The Cayman Islands government has started the tumultuous economic period in the wake of the coronavirus pandemic with better-than-expected first-quarter fiscal results.
The entire public sector, including core government and statutory authorities and government companies, saw a $177.3 million surplus in the first three months of this year. This is $25.3 million higher than anticipated by the 2020 budget.
Although core government revenues of $353.2 million declined by $20.5 million compared to the first quarter of 2019, the income was slightly higher than budgeted.
Central government expenditures of $180.9, in turn, were lower by 14.7 million, while public entities contributed a surplus of almost $5 million.
Government spent less than allocated on personnel (-$3.6 million) as well as supplies and consumables (-$9.4 million). Transfer payments within core government were down by $5.6 million.
The surplus improved government’s cash position. Government now has $487.5 million in operating cash and deposits and $172.1 million in restricted deposits, resulting in $659.6 million cash reserves.
In the first quarter, government incurred $1.8 million in operating costs from the preparation for the COVID-19 public health crisis. This figure is expected to increase significantly in the second quarter.
Meanwhile, lockdown measures and the closure of the tourism sector are going to lead to a major drop in government revenues for the remainder of the year. Cayman’s borders are closed until at least 1 Sept.
The unaudited first-quarter financial report noted, “The initial 2020 budget projections will be greatly impacted by the financial and economic effects of COVID-19 expenditures which are expected to increase in April 2020 and onwards, and the fall-off of revenue due to slowed tourism and local economic activity for the rest of the year.”
During the remaining three quarters of 2020, “costs will have to be diligently monitored”, the report said.
First-quarter revenues are supported by the fact that most financial services fees are due at the beginning of the calendar year and collected in the first quarter.
A closer look at the first-quarter revenue shows that coercive revenue was $1.2 million lower than budgeted, despite the continuation of the property boom and higher income from stamp duty on land transfers and higher building-permit fees.
Partnership fees, one of the items collected at the beginning of the year, also increased year on year.
However, reduced income from exempt company fees and security investment business licences and $4.8 million less in tourist accommodation charges due to the first impact of COVID-19 all meant that coercive revenue came in lower than expected.