Government expenditure is expected to be just $3.3 million less than government revenue this financial year, Premier Wayne Panton has said.
He made the announcement during a meeting of the Finance Committee in Parliament on Tuesday, 26 Sept.
Before presenting 11 supplementary appropriations to members, he said they would total $68.8 million, which, if spent, would bring total expenditure for 2023 up to $1.03 billion.
Meanwhile, government revenue is expected to be “very marginally shy” of April’s Strategic Policy Statement projection of $1.037 billion, and instead reach about $1.033 billion.
Panton, who is also finance minister, added that the total bank balance at the end of the year, including the surplus, will be $484.4 million.
During the session, Opposition members accused the government of “sailing close to the wind” and risking a deficit.
‘Savings were realised’
Leader of the Opposition Roy McTaggart asked the premier if the total expenditure included that authorised in 2022 and carried over, to which Panton replied that it did.
McTaggart went on to ask if efforts had been made to see what other areas could have offset some of the $68.8 million in supplementary spending.
“Considerable requests were made to ensure that spending was appropriate and being done efficiently, and savings were realised where possible,” Panton responded.
“So these projected expenditures would implicitly support an analysis of where savings could be found.”
The Opposition leader then asked if there are amounts within the requested additional expenditure that have been spent already, to which the premier responded that there were not.
“[The ministries] have indicated, however, that they need to be able to get the funding in place to be able to move forward in October,” he added.
Total approved
Independent MP Chris Saunders said April’s Strategic Policy Statement showed that expenses were not expected to reach $1 billion until 2026.
And core government surplus for the final quarter was projected to be just under $62 million, he added.
Saunders asked what was the total amount that had been approved to be spent in 2023 to date.
Financial Secretary Kenneth Jefferson said the original appropriation for 2023 was $951 million – of which about $24 million was used in 2022, and another $76 million brought forward.
This gave a total of $1.003 billion, Jefferson said, to which another $36 million in supplementary appropriations was added in June after Finance Committee approval.
“We’re looking at, as of right now, a legal ability to spend of the magnitude of $1.039 billion, and we are looking to add $68 million to that.”
He added if that succeeds, government would have $1.107 billion to spend in the current 2023 year.”
He added that the projected $3 million surplus “is so small” but is based on the belief that every single dollar of the supplementary appropriations will be spent.
“Our experience in 2022 and in even prior years is that that isn’t the case – 100% isn’t always spent of the amount requested.”
‘Close to the wind’
Opposition MP Alden McLaughlin asked the financial secretary: “As a veteran of these things, are you comfortable with sailing so close to the wind? In other words, the risk that the government finishes the year in a deficit?”
Jefferson responded he was not comfortable and it “could easily turn into a break-even position”, but reiterated that supplementary appropriations may not be spent in their entirety.
McLaughlin raised concerns about the additional $77 million above the projected expenditure of $1.03 billion to reach $1.107 billion allowed spend.
“To have an additional $77 million out there that can run the risk of this country running a deficit for whatever reason, that’s the part I’m uncomfortable with,” he said.
The premier responded: “As minister for finance, premier, and in… Cabinet, we are very conscious about spending and we will try to ensure that we limit spending as much as possible.”
McLaughlin asked why another $68 million was being requested if an underspend is expected, to which Panton replied that it is difficult to predict which appropriation will be underspent.
Abstaining
During the vote on the new supplementary appropriations all of the Opposition members abstained on each of them.
Appearing on Radio Cayman’s ‘For the Record’ on Wednesday, 27 Sept., McTaggart said it was because they did not want to be “part of the problem”.
“We have come to the view that we are in real danger of ending up with a fiscal deficit this year and we don’t want to be seen as being a part of that,” he added.
A deficit will ring alarm bells in the UK government and affect the budget for the next two years, he told host Orrett Connor.
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