About one-third of the Cayman Islands government’s capital projects budget will go toward paying off debt and covering operating losses of statutory authorities and government-owned companies, as well as partly funding a major upgrade to the Owen Roberts International Airport.
Spending plans for the upcoming 2016/17 fiscal year, which cover an 18-month period between July 1, 2016 and Dec. 31, 2017, have set aside $35.2 million for the authorities and companies. With the exception of the airport terminal expansion in George Town, most of that money will pay off accumulated debts or – in the case of the Cayman Turtle Farm – cover operating losses.
Over the next 18 months, $12.7 million has been earmarked for the Turtle Farm. Some of the money will cover historical debts and the rest will cover annual losses from the West Bay tourism attraction. The farm has never made money since it was rebranded and opened as Boatswain’s Beach in 2006, later reverting to the name Cayman Turtle Farm.
The facility’s debt taken on for the expansion – which once stood at more than $30 million – is expected to fall below $10 million at the end of the budget year in December 2017. The full amount of the debt is expected to be paid off by 2019, according to Cayman Turtle Farm Managing Director Tim Adam.
The government will give another $7.7 million to Cayman Airways to fund debt obligations, some of which involve historical obligations.
Other debts being paid off by the government capital projects fund include $3.4 million for the National Housing Development Trust and $2 million for the Cayman Islands Development Bank.
The airport expansion and upgrade will receive $7.5 million from government, about half of the $15 million central government is expected to spend on the project. The rest of the money for the $60 million upgrade will be funded through passenger fees collected by the Cayman Islands Airports Authority.
Finance Minister Marco Archer said Monday that is crucial that government focuses on paying down its debts, including amounts due in the statutory authorities and government-owned companies.
Mr. Archer said the total debt held by the public sector is set to decline by about $70 million at the end of 2017, leaving government’s total debt at $523 million.
“It is critical that we continue with this strategy, not just from the perspective of [compliance with U.K.-mandated rules], but because it is prudent and wise,” Mr. Archer said. “We have been handed a rich legacy by our forefathers and today, as guardians, we must act responsibly for future generations of Caymanians.”
Pensions and healthcare
Ongoing pension and healthcare expenses for civil servants, retirees and seamen and veterans are not included in the public sector debt figure.
Mr. Archer said the 2016/17 budget contains an estimated 18-month pension payment of $49.2 million. This includes an additional cash contribution of $15 million to the Public Service Pensions Fund directly from government to reduce ongoing liabilities in the retirement funds managed by government.
Healthcare-related benefits for retirees, seamen and veterans will cost $42.9 million in the upcoming budget year.
“This amount represents 4.9 percent of the government’s overall operating expenditure budget,” Mr. Archer said. Total healthcare costs, including current civil servants, total about 20 percent of the annual budget, the finance minister said.