that short-term borrowing or overdraft facility must be paid back within the budget year.
In addition to the borrowing ban, the Cayman Islands has agreed that no supplementary appropriations – extra spending above what was initially approved in the budgeted expenditures – will be allowed.
The government’s 2013/14 spending plan will be released along with its four-year budget overview that sets out more general guidelines as to how the Cayman Islands will bring its budget back within the limits of the Public Management and Finance Law. Now, the budget does not comply with requirements for cash reserves, which must cover at least 90 days’ worth of government’s executive expenses. Also, the “net-debt ratio,” which states that government’s overall debt, should be no more than 80 percent of core government revenues.