A projected $145 million operating surplus for the Cayman Islands government will be at least partially spent on public projects and paying off debt, according to budget records examined by the Cayman Compass.

Premier Alden McLaughlin announced during a private fundraiser last week that the government’s operating surplus in the 2015/16 budget – which ends on June 30 – would total $145 million, of which $133 million is from central government operations.

That means operating revenues were much higher than expenses for the year. According to budget figures presented by the premier, the public sector took in about $35 million more in revenues than initially expected. Government expenses were also higher than expected, by about $10 million.

However, certain expenses not included in government’s operations figures are typically paid out of the year-end surplus, if there is one.

Those expenses planned for the 2015/16 budget year include $20 million for repayment of borrowings – the principal amount due on government’s debts.

Interest paid on those debts (about $27.7 million) is counted against operating expenses, but the principal debt repayment is not.

In addition, government budgeted about $47.6 million for capital projects, equipment purchases, construction projects and additional money given to government statutory authorities and companies. That will also come out of the operating surplus, according to budget figures.

With the principal debt repayment and capital spending, it is estimated that at least $67.6 million would have to be subtracted from the operating surplus. That figure may have increased during the course of the year.

Financial Secretary Ken Jefferson has previously explained this as a function of government’s accrual accounting system, which shows the amounts due, just not as operating expenses.

The debt principal repayment and the capital expenses are included on the government’s balance sheet as part of the “net worth” of government’s public entities.

“It is not that the transactions of debt-principal repayment and capital expenditures are ‘lost’ or ‘unaccounted for,’” Mr. Jefferson said. “[These transactions] are required to be recorded in different [financial] statements.”

Even with the additional spending, government expected it would hold about $72 million in cash at the end of the budget year on June 30, an amount that is likely to go higher due to government’s increased revenues during the year.

The government is expected to hold just under $350 million in cash or cash equivalent value at the end of the 2015/16 budget year.

New budget

Premier Alden McLaughlin is to present the new 2016/17 budget on Monday in the Legislative Assembly, which gained final approval from the U.K. Foreign and Commonwealth Office last week.

Mr. McLaughlin said the new spending plan does not contain any borrowing or any plans to raise new taxes or fees. Finance Minister Marco Archer has said that the budget will not contain as large an operating surplus as the previous years’ plans because it is an 18-month spending plan.

Cayman is transitioning during the 2016/17 year from a single-year budgeting process to a two-year process. The interim period, covering July 1, 2016 to Dec. 31, 2017, will be included in the upcoming 18-month budget.

Details of the budget, expected to include targeted pay raises for civil servants and longer-term plans for healthcare co-pays in the civil service, will be revealed Monday.

The premier is also expected to reveal some details during his presentation to the Legislative Assembly regarding an immigration consultant’s report commissioned by the government last year.

The report by local attorney David Ritch was completed in the wake of an August 2015 court judgment that questioned aspects of the current and former application process used to vet prospective permanent residents.

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