Projected four-year budget surplus: $555M

The Cayman Islands government will accumulate operating surpluses of more than $555 million over the next four years, according to estimates presented last week by Premier Alden McLaughlin.

The current budget year, which ends on June 30, is expected to wind up with a $128 million surplus – government revenues that exceed its expenses during the period.

Similar surpluses are expected in the next three budget years, with current estimates totaling $124.5 million in 2015/16, $134.8 million in 2016/17 and $168.3 million in 2017/18.

“This government is now operating on a cash basis without need for an overdraft facility,” Mr. McLaughlin said, referring to short-term borrowing measures government was required to undertake to “make ends meet” during low-earning periods of previous years. Interest costs on that short-term debt reached as much as $750,000 in the 2012/13 fiscal year.

The $128 million operating surplus for the current budget does not represent cash that government receives free of other financial liabilities, however.

Since the Cayman Islands is not allowed to use long-term debt until at least mid-2016, due to financial agreements with the United Kingdom, any capital (construction) works government undertakes during the year will have to be paid out of operating surplus.

“The projected operating surplus does not factor in captial expenditure [approximately $45 million] and debt principal repayment [approx CI$26 million],” Finance Minister Marco Archer said. “The operating surplus would reflect operational expenditure which only includes interest expense on debt.”

Current financial arrangements with the U.K. mean more than $71 million will have to be subtracted from the operating surplus of $128 million, leaving Cayman with about $56 million.

Still, Mr. McLaughlin said, it is evident that the country is producing “consistent and real surpluses” that allow it pay off current loans while having cash left in the bank.

“Government will also have the means to further reduce borrowing by 2017/18,” Mr. McLaughlin said. “These surpluses, coupled with reduced borrowing, will help ensure that the country will be better able to withstand any future economic downturns.”

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  1. Moving in the right direction good. Not fully giving us the bottom line and still not taking into account ALL expenses bad.

    128m operating expenses less 45m capital exp less 26m debt repayments = 56m.

    Then 56m less 25m historical annual transfer payment to statutory authorities = 31m.

    31m surplus still great right? But wait

    Then there is 1.18b of govt employee healthcare benefits to be paid over the next 25 years and there are two aspects to this massive component. Firstly no money is reserved and they should be setting aside at least 47m yearly on a straight line basis.

    Second the cost of that health is growing due to inflation (read a loaf of bread was XX ten years ago and will be much more then years from now). When one factors in industry expert health care inflation rates (historical long term rate vs. PWC vs. AALTCI), that 1.18b cost is growing by a range of 64-101m each and every year. Nothing fancy here just simple math.

    Then 31m surplus once one factors in health care benefits (that they are ignoring) less 47m (which should be being set aside annually) less the (min) inflationary factor of 64m = (80m) loss. Add another 40m to that loss if one uses the high band of health care inflation.

    And they still owe their own pension plan 200m (govtstatutory authorities) and claim it will take another ten years to make good on that.

    And And lets keep in mind that these are budgetary amounts only. Firstly, have they received all the taxes they think they will and will they keep their expenses below what they think they will? Historically the answer is a clear no and no.

    And And And where are those financial statements that we were promised ten years ago by both the PPM and UDP to actually be in a position to believe them or not?

    So once all is factored we then swing from a 56m surplus to an 80m loss. So it is now easy to understand why Cinico does not pay its bills or there is no money to fix a few garbage trucks and service is reduced.

    Please disprove if any of this is not the case.

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  2. I cannot believe that they are still playing these imaginary numbers games, and it’s even harder to believe that people actually believe what they are saying. I wish just for once they would give a clear picture of what the Cayman Island Financial situation is.

    I think that these politicians truly believe that the people they represent are nave or just plain stupid, why else would they constantly chance their stories, their alliances, make false promises that can’t be kept and tell bold face lies about what they are planning or doing.

    But I guess you can’t blame them because it’s the people the consistently support them year after year, believe all their lies and never call them to task.

    The budget they provide should be review by the Auditor General and his findings also made publicly available.

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  3. Well said Mr Davis, and Mr Peene, the premier should stop putting the spin on things like the financial situation of the Islands that sounds good to the people of the Islands, and better for the developer who is getting 2 times more owed to them than what the premier is talking about. This is how Governments fail and get in big trouble with some developer.

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