Budget depends on accurate forecasts
(CNS): Following the passage of the government’s first two-year budget in the Legislative Assembly last week the administration can now get down to spending the cash and implementing its policies. But the more than $1.45 billion revenue government expects to fund the expenditure, pay down debt, retain cash flows and produce the predicted surpluses is dependent on accurate economic forecasts. In his first budget Finance Minister Roy McTaggart stated that the key indicators point toward “improved economic health” and a growth in real GDP of 2.4% in 2018 and 2.3% in 2019. However, government is still depending on unreliable private sector development as well as its own projects to fuel this expected growth.
“Barring major disruptions from the external environment, the economic growth of the Cayman Islands over the medium term is expected to remain higher than the average growth over the last five years,” officials wrote in the Plan and Estimates for 2018 and 2019.
But construction is expected to lead the growth, as government continues to hope that controversial private sector projects, such as the Ironwood Golf course and Dart’s plans for a new five-star hotel, will get underway next year. It also pointed to its plans for the George Town cruise berthing project as a major contributing factor and road building to boost economic growth.
Officials hope the tourism sector will continue growing, despite some forecast economic challenges in the United States, Cayman’s primary market. The budget also assumes the financial services sector will sustain its recent performance, which ignores potential dampened demand for borrowing with expected interest rate increases.
But promised private sector projects are often merely speculative and unreliable proposals to base economic fortunes on. The Ironwood golf proposals has been on the table for years but it is yet to materialise, and while Dart has proved a much safer bet, the next hotel it plans faces some hurdles, given the developer’s desire to dig up Seven Mile Beach.
Predicting what government thinks it will earn and more importantly spend is also far from an exact science. Over the previous 18 month budget, which began 1 July last year, government spent $17.4 million more than it expected, and had it not been for a drop in personnel costs, that would have been closer to $25 million. The statutory authorities and government companies are also expected to end the 2017/18 month budget period in a very different position to the one government had predicted. The SAGCs will have a net operating loss of $8.9 million, a deterioration of $9.4 million from the $0.5 million profit originally forecast.
Fortunately, the predictions about what government would collect in revenue were also wrong but in a positive direction. It earned $26.3 million more than forecast in the original budget because of higher than expected revenues from stamp duty on land transfers, as well as more from import duty on cars, gasoline and diesel imports. This countered the problems of the SAGC losses and the additional core spending.
But government spent some $10.3 million more on the uninsured, under-insured and indigent people needing overseas medical care, another $3.1 million more than expected on dealing with Cuban migrants, and nearly $5 million settling legal expenses — all appropriations that are difficult to predict, meaning the government’s predicted surplus of $81 million in 2018 and $59.3 million in 2019 are by no means guaranteed.
Category: Economy, Government Finance, Politics
It’s either going to be partly cloudy or partly sunny, maybe even both. Of that I am certain.
This story is a real masterpiece. Let me give you another headline. If you hold your hand over a flame you are going to get burnt. Gees!
Where is the construction of affordable housing we are not all millionaires.
Oh I forgot this government don’t give a flying f*€k about that it’s all about greasing there back pockets
If its affordable, build it yourself and stop waiting for a handout. If you can’t afford to, its not affordable.
Say what you wanna – our current economic standing and future prospects are phenomenally superior to the “mother country”‘s.
Recent UK reports and 20 year forecasts make for some depressing reading.
Let us prepare for an even greater influx of immigrants from that jurisdiction … and let us also completely ignore or pretend to appreciate their input on our domestic affairs.
– Whodatis
Tediously predictable Who. Do you have a new song up your sleeve or just gonna keep that old one keep playing…it’s already worn out
Wow you really hate the Brits. This constant outpouring of hatred must help a little with your demons I hope. Whatever was done to you by British people, or in that country, may you one day learn to accept it.
Correction: I really love the Overseas British Territory known as the Cayman Islands.
I make it a priority to continually remind my fellow Caymanians of the current reality – and do so without apology.
You have the option to turn away – but be warned, this train steams ahead with no stops or cigarette breaks.
– Who
*Anyway, as it is budget time in either country, where would you rather be for the next 20 years?
Which country is in a better standing?
Why should the economically superior of the two be dictated to by the inferior?
Again – crucially and honestly, where would you rather be for the next 20 years?
Thank you. I rest my case. (For now).
Except we could well be under water in 20 years…and independence calls to avoid the “Brexit” fallout will have no effect-in fact will just seal Cayman’s demise as other territories who have gone that route can see..so your point is, that you have no point.
Your reply is so ridiculous that I only replied to say just that.
– Whodatis
😉
Roy – some facts to consider:
The executive classes (paying the highest fees) are all being granted PR and status. Work permit revenues will be shortly diminishing greatly as they become Caymanian.
Their children will qualify for scholarships in record numbers.
Driverless vehicles will be mainstream in a decade. What are the less educated going to do for a living when almost no-one is driving a bus or a taxi.
The population is closer to 70,000 than the official number of 61,000. How can you plan anything with that margin of error.
In 15 years our buildings are going to be 3D printed. What are the less skilled construction workers going to do?
In 10 years most aspects of the civil service will be automated/computerized. This will save lots of money. What about the people?
We continue to import poverty and fail our own people in relation to the quality of education we provide.
A significant number of persons who are being treated as Caymanians as a matter of law, are not.
We have no sovereign wealth fund.
Our pensions are insufficient.
Globalization is driving down our salaries.
Immigration is almost literally chasing businesses that want to set up here to other jurisdictions.
Against that, how are you possibly budgeting for anything?
Very good questions that demonstrate your foresight, unfortunately your government doesn’t have any.
There would be no self driving taxis and tour buses for a long time.
Many Civil service employees would retire, retraining of others should have started 5 years ago. Computerization would make them obsolete unless they are retrained and certified by independent agencies. New generation acquires computing skills almost from birth, so there would be no problems with replacing retired civil service employees.
New technology would bring new, an app based jobs, as it is happening in the USA.
Uber,Lyft, hellofresh, instacart, bitesquad etc etc.
Aging population would require more caregivers,nurses. Overvaccinated and overmedicated population would be sicker, but live longer.
3D houses aren’t going to happen either, at least not in a foreavable future.
Many advocate for all inclusive packages for visitors. That is not going to happen in a country completely void of local produce in quantities sufficient to satisfy it. It would be cost prohibitive here as all produce is imported. Maybe your governments wants to look into developing an agricultural sector before every sq.inch is developed? That would create lots of jobs.
You have an endless supply of lizard skin that could be turned into a goldmine..
Plants distillation for oils is another niche that is waiting to be explored. Do you have a registry of native plants on this island? Which ones are in abundance and could be utilized? Jamaica is probably a good place to look for examples. Distilled and extracted essential oils from native plants are highly prized and can provide sufficient revenue done properly. Do you know for example that 20 drops of wild Croatian Helichrysum oil costs $120 and sold out before it is even harvested?
As for other questions I am sure that readers would contribute..
Keep bringing your questions and if your government has no answers than you have no one to blame.
By the way, they are planning on building a trash to energy plant on the outskirts of this island.. Have they thought already about sending people to trade schools that train operators for such plants? They would require years of supervised experience before they could work independently. Or you are going to employ ex-pats again and blame them for everything? By the way it would be hard to find highly qualified expats in this field. Have the started working on regulatory matters? Running a mini nuclear plant is not for dilettantes an in the absence of rules regulations and controls.
I will finish with a warning, don’t forget how to use a hammer and a screwdriver yet. There were several near or complete extinctions on this Earth. All it takes a really
powerful solar flare to fry out all electronics. That happened in 1800s, only there were no electronics back then, only Telegraph that took the hit.
The things you say wont happen is the kinda wishful thinking of a infant who wants to suck up into their mind and watch TV all day instead of going to school.
There is a solution, but it will take a while to really become effective. It’s called “Birth Control”.
More fiscal mismanagement and political spin brought to you by the PPM led government. Look at their history.
The cold hard fact is this: you think Cayman is bad, try your luck in another country then come back and let us know if you still think Cayman is such a bad deal! Try it!!
Not the point. We are repeating the mistakes of those other places and importing their problems.
My issue is not that Cayman is bad. My issue is that we could be so much better off if it wasn’t for such poor leadership. If government was visionary, innovative and effective we would be so much more ahead of the rest.
Trickle down trumped up economics
In the US the GOP says if you cut taxes for the rich you will provide revenue and opportunities to the middle class
In Cayman the PPM says if you continue to let them grant as many work permits as the businesses want that the Caymanian people will benefit somehow
Guess our warlike neighbors to the north aren’t the only ones living in a fantasy
Depends on accurate forecasts? Say it ain’t so!
Captain Blimming Obvious
The CIG is not lacking foresight …they simply don’t have any.
If not for a benefactor like DART the Cayman economy would collapse. The Cayman Islands Government has no sustainable plans short or long term beyond negotiating poor deals and giving away concessions to developers.
This is a bad combination for the present and future