Minister presents billion dollar budgets
(CNS): Finance Minister Roy McTaggart has forecast that the government will collect CI$825 million in revenue during 2020 and spend almost $760 million in its first ever US$1 billion budget. But that record-breaking earnings and expenditure will be broken again in 2021, when the minister is predicting the government will collect almost CI$850 million in revenue and spend in excess of a whopping CI$774.4 million across the two-year billion dollar budget.
In his Budget Address delivered in the Legislative Assembly on Friday, McTaggart said that the strong revenue position and spending plan reflected Cayman’s track record of economic growth, which is expected to continue. He said the budget complied with the law and was fiscally prudent without increasing the tax burden on Caymanian families. With no new coercive revenue measures and no borrowing, the minister pointed to existing revenue flows as the source of the historic record-breaking budget.
In both years core government is expected to deliver significant surpluses, despite the high spending. McTaggart is forecasting a surplus of $65.3 million in 2020 and $75.3 million in 2021, which he said would help with the track record of making capital investments from cash without the need to borrow.
However, he noted that the surpluses in both years would be less overall as a result of significant losses from the government’s collection of money at statuary authorities and government companies. The SAGCs are expected to deliver losses of around $17 million in both years due to losses at Cayman Airways and significant costs to government for health care.
McTaggart said that the forecasts are conservative, as his ministry has had one eye on emerging indications that there could be a global economic slowdown during this budget period. Brexit, the US-China trade war, disruptive public protests and impacts of natural catastrophes may fuel the slowdown and were some of the risks his ministry considered when setting the budget.
“I can assure the House that the 2020–2021 Budgets have taken these global factors into account as best we can, given the uncertainties,” he said, adding that he was, however, not going to be a “prophet of doom” about the future.
“There is every reason to believe that Cayman is in a good position to weather any coming economic storm. There are, after all, many things which are positive in our local economy. The Cayman Islands are currently enjoying a period of great economic prosperity,” he said, as he pointed to several consecutive years of solid, sustained economic growth, with an average annual growth rate of 3% led by the private sector.
Confident that this would continue for Cayman, he said government would remain cognizant of what is happening around the world, but the strength and robustness to Cayman’s economy was the the envy of many in the region.
That was underscored by the summary McTaggart gave for the end of year figures for 2019, which have provided the basis for the next two-year budget. The budget for this year is on track, he told parliament, to deliver better than budgeted results.
Operating revenues are forecast to be $824.2 million, well over $100 million more than had been predicted in the original budget.
“These results point to healthy performance in our core economic sectors and demonstrate how the healthy Cayman economy benefits all Caymanians through the increased revenue yields that government can then spend on vital public services. This is the strong economy, working for you,” the minister said.
Government spent $85 million more than the $657.8 million forecasted, but the revenue windfall has kept the pubic purse in the black. The bulk of the extra cash was spent on government workers and healthcare.
SAGCs are also expected to have lost around $6.5 million for the year ending 31 December 2019, compared to an original budgeted loss of $5.8 million. But the result is that government will end the year with an $80 million surplus, $15 million more than forecast.
With almost $438.3 million in the bank when it pays off part of the CI$261.3 million bullet bond due at the end of this month, government’s debt will have fallen below the amount of money it has in the bank for the first time in decades. It is, however, re-borrowing more than half of than bullet bond with a new $153 million loan.
See the finance minister’s full budget address in the CNS Library
See the full day’s proceedings on CIGTV below:
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Category: Government Finance, Politics
Blah blah blah. Fix the dump and educate children. E
Under PPM Government and its clone “Unity” Govt, the gap between rich and poor in Cayman has widened and the middle class has shrunken. All Alden and his goons have done is to steward “rich get richer and poor get poorer” policies in Cayman.
Exactly who is better off since PPM took over in 2013? Not the majority of Caymanians!!
Permits and PR for everyone!
And there is Santa Claus and the Easter Bunny
Can they fix the damn dump for us?
Something is amiss when a few hundred votes can get you a billion dollars to play with. And they do play with it.
How about budgeting for new airbus planes and for sand to fix the damage from the port.
Best make that part recurrent.
VOTE NO
Those Max 8s aren’t going anywhere, the ink is dry on those leases
Just another set of embarrassing monuments to the egos and shortsightedness of Alden and Co.
Instead of opting for a tried and tested model we had to get the brand spanking new models (that just so happen to fall out of the skies on occasion)
All so we could put a tiny little label on the side that said “First Max 8 in the Caribbean”
Couldn’t have summed up that decision to lease those planes any better.
When are we going to finally wake up and release we shouldn’t be dumping millions and millions into a failing airline just so the employees, board members, and MLAs can fly first class for free.
I am also predicted that CAL will need a much bigger subsidy than budgeted for just to make the lease payments on those paper weights we have on the tarmac. It may be time to replace the leadership at CAL or better yet close the economic disaster down.
If it’s a Boeing, I ain’t going. The Max is not an option for me or my family, and I am not alone. Government needs to budget for that fact too as it subsidies Cayman Airways.
nothing done to address the cost of living or the cost of doing business. no effort to reduce the civil service. miller-shaw and e&y reports totally ignored.
recipe for disaster.
thank you ‘do-nothing ppm’.
Not sure I’m happy about seeing a strong pubic purse making a comeback…..
This is tax and skim revenue, paid by US, not earned by the PPM/Unity whatever.
We don’t need the U.S. “boom and bust” cycle to ruin things for us…. our own CIG is taking care of it all by themselves! Spend spend spend and don’t worry about the future. Fix the dump!
I’m fine with governments spending, ( a government is not equivalent or comparable to a household or a business in terms of finances)
But the areas where the spending takes place is concerning, especially while we have growing liabilities that will be passed on to future generations like the unfunded pension liability
https://caymannewsservice.com/2019/04/public-pension-liability-not-cause-for-alarm/
We took loans during a time when borrowing was the only option and we have had some good years in terms of finances but we never handled any of the underlying issues, we didn’t diversify our economy like we should have
Like Obama’s 2 terms it seems like the PPM is only interested in keeping this house of cards standing up long enough for them to run out the back door after having their turn at the wheel
at some point we will have to take a long hard look at the money owed, and we all know who is going to end up paying for the working class Caymanians who are already struggling
Obama couldn’t get anything past the house because of Republicans. These ppm macs don’t have that excuse.
Relax a little Nostradamus.
Interesting, but what has me scratching my head is imagine the amount we would have had if this gov’t and past gov’t did not squander our money. It takes a lot of discipline to balance a budget and make a profit. It does not take an expert to figure out we need to have the mentality to save for a rainy day (crisis, recession etc.). This mentality of let’s borrow more because we can, reminds me of those with the YOLO mentality. It seems like governments (past or present with the exception of Benson, Truman, Norman EXXCO members who understood finance and probably had this country in the best shape) seem not to understand the concept of proper planning, focusing on one or two capital projects and getting them done. The continued rhythm here is let’s rely on DART to bail us out, so let’s just keep spending. What a mess our country is going to find ourselves sooner rather than later.
And the minimum wage stays at 6$ an hour.
Minus the busfare and rent for a small room, there is nothing left to eat.
Agree that this is a travesty. Yes, to increase the minimum wage will drive up prices everywhere. If we set it at $12, that would at least provide a living wage, and could perhaps reduce Caymanian unemployment to zero.
This is the thing (and it’s my OPINION, however a semi-supported one): Caymanians can live with the assistance of the NAU, and there is little incentive (for some) to do more than that. There are many unemployed Caymanians that simply cannot support their families on the tiny wages of $6.00. I know several people who would love to work for a living, and it cuts some of them pretty hard, because it’s not the way they were raised, but it’s what they have to do.
We raise the minimum wage, and we’ll all be paying more for everything. Government should subsidise the fuel factor, and keep everything same same. That means power and fuel.
An MLA hopeful who proposes something similar to the above will get my vote. I wish for a system to be created which enriches Caymanians, not just maintains them with the status quo.
There appears to be less opportunity in the private sector than there was when I was much younger. Now, many of those positions are being filled with WP holders, and the job adverts are carefully crafted to exclude those that might want to rise up.
I’m pretty sick of it all. I don’t blame this administration so much as ALL administrations before this one. We used to take care of Caymanians. I remember a time when a WP holder would be pulled off a construction job if there was a Caymanian who needed work. Of course, back then, our culture was rich with self-subsistence. Well, we can be like that again.
Make no mistake, we NEED the expats, and WP holders. No question. We have gotten lax though, in not supporting our own, and to some extent, some of our own have gotten lazy about vigorously seeking work. SOME of our own.
Raise the minimum wage,and watch clerk and grocery jobs get filled with Caymanians.
I am usually in favour of government spending, but somehow when I hear it is Alden doing the spending, my stomach churns. Even as I read I would be getting a 5% raise. I don’t trust the spending on the important things – homes, education, dump. I just don’t trust it will be achieved. Then, there is no mention of environment, no mention of protected areas to save mangroves. And I see about $3million of direct spending on the port.
They have assisted in and facilitated the importation of so much poverty that just the economic burden of that will mean that unfinished capital works will be the least of our problems.
Agreed 1047 when you see how much is eaten up bu NAU budget for the dependents and offspring of Mac’s status grants to woters.
Not just them (although they are significant). Alden’s “PR for all” has compounded the problem. This coming election will be the last that people generationally from the Cayman Islands have any material role in deciding.
Vote No
If you are a financially responsible person, you must be frustrated as I am, after reading this article.
Yes, these are the good times folks. However, instead of Government aggressively either saving real meaningful chunks of these unbelievable revenues or aggressively paying off our debt, they are pissing the money away like there is no tomorrow! How can the Government collect over 800,000,000+ (Yes 800 MILLION) in 12 months and only save 80 million?
Sadly this Government is drunk on the good times and can’t see around the corner. This is a golden opportunity to make this island financially rock solid for decades to come, but it is be squandered right before our eyes.
We should not have ANY DEBT at this point – PERIOD! To make this announcement even more amazing, they are also going to borrow another $153 million. You can’t make this stuff up!
Heroin addicts have terrible withdrawal symptoms when they can’t get money in time for their fix. The side effects on Caymanians and our community, when our revenue streams deeply dry up, will not be unlike the agony of an addict in withdrawal.
Not to sound like an alarmist, but common sense should tell us all, that rainy days are coming….it is just a matter of when.
Now, wishing all a wonderful long weekend….while the good times last.
That’ll pay a lot of government credit card bills! And gas cards. And pensions. And travel. And duty waivers. Etc etc. 200 votes will get you a seat at the most lavish banquet in the world today.
Be fair now, its not 200 votes… its 300 (as if that is any better)
It does amaze me that a normal person would struggle to get hired anywhere on Cayman without a HS diploma but apparently you can be a Legislator for 30+ years and then be made speaker of the house all while being a highschool dropout
Really had some hope for this guy but it appears that he too has been drinking the corrupt Alden cool-aid.
Should really be ashamed of himself. His family must be so embarrassed.!!
Caymanians please note – he never explained how!! Higher Customs duties on all imports on the horizon! Higher fees all around!! General increase in cost of living!! How else can they increase revenues without expanding the revenue base??!!,
More people moving here…
And when the recession hits expect the expenditure to jump and the revenues to plummet
The US boom bust cycle carries us with it
We will never get of our debt because every 10 years the US economy flatlines and takes the rest of the world with it
These capital projects will be left as husks just like the schools and we will have the PPM wash their hands and take no responsibility for their reckless stewardship of the country over the past 6 years
They have been acting like the good times will never end, and because of it we will all have a very rude awakening
You are absolutely right, but it will could be even worse because the government have created an artificial construction boom by changing the stamp duty law. The downturn appears likely coincide with a cessation of most construction, corresponding reduction in import duties, and reduced work permit income as a generation of professionals become Caymanian.
At the same time the corresponding burden on government to take care of an increasingly disadvantaged local population will increase.
So short sighted…