Although it is still very early in the government financial year, Premier Alden McLaughlin said last week that it appears Cayman will earn another massive operating surplus during the current year.
Projections are that government will end the 2014/15 fiscal year on June 30, 2015, with a surplus of $120.9 million, meaning operating revenues will exceed operating expenses by that amount.
The surplus figure typically does not include what the Cayman Islands government spends to pay off debt principal or what it spends on its capital [construction] projects during the year.
However, Mr. McLaughlin said for the first quarter, July to September, of the government budget year, things are looking up:
Operating revenues for the quarter were $2.5 million higher than budgeted
Operating expenses for the quarter were $5.5 million lower than budgeted
Statutory authorities and government-owned companies, which operate outside of central government, earned an operating surplus of $1.7 million for the quarter.
Central government’s operating bank account balances were $67.1 million as of Sept. 30
The government also would not require an “overdraft” facility during 2014/15 at all, Mr. McLaughlin said. An overdraft is a short-term loan given to help governments “bridge the gap” between lesser earning revenue months and higher earning months. The money from the short-term loan is usually paid back in the same year it is borrowed, but Mr. McLaughlin said even that limited debt does accrue interest.
“It was not uncommon for annual overdraft interest costs to be $750,000,” he said. “In the [Progressives] government’s first year in office, we were able to reduce the figure to $66,000 and this year overdraft interest will be zero,” Mr. McLaughlin said.
Mr. McLaughlin credited Finance Minister Marco Archer for most of the good news. “Investors like certainty, and Minister Archer has certainly brought this to the management of public finances,” he said.