Members of the Legislative Assembly approved additional funds for the government for the financial year 2020.
The increased need for higher than expected expenditures, equity investments and borrowing are largely necessitated by the COVID-19 pandemic and the related economic fallout.
Under the Public Management and Finance Law Cabinet can make changes to the budget which then have to be presented to the Legislative Assembly for approval in a supplementary appropriation bill.
Speaking in the LA on Monday, Finance Minister Roy McTaggart said the significant financial transactions, most of which have taken effect already, come as a result of the government’s decisions taken to mitigate and suppress the COVID-19.
This includes $40 million for the purchase of supplies to mitigate pandemic, COVID-19 testing, the cost of air bridge flights between the UK and Cayman and other items related to government’s COVID-19 response.
The bill also contained the $330 million line of credit obtained by government from local banks and the permission to borrow an additional $170 million should that become necessary.
To help those impacted economically, government has assigned $23.1 million for financial assistance to the most vulnerable, displaced tourism workers and non-Caymanian residents.
And $9.5 million have been allocated to micro and small businesses relief efforts, mainly in the form of a grant programme.
Government is also providing a temporary loan of $20.9 million to the Cayman Islands Airport Authority for work that included the strengthening and extension of the airport runway and apron, the removal of the ponds next to the runway and the establishment of a parallel taxiway and a perimeter road.
Although the Airport Authority has secured $20.9 million loan and overdraft facility from First Caribbean International Bank, the commercial loan must first be approved by the UK Foreign, Commonwealth and Development Office.
McTaggart explained that because the government is expected not to meet certain requirements of the Public Management and Finance Law, the Foreign Office has to approve larger loans and projects undertaken by government entities.
In particular, government is forecasting to end the 2020 financial year with an operating deficit of $168.7 million and cash reserves equivalent to 65 days of expenditures, rather than the required operating surplus and 90 days of cash reserves.
Given that the Airport Authority has “close to zero” operating revenue due to the border closure, the finance minister said, government is providing the loan amount until the commercial loan becomes available towards the end of this year to help the CIAA meet its operating and financial obligations.
Meanwhile, Cayman Airways will receive $16.3 million for operational support.
Cayman Airways has maintained more than 400 staff on full pay during the crisis, despite the border closure and limited service, to maintain Cayman’s connectivity to the rest of the world. Cayman Airways staff also received a $300,000 honourarium for work done and exposure to COVID-19 during the lockdown.
The Cayman Islands Monetary Authority is given an additional $6.1 million to increase its regulatory capacity.
Other capital projects that require more funding include $20.1 million for additional work on the John Gray High School campus and other capital works; $3 million for the purchase of laptops for students in public schools; $2.4 million for the construction of the West Bay Police Station; and $1.4 million for the establishment of the Cayman Islands Regiment.
Government’s forecast financial statements and net debt levels are also impacted by the government-guaranteed loan scheme for medium- and large-sized businesses. Government is guaranteeing 50%, or up to $100 million, of a maximum loan facility of $200.0 million made available by five local retail banks.
A portion of the funding in the supplementary appropriation bill is covered by savings in other budget items or by bringing forward funding from the financial year 2021.
Breakdown of funding
• $500 million to cover a $330.0 million Line of Credit and the capacity to borrow an additional $170 million
• $40 million to mitigate COVID-19 and maintain the UK-Cayman air bridge flights
• $23.1 million financial assistance to the most vulnerable and displaced tourism workers
• $20.9 million for a temporary loan to the Cayman Islands Airports Authority
• $20.1 million for additional work on the John Gray High School campus and other capital works
• $16.3 million for operational support for Cayman Airways Limited
• $9.5 million for micro and small businesses relief efforts
• $6.1 million to increase the regulatory capacity at the Cayman Islands Monetary Authority
• $3 million for the purchase of laptops for students in public schools
• $2.4 million for the construction of the West Bay Police Statio
• $1.4 million for the establishment of the Cayman Islands Regiment