2017 generates bonus surplus

| 30/10/2017 | 22 Comments

(CNS): The public purse appears to have earned a bonus this year as forecasts suggest that government’s surplus for the 18-month financial period from July 2016 to December 2017 is $8.9 million more than predicted. Finance Minister Roy McTaggart told his political colleagues on Friday that by 31 December core government would have a predicted surplus of $55 million, following its first extended fiscal period of 18 months. Before detailing his expectations for spending and earnings over the next two years, he set out the current fortunes of the public purse.

McTaggart revealed that core government generated $934.8 million in revenue for 2016/17, a whopping $26.3 million higher than the forecast $908.5 as a result of a boost in stamp duty on land and a boost to imports of cars and fuel. But because government spending was $17.4 million more than the original budget called for, the bonus was not as hefty as it could have been.

Surprisingly, it was not the civil servants’ wage bill that pushed up costs for government during the current fiscal period, as that fell by $7.7 million. The increase in spending was driven by a higher than expected number of uninsured, underinsured and indigent people needing overseas health health care to the tune of $10.3 million plus $4.8 million to fund various legal cases, none of which are likely to be detailed. Cuban migrants cost government $3.1 million, and $7.6 million was needed for other operating expenditures and depreciation.

Government is also facing significant losses from the statutory authorities and government companies. According to the budget delivered by former finance minister Marco Archer, the SAGCs should have delivered a surplus this year of half a million dollars; instead they are now expected to have a combined net operating loss of $8.9 million, a miscalculation in the wrong direction of some $9.4 million. McTaggart pointed the finger at the national airline and a fall in ticket sales.

“The deterioration is primarily related to Cayman Airways, which has seen a significant reduction in its passenger loads on its Cuba and Miami routes and will thus experience a larger loss than initially forecast,” he said.

But given the significant earnings government made over the last 18 months, it can weather the unexpected costs and the losses from the public authorities.

However, McTaggart gave no indication that the people can expect any windfalls themselves as he made it clear he is intends to ensure that government maintains a healthy bank balance.

“Some people ask, why must the government generate operating surpluses? Simply put …it is always wise to spend less than you earn and to manage your finances so as to always end each financial period with a surplus – it is the wise and prudent thing to do as it ensures that you will have the financial wherewithal to deal with unexpected circumstances,” he told the Legislative Assembly. “Maintaining an operating surplus is a key component of ensuring compliance with the Principles of Responsible Financial Management and the FFR to which this government is committed to maintaining over the long term.”

He spoke of the need for public sector agencies to control expenditure spending and improve performance.

“By aggressively managing our expenditure we will continue to generate cash from operating activities enabling us to build and maintain our cash reserves while simultaneously generating cash to fund our capital investment programme – and minimize the need to borrow,” he added.

The details of the performance by SAGCs and government departments will be scrutinised during the finance committee hearings, when senior civil servants will be on hand to detail their spending plans and the results of the fiscal period, which ends on 31 December.

The Finance Committee is expected to convene following the debate on the budget, which begins Wednesday.

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Category: Government Finance, Politics

Comments (22)

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  1. Anonymous says:

    remember the article the other day….vulture capitalist’s, tslking anout consortium of billionaires …..they prey on weak and vunerable hovernments like cig?

  2. Hornblower says:

    More smoke & mirrors accounting and a conveniently timed press release so as to justify building an obselete cruise port.

    Pull the other one Roy, you’ll find its got big bells on it.

  3. Anonymous says:

    But I keep reading that the civil service is the problem. Appears the civil service is the solution. Why isn’t this extra money spent on rewarding civil servants? That’s what the private sector does.

  4. Anonymous says:

    And I would then ask ; What, if anything in the past would now make me think that you are now able to tell the truth as far as your financial forecast? Does anything come to mind? That’s what I thought.

  5. Anonymous says:

    Creative accounting?

  6. Anonymous says:

    How does this fit into the above rosy picture?

    “….. government still does not properly plan or budget its major capital projects, which could mean that the costs of those developments could be underestimated by a “significant” amount, according to a report released last week by the Office of the Auditor General.”
    “…government routinely does not account for the long-term costs of maintaining its assets once they are constructed, does not spell out in its budgeting documents how much each project will cost, and does not conduct proper analyses on developments before beginning them.”

  7. Anonymous says:

    if Govt employees could get a bonus, that’d be great.

  8. Anonymous says:

    Apparently we no longer need the Department of Environment under Alden’s rule, so getting rid of them should create an even bigger surplus! Yippeeee!

    • Diogenes says:

      The DoE was never a large part of expenditure, if they want to increase the surplus they should cut some of the MLAs pay and stop treating them like nobles and aristocrats, they collectively make millions for a part time job they received by convincing a few hundred people to vote for them

      Diogenes

  9. ? says:

    Nearly 100 million revenue @ roughly 33 miles long which includes the two sister’s and a population of 65K we should have streets lined of Gold..

  10. West bay Premier says:

    I would say to the Cayman Government stop sugar coating and trying to make everything look pretty rosy . Because that’s how you gets yourself in big trouble. They should be trying to use their brain because I don’t think they are .
    Just look at how they have allowed crime , guns , iguanas, and all the other problems to get out of control and cost a lot more money to fix those problems .

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