The Cayman Islands government has a lot more money in the bank than it thought it would by June 30.
However, the budget year was only half over at the time and the leaner months of the late summer and fall are now facing the British Overseas Territory.
In a half-year fiscal report released Friday, produced for the first time by government officials, Cayman boasted an operating surplus of $201.1 million between Jan. 1 and June 30 – about $67 million higher than expected.
The primary reason for the larger surplus was higher-than-expected tax revenues through June. For instance, stamp duties levied on land sales were about $15 million more than expected. Import duties also came in $4.4 million higher than forecast.
The tourism sector also contributed with $4.5 million more from tourism accommodation charges than anticipated for the first half of the year.
“Tourist accommodation charges were favorable mainly due to record high visitor arrivals,” the half-year budget report said, noting a 20-percent combined increase in air and cruise arrivals over last year.
Overall, government tax revenues increased despite falling fees collected from exempt companies in the financial services industry and a drop off in funds paid by permanent residence applications, which there were fewer of during the first half of the year.
The half-year budget also benefited from a savings in personnel costs within the government; however, financial managers cautioned this savings is likely temporary.
“[It] is the result of several ministries and portfolios having numerous vacant posts that still have not been filled, including positions for the fire service, prison and Workforce Opportunities and Residency Cayman [agency],” the report noted.
The larger budget surplus will provide the public sector a cash cushion heading in to what are typically the lower-earning months of the year between August and November, Finance Minister Roy McTaggart said. Typically, most of Cayman’s government fees are paid in the first four months of the year, when tourism is at its highest level and when most financial services company fees are due.
“As the trend for revenue is generally lower in the second half of the year, it is anticipated that the surplus will align closer to budgeted expectations by year-end,” Mr. McTaggart said. “Government is confident it will achieve the budgeted net surplus of $81 million, at a minimum, by the end of this year,” Mr. McTaggart said in a statement Friday.
The Cayman Islands government has ended its past several fiscal years, staring in 2013, with an operating budget surplus, meaning revenues from taxes and fees came in higher than expenses for the year.
Cayman Islands central government revenues have risen by 44 percent in the past decade, according to budget records produced by the public sector’s Economics and Statistics Office. Current revenue reported by the government during the calendar year 2008 stood at $522.2 million, compared to $753.2 million for 2017.
The revenue figures went up substantially after two significant tax increases on immigration permit fees and financial services companies levied in 2010 and again in 2012, following the global market recession.