Cayman Islands government budget plans over the next four years have projected slight decreases in public sector spending, from total expenses of $544.4 million in the current year to $528.2 million in the 2016/17 fiscal year.
However, historical financial data examined by the Caymanian Compass show that initial estimates for government spending are rarely what occurs by year’s end.
Although government revenues have increased to greater-than-anticipated levels in recent years, they typically have not met the public sector’s initial goals for earnings, either.
According to government spending numbers in the last three-year budget plan that the former United Democratic Party administration agreed to with the United Kingdom, Cayman did not meet – or even come close to – spending targets established in 2010.
According to a review by the Compass, central government expenses for the 2010/11 fiscal year were listed as $520.7 million, compared to an initial forecast of $508.4 million in the three-year budget plan with the U.K.
In the 2011/12 budget year, projected expenditures were finalized around $550 million, including an additional $49 million approved by lawmakers in a supplemental appropriation bill. Planned operating expenses, according to the initial three-year plan with the U.K., were $479.2 million.
For the 2012/13 fiscal year, which ended in June, Cayman’s budgeted expenses were $556.2, according to the most recent figures available. Then-Premier McKeeva Bush’s stated expenditure target of $498 million at the beginning of the budget year – had it been met – would have been well above the $462.3 million set out in the final year of the U.K.’s 2010-2013 budget plan with the Cayman Islands.
The government missed its expenditure projections, according to the three-year plan, by a total of $177 million.
The recent four-year budget outlook approved between the government and the U.K. Foreign and Commonwealth Office has lower expenditure levels each year compared to the 2012/13 fiscal year.
In the current budget year, 2013/14, total expenses of $544.4 million were expected; in 2014/15, expenditures were forecast at $531.8 million.
Finance Minister Marco Archer told the Legislative Assembly last week that the government will cut $22.5 million in expenses during the next two budget years and will not enact any “new” revenue measures.
Mr. Archer, who presented the government’s strategic policy statement for the 2014/15 fiscal year, said the Progressives-led government this budget year would move forward with plans to charge registration fees to hedge fund directors.
He also said it is likely that government will increase some other fees between 2014 and 2017 to keep up with the cost of delivering services. He did not say which fees might increase.
Based on the previous three-year budget plan with the U.K., government had forecast a decrease in expenditures, from $508.4 million in 2010/11 to $462 million in 2012/13, but it ended up with expenditures that increased from $520.7 million to $556.2 million, or nearly 7 percent.
Government now forecasts a more modest expenditure decline of about $28 million between budget years 2012/13 and 2016/17.
In addition, government debt payments will be front-loaded in the next two years, while public spending on capital projects will be limited and paid only out of government operating surpluses, Mr. Archer said.
There is no plan to use long-term borrowing through the 2016/17 budget year and Mr. Archer said his ministry would minimize use of short-term borrowing through overdraft facilities during those years.
If all this is achieved, “government will attain financial independence within a few years,” Mr. Archer told the Legislative Assembly.
Revenues, meanwhile, were expected to increase from $644.6 million in 2013/14 to 676.9 million in 2016/17, about 5 percent.
In each of the four budget years between 2013/14 and 2016/17, government has forecast between $100.3 million and $148.6 million in operating surplus – the amount of revenues anticipated to outpace government expenditures.