The Cayman Islands government would have achieved a budget surplus last year, had it not been for $65.4 million in unexpected COVID-19 pandemic-related additional healthcare spending and financial support for small businesses and displaced workers.
Central government reported a budget deficit of $38 million for 2020. This was substantially less than the previously forecast deficit of $168 million, Finance Minister Roy McTaggart said at the government press conference on Wednesday.
This resulted from operating revenues of $789 billion and operating expenses and financing costs of $827 million.
Despite the complete halt to tourism in three quarters of last year, McTaggart said, “It is particularly pleasing to report that the shortfall in revenue for the year was only $35 million compared to our budget.”
Government covered the shortfall and additional expenditures fully from its cash reserves, which stood at $447.6 million at the end of 2020, without incurring any new debt.
Based on a gross domestic product of $4.7 billion and total government debt of $248.6 million in 2020, the finance minister said, Cayman had one of the lowest debt-to-GDP ratios in the world at only 5.2%.
McTaggart said certain government revenue streams performed much better than expected. Stamp duty on land transfers exceeded initial budget forecasts by $20.6 million, while new private fund fees, which resulted from the new Private Funds Act 2020, yielded $5.7 million for government last year.
At the same time, government reduced its planned expenditures for personnel by $6.7 million and spent $27.3 million less on supplies and consumables.
McTaggart said the $38 million deficit comes after government paid approximately $65.4 million for COVID-19 mitigation measures.
“Were it not for the occurrence of this necessary expenditure government would have produced the usual annual surplus.”
Pandemic-related expenditures included $32.3 million for healthcare, quarantine and personal protective equipment; $15.6 million in financial assistance for displaced tourism workers; and $4 million in grants to small businesses.
However, McTaggart cautioned that the pandemic is not over. “Not by a longshot. Government continues to be challenged by the extraordinary demand for assistance and services from our people who are experiencing unprecedented hardship,” he said.