Government coffers still in the black
(CNS): Despite expectations of plummeting government revenue as a result of the COVID-19 pandemic, so far this year the public coffers are still in the black. The unaudited core government financial results for the first six months of this year show that the surplus is considerably less than expected but government isn’t in the red just yet. The entire government is currently running a $79 million surplus, some $45 million less than budgeted. However, expectations are that things are about to get a lot worse.
The financial position has been buoyed by the first three months of the year, when government collects most of its annual fees from the financial sector. During most of the first quarter tourism numbers were still soaring, the economy booming and the health crisis had yet to get a grip on the islands. But from 1 April government began spending more than planned and collecting far less revenue.
For the second three months core government revenues fell by more than one-third compared to the previous year, while expenses increases by around 8%. The second quarter actually showed a deficit of $98.1 million for core government. Factor in the statutory authorities and government companies and the overall net surplus for the entire public sector (EPS) has deteriorated by $121.8 million when compared to the second quarter’s result in the prior year.
“The 2020 second quarter’s performance indicates the likelihood that the Government will not be able to achieve its 2020 budgeted performance,” the report stated. “The country, and the world, continues to be greatly impacted by the financial and economic effects of COVID-19 expenditures which are expected to continue to increase along with the fall-off of revenue due to slowed tourism and local economic activity for the rest of the 2020 year.”
The decline in government revenue during the second quarter was largely due to a fall in expected work permit fees of more than $18.5 million, the loss of tourist accommodation charges of $14.8 million, and despite the online shopping sprees during lockdown, a drop in import duty of $13.5 million compared to expectations in the 2020 budget.
Stamp duty, however, was more than expected, as deals made before the impact of the virus still closed, which officials said was a continuation of the real estate boom which began in 2018. But despite the larger volumes of property transactions and stable property values, it was less than the results for 2019.
Overall, coercive revenue recorded between January and June was $64.5 million less than budgeted expectations and $67 million less than the prior year-to-date actual results.
While government expects some recovery with the reopening of the domestic economy and then the reopening of the borders as restrictions related to COVID-19 are lifted, the global recession and the particular challenges in the United States suggest that Cayman is in for a rough ride over the coming months.
Government does have money in the bank and has cut debt significantly over the last few years. Depending on how long this particular health crisis and the economic fallout lasts, this could help the country steer a way through. At the end of June bank account balances stood at $559.6 million in cash and deposits, and the debt balance had fallen to $266.5 million.
But a major challenge for government will be managing spending as revenue declines but demands for its support and services increase. Total expenses for core government have already risen by $37.7 million as a result of the additional spending relating directly to the COVID-19 pandemic
See the unaudited quarterly report in the CNS Library.
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Category: Economy, Government Finance, Politics
#blackcoffersmatter
Excuse me but I will say this.
The MLA’s, every single one of them, I want them to sit down with a bible and honestly swear on their loved ones lives that they righteously deserve the current salaries and extras they receive.
If they truly are as Christian as they claim to be then they must, ABSOLUTELY MUST,be capable of doing this.
If they cannot then it only goes to show what they are all about.
So in saying this, I challenge, one and all, inclusive of the Deputy Governor, to complete a You Tube Challenge and show the people of these Islands what they believe….
Its a Challenge for them. Lets see if they are are up to this Challenge.
If they dont do it then that speaks for itself and lets these Islands know what they believe and stand for….
5:30 Do that INCLUDE the WANNABES!
Maybe we could do some crowdfunding for the MLAs!
Well, with the current economic climate in Cayman I wonder if the new Regiment and Coast Guard will be viable.
Both of these new entities will require major funding that was based on the needs of the country, particularly the tourism sector.
Now that the tourism sector is basically shutdown, with uncertainty of when it will be reopening, how can it be justified the need to start two new government entities that will require large funding.
Just thinking out loud….
But it means jobs for caymanians so until a fix is implemented let it remain…
whoa….the party never stops in the civil service
Just wait until we have the annual bailout of the national airline, that will erase most of what’s left. Then read the article in today’s Compass and see the obscene salaries and allowances our politicians have awarded themselves, does any country in the world come anywhere near the greed of these people, I very much doubt it, yet we have a miniscule population.
Yeah, even without allowances they make about USD250,000/ year. Mind boggling. 🤭🤔😲
I bleed red too unnah know!
Alden
If they made the same amount as we did, someone who makes what they do now could more easily steer them.
They want to be millionaires
Wow the new http://www.gov.ky website is well… world class.
Folks stop worrying about CIG finances we are going to be just fine.
Looks like a tacky wordpress site to me
Thanks to our politicians who took pay cuts to suffer along with their people…oh no that was a lot of other countries’ politicians…ours will probably give themselves bonuses to make up for lost port contract revenue.
Place is economically destroyed just admit the truth and recovery will be easier .. this downturn will last for years
With all that money sloshing about, isn’t it about time we gave the hard working civil service a pay rise?
Lol
Bonuses have been issued.
When?
Not to teachers who have been working their butts off.
FOI is your friend.
11:19 You just said “NOTHING CAN AVOID THIS” but same time
you EXPECT it to be AVOIDED!
Can’t wait till those rude civil servants get made redundant. They will for sure feel our pain when they have to try to get a hold of anything they need after their key fob has been returned.
Don’t wish ill on others, it’s bad karma.
I’m sure many will be made redundant as it’s really the only way forward for a while. Shame really.
Revenue under-budget, unaudited, and poised to worsen. Yet there are still priority funds to fight the rights of our own people, finance a fleet of unflyable planes, a turtle farm attraction/abattoir we don’t need, cultivate false agenda-furthering narratives, and pander to party donors. Endless money for those recreations, all without required duty, thrift, disclosure, or supervision. Despite the radical Covid-19 Gigatrend, there has been no measurable deviation in the culture of governance in the Cayman Islands to prudently adjust to the times.
Stop grumbling and be grateful that our Gvt. has managed to keep us all alive and afloat under very difficult circumstances.
Excuse me but the government need to be held accountable for corruptive activities and spending our (residents) money foolishly.
They didn’t really do anything but follow guidance from the FCO, WHO and NHS. But I forgot that in Cayman people get awards for just showing up and going through the motions.
They didn’t really do anything but follow guidance from the FCO, WHO and NHS. But I forgot that in Cayman people get awards for just showing up and going through the motions.
3.13..That bunch did a great job in the UK don’t you think.?
And Alden is dead set on making things 10 times worse.
Anyone know where I can buy a smoke pot and a pair of wompers?
Shouldn’t have shredded all of those tires, going to be needing them soon.
Aren’t we blessed to live in Cayman.
The beach is pristine as ever and the books are in the black.
Life is good!
The Financial sector is supporting this entire economy at the moment.
The government should shift its focus from tourism and retrain that sector to enter the financial industry.
What happens when the boarders can’t open 1st October?
How long will the government keep giving out $1000 to unemployed tourism staff?
Is the government going to protect people from losing their homes to the banks due to foreclosures for the next 12 months?
This government is blinded by a false comfort, mainly their salary.
Please can you refrain from commenting when you wish to use the word “borders”?
I have quick fingers and it doesn’t make my point any less valid.
Are you the CNS police?
I think the speed of your brain was the issue.
Bullying strangers on a news forum makes you feel great about yourself?
Sorry, just a joke…apologies.
11.52 Financial industry laying off staff in Cayman not hiring. Keeping persons in other countries employed by outsourcing.
Well, it would help if the Governor’s office hadn’t refused work permit holders access to the airbridge flights.
the only people whoe are ignoring the truth are the usual confidence tricksters….relators/developers
And their customers who are making cash purchases and will be protected from inflation and will be owning property, much of it income producing, in the world’s most beautiful bubble.
anybody who thinks we are not looking at a severe 2-3 year recession is living with their heads in the sand.
we are only experiencing the tip of the ice berg with the real effects to be felt in the next 6-9 months.
nothing can avoid this and every top economist will tell you the same.
now what is this governments plan to save cayman’s economy from total melt-down?
I hope reduction of their inflated salaries in half and elimination of all allowances is being planned.
Then they have to figure out how to continue paying civil service employees salaries and benefits.
Going to be a lot of inflation… So they salaries got to be inflated….
what is this governments plan to save cayman’s economy from total melt-down?
Why don’t you put forward a plan, as I can’t see anyone putting anything forward that stands a chance of meeting with your approval.
It is really quite straightforward. Amongst the solutions are:
1. You stop paying people to sit at home on their asses doing nothing and instead remunerate them for doing something useful within their capabilities. It could be as simple as beach cleanups, tree planting, and fixing/painting the homes of the least fortunate.
2. You cut all unnecessary government services.
3. You reduce the salaries of the highest earners in the public sector, including MLA’s, by at least 20%. Even the Governor should take one for the team, and lead by example.
4. You try to entice as many self sufficient digital nomads to take up residence here as practicable, charge them appropriate fees, and ensure that they do not compete in the local economy.
5. You facilitate the entry and extended residence of as many Snowbirds/Covid refugees, as possible.
6. You ensure the health insurance law and other provisions designed and intended to minimize government liabilities are enforced.
7. You offer voluntary redundancy packages to categories of civil servants and (for example) Cayman Airways personnel whose services will not be required in the near future.
8. You make persons redundant.
9. You create public works schemes to provide employment, creating useful infrastructure for the future.
10. You borrow money to use where necessary to provide employment and useful stuff.
11. You let DART build his tower but require him to sell aspects of it (for stamp duty revenue) and charge appropriate import duties on materials.
12. You pay Caymanians formerly employed in Cruise Tourism to retrain in stayover tourism and other industries.
13. You repurpose at least one hotel as a hotel training school.
14. You ensure that all capable Caymanians have private sector employment where possible.
15. You facilitate the return of work permit holders, especially in fields where there are no unemployed Caymanians.
Etc…etc…
You also plan for worst. We can hope for the best, but we are not going to see regular tourism for at least a year.
Forget number 11
It’s all about the money, honey. Where is it going to come from?
11.19 I suggest you relocate to somewhere better and pay income tax ,while hiding from violent crime and crowded Covid infested hordes of rioting low lifes.