CIG’s 1st Q results provide $25M buffer
(CNS): The public purse collected $25 million more than it expected during the first three months of this year, providing an additional buffer that will help the country brace for the expected massive decline in revenue in the second quarter, resulting from the economic lockdown in the face of the COVID-19 pandemic. Between 1 January and 31 March government made a much needed surplus of $177.3 million across the entire public sector and currently has $659.6 million in the bank, the finance ministry has said.
But government has been dipping into that cash over the last two months as a result of the strict shelter-in-place orders and the efforts to control the spread of the coronavirus here to save lives. And it will be digging even deeper in the coming months, given that the next quarter will be down by unprecedented levels.
“To date the government has incurred $1.8 million in operating costs associated with the preparation for and mitigation of COVID-19,” officials from the Ministry of Finance and Economic Development said in the executive summary of government’s first set of reported accounts for the year and its first official report since the virus arrived in Cayman. “The second quarter and onwards will show greater costs associated with COVID-19 mitigation,” the report stated.
The additional $25.3 million over the predicted surplus of $152 million was mostly due to investment revenues and higher revenues from duty. But the anticipated level of public sector spending also fell, which helped fuel the surplus. But compared to the first quarter results for last year, core government revenues have still declined by $20.5 million and spending has risen by $22.6 million, as predicted in the 2020 budget, the biggest in Cayman’s history.
Despite the increase in the size of this year’s budget, government said it had adhered to fiscal policies that have yielded significant improvements in the overall cash and deposits balances. Operating Cash and Deposits were $487.5 million and Reserves and Restricted Deposits were $172.1 million, for a total Cash and Deposits balance of $659.6 million. Meanwhile, government’s debt at the end of March stood at just $279.3 million, with the bulk of the debt now due for at least five years or longer.
While government had previously take an aggressive approach to cut the debt and massively reduce government borrowing, that policy is likely to change in the coming months.
At the current debt level, the government could increase borrowing to support new public sector jobs and services to help Cayman navigate its way through the global economic crisis caused by the COVID-19 pandemic.
The first quarter of the year was only impacted by the COVID-19 pandemic for about the last two weeks. But there was an immediate negative impact from that short period on government revenue, as accommodation fees fell almost $5 million on the revenue predicted in the budget and import duty was also much lower than expected.
The ever-growing expense to government for healthcare costs was also impacting government revenue even before COVID -19 arrived here. Government saw an increase of $2.1 million in spending over budgetted costs for this first quarter, which will only get much worse.
Meanwhile, a fall in expenditure on transfer costs due to a drop in temporary financial assistance and scholarship spending of more than $5.5 million is likely to be reversed next quarter, given the significant increase over the last two months in the number of people who have had to seek help from the Needs Assessment Unit.
Accountants at the ministry who compiled the report said the overall 16.6% increase in the surplus puts the public purse in a “favourable position” but things will soon begin to look pretty gloomy.
Government generally collects most of its revenue from the financial services sector in the first quarter, making it the most lucrative quarter of the year under the best of circumstances. This year, however, the first quarter will be even more starkly contrasted with the next three.
And while government was on track with the first quarter to meet budget projections, these will be greatly impacted by the financial and economic effects of COVID-19. Expenditures are expected to increase in April 2020 and onwards, while revenue is expected to dramatically drop due to slowed tourism and local economic activity for the rest of the year.
“Over the remaining three quarters of 2020 costs will have to be diligently monitored,” the report noted.
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You have to give it to the Premier, he was steadfast in refusing civil servants their requests for pension advances, pointing out they had all recd a 5% cost of living adjustment at the star of this year to help with payment of their mortgages etc. What he did not point out is that when they retire unlike the private sector who will struggle on much reduced pensions, our bureaucrats will enjoy fat undiluted pensions with annual cost of living adjustments along with continued free medical benefits. What the Premier needs to come clean on, is exactly how much of Governments total revenue is spent on the public service and related entities, to include subsidies to all the public white elephants.
Don’t forget the millions that Fearless Leader blew to get his dock?
Say what you will about Roy but here’s a question for you. Who would you rather have trying to manage us through this financial crisis. Him or McKeewa (or any of those other clueless individuals who managed to get 250 family votes and get into the LA)? I’ll take Roy for 500 Alex.
The reality of this is about to hit Cayman. Regardless of Alden’s clueless mantra of needing to destroy the economy in order to save lives, even after it has been proven that they are clearly not at risk, the country is running a massive deficit and unemployment is surging past 20%. By the time this ends, real losses to the country will top $500,000,000 which is material to a country of only 60,000 people. With the Ci dollar pegged to the US dollar, you can also expect structural deflation to occur, with a massive drop in real estate values and the permanent closure of many more businesses. I know dozens who are quietly preparing for the end, hanging on in the hope that Alden comes to his senses – but he won’t. For the government to keep up with the charade that “overseas” can carry GDP and save everything is simply another of the Premier’s uneducated delusions. Other than maybe a billionaire, who will be buying up yet more land, there’s nobody escaping this disaster unscathed – except of course for the government and its employees, who are filling their pockets with your money, while you go broke.
CIG burns 80 Million per month so this report is questionable at best … more than likely pure lies
Get plenty of sunshine!!
Dr Lee was asked today why the virus is so mild in Cayman. The answer is simply sunshine! There is a very strong link between people who have severe symptoms and vitamin D deficiency. Make sure you’re either getting plenty of sunshine each day and/or taking a vit-d supplement.
When your skin is exposed to sunlight, it makes vitamin D from cholesterol. The sun’s ultraviolet B (UVB) rays hit cholesterol in the skin cells, providing the energy for vitamin D synthesis to occur. The form of vitamin D produced by the sun is water soluble and can be more easily absorbed and used by the body.
but making vitamin D is only one of many benefits of sunlight
In fact, it is the most important “nutrient” most doctors and “experts” recommend to avoid.
All life on this planet captures sunlight in one form or another and uses it to produce energy, heal, produce hormones, melatonin, dopamine etc. In fact, production of “hormone of sleep” melatonin starts with early morning sunlight hitting your retina.
We blew up the economy we robbed 25% of the people of their jobs. We instilled pandemic of fear and drove people to wear masks. And we did all this in two months; we were able to unravel over hundred years of existence, all this was done to “save” lives from the virus with mortality rate 0.0% and we’ve done all of this. All done at adult level thinking. Scary thing is people willingly gave up their authority over their own lives to a bunch of politicians.
Well said man. Unbelievable times.
All thanks to communist China and a bunch of spineless North American and European politicians. Suggestion. Better learn Mandarin.
Did China destroy Cayman or USA economy? Lockdowns did. While initial lockdown was somewhat warranted, nobody knew anything yet, its extension past 1-2 weeks was driven by politician’s irrational fear.
Face masks would have sufficed, in my opinion. Keeping people indoors was the worst decision ever made. I don’t know what each country teaches its kids in schools, but mine taught us that viruses and bacterias LOVE confined places and don’t survive long in open air with plenty sunshine.
What are you on? Seriously? It’s very concerning to see you carrying on here, much like the good old days of the weirdo holding up a sign that said it’s the end of the world. Go seek some help please! I’m pretty sure all the doom and gloom posts are all penned by you. WOW
Open the damn country! I will admit in January, Feb and even March I was worried about how awful this disease was… but now even Stevie wonder can see that this thing isn’t as deadly as first feared!
Killing the economy will cause much more suffering than Covid ever could.
Ever thought that the “as deadly as first expected” is due to the restrictions?
Accept for the poor Italian that arrived on deaths doorstep we have no deaths, nobody in the hospital. Shouldn’t we have at least 5 dead by now according to early predictions since we now have nearly 140 cases?
Ever thought the restrictions were put in place because the death rates were inflated by as much as 1000%.
Why don’t we switch locations and then you tell me that this virus isn’t deadly?
Have you looked outside? It’s not just us.
Tell that to the 100,000 Americans who lost their lives and the others around the globe.
Americans realize they can’t hide forever and life has risks. They have decided to face it head on and get back to living.
Americans cannot hide from it only because they do not have the luxury of being on an isolated Island with controllable levels of infection. Go join them all you want. I am perfectly happy for us to seek to become (and remain) virus free.
Isnt the first quarter always the highest one since most annual fees for companies etc come in at this time?
The income collected in the first quarter for annual fees is deferred over the year and booked accordingly ( ie spread as equal income across the 4 quarters).
hence even more reason to cut back on cig expenses like civil service pay and capital expenditure.
its basic economics….reduce spending when you have reduced income.
Now if all those that about to receive their pension make those right choices.
GOOD NEWS!!
Alden get’s to keep his entire 17,000 CI a month, even if government has zero revenues!
–> HE <– has bills to pay you know… Stop being inconsiderate you complainers that lost your entire income, businesses and possibly your homes.
I was equally pleased that Seymour finds his morning commute to his job so enjoyable brief now that the streets are free of most other people commuting to their jobs. We should all be as blessed as they.