New budget surplus $3.7M

Cayman’s budget for the upcoming year contains a forecast $3.68 million operating surplus that is expected to be achieved by the end of the fiscal year on 30 June, 2012.  

That means the government’s earnings will slightly outpace its expenses by that date, according to budget managers’ estimates.  

The surplus figure is significantly less than what was stated by Premier McKeeva Bush in his budget address on 10 June.  

“Operating revenues are expected to be $535.8 million in 2011/12,” Mr. Bush said. “Operating expenses are projected at $489.9 million in 2011/12. The surplus of government – after deducting $33.8 million of financing costs and expenses arising from foreign exchange transactions – is forecast to be $12.1 million.”  

Mr. Bush’s assessment – according to budget documents reviewed by the Caymanian Compass – does not include a projected $8.4 million operating loss by statutory authorities and government-owned companies.  

That loss would have to be made up out of the government’s general fund budget, if a deficit from the operation of those companies does occur.  

The Caymanian Compass examined budget documents for several years prior, and up until the 2009/10 fiscal year, operating losses of statutory authorities and government-owned companies were counted as a part of the government’s operating expenses.  

However, in the 2010/11 budget – the year Cayman is currently in – a subtle change appears to have been made. As of this fiscal year, operating losses of the public authorities and government companies were counted outside of core government’s operations.  

This year, those entities were expected to show a modest overall profit – about $1.8 million, a figure which Mr. Bush added to reach an overall budget surplus figure of roughly $4.5 million for the year ending 30 June, 2011.  

The same figure for the 2011/12 budget – expected as a loss of $8.4 million – was not included in reaching the $12.1 million surplus t 

he Premier announced in his budget address.  

Meeting expectations 

Following the budget address, Cayman’s Financial Secretary Ken Jefferson said the Cayman Islands has met all of the United Kingdom’s demands with regard to central government operating expenses for the coming year.  

“Recent communication from the [UK Foreign and Commonwealth Office] has made it clear that the [office] expects the government of the Cayman Islands to produce a budget for the fiscal year 2011/12 that has operating expenditures which do not exceed the forecast level of operating expenditures for the 2010/11 year,” Mr. Jefferson wrote in an email to the Caymanian Compass.  

For the 2010/11 fiscal year, which ends on 30 June, central government operating expenses were forecast to be $490.2 million, Mr. Jefferson said.  

In the budget plan for 2011/12, which starts on 1 July, central government operating expenses are CI$489.9 million, he said.  

However, those figures do not include debt service payments, foreign currency exchange costs or any projected debts from statutory authorities and government-owned companies that might arise. 

According to budget documents – when those amounts are factored in – the Cayman Islands’ total forecast expenses in the 2010/11 budget year were stated as $520.7 million.  

For the upcoming 2011/12 year, which starts on 1 July, total expenses were budgeted at $532.2 million, about $11.5 million higher than the year before.  

Financial statements for the 2011/12 spending plan indicate that government’s personnel costs are expected to rise by just more than $12 million compared to the year that ends 30 June.  

The budget includes a $6 million increase in healthcare costs for civil servants, as well as retirees, seamen and veterans.