Deficit also fuelled by non-COVID spending

| 02/11/2020 | 19 Comments
Cayman News Service
Finance Minister Roy McTaggart presides over Finance Committee, October 2020

(CNS): With revenue down by just under CI$70 million at the end of September and government spending on direct and indirect COVID-19 related costs expected to be around $80 million by the year end, the projected deficit of $168 million is not unexpected. But government had forecast a surplus of around CI$95 million by the end of 2020, which appears to have been sucked up by the pandemic as well as significant unrelated spending.

The tens of millions of dollars in this year’s budget that were reshuffled and moved around ministries last week show that in almost all ministries there was additional and unexpected spending that arose throughout the year that government had simply not budgeted for.

From almost CI$2.4 million to start work on a new police station in West Bay to more than CI$22 million additional funds for the John Gray High School project, there was no cutting back on new public spending regardless of the impact of COVID-19 on revenue and emergency expenses.

The supplementary appropriations saw government reshuffle around $175 million dollars in addition to the CI$500 million of potential borrowing.

While that figure included some savings, the net additional spending was in excess of $150 million. The confusion over how government presented the appropriations makes it hard to calculate what was directly or even indirectly appropriated as a result of the COVID-19 pandemic, but it appears that around $70 million, which is close to the original projected surplus, was entirely unrelated to the virus.

According to Accountant General Matthew Tibbetts, revenue is down less than may have been expected, given the pandemic, as government was still able to collect significant revenue at the start of 2020 before the lockdown at beginning of the second quarter. Tibbetts told the committee that revenue at the end of September was down by around $68.1 million on what government expected to have collected by that time.

He confirmed that, despite the virus and the related lockdown, government had still taken in $604 million in revenue.

As Finance Committee members drilled down into the details of the supplementary appropriation this week, they found that some line items, such as the CI$1.3 million on the Cayman Islands Regiment and the CI$6.1 million extra for the financial services sector, were not budgeted for and were not virus related.

The lack of clarity around the appropriation reshuffle means that it is difficult to say exactly how much the pandemic has impacted the public purse, and how much poor budget forecasting and policy decisions led to additional expenditure.

Government is expected to give a more exact calculation on earnings versus expenditure and the state of the debt reserves within the next two weeks when it publishes the third quarter results.

See all the Finance Committee sittings on CIGTV.

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Category: Government Finance, Politics

Comments (19)

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  1. Anonymous says:

    $22 million additional funding for John Gray HS. What is the total now spent on this money pit over the past 10 years plus? We now have the most expensive HS in all of the Caribbean. Pity some of it wasn’t spent on improving the education provided to the students!

  2. Anonymous says:

    Did you know that there are now way more Porto Ricans living in the US now than in Porto Rico? It went broke then a hurricane hit it and now it is a non functional island. At least Caymanians can move to the UK. Soon come. Only expats with money will be left.

  3. Anonymous says:

    Allow all Caymanians to run for elected office.

    • 7th Generation Caymanian says:

      All eligible Caymanians as per the Elections Law can run for public office and elections.

  4. Anonymous says:

    Unwary Christian soldier is back in the chair of dumbness. How can these islands progress?

  5. Anonymous says:

    keep saying it…roy or anybody else in cig has not got the ability to deal with the economic crisis facing cayman.
    roy’s refusal to even look at reducing expenditure in the face of a $300m/year deficit is staggering

  6. Anonymous says:

    Government is pretty good at taking WP fees, it not issuing basic WP’s for helpers. Thieves

  7. Anonymous says:

    It is no longer practical to expect the government to cover the costs associated with providing educational services. As the country is facing a significant decline in revenue now is the time to remind parents that it is there responsibility to cover the costs to educate their children. Recent reports have also essentially concluded that the money being spent by the government is not a good investment as the schools, the parents and the children are all underperforming.

  8. Anonymous says:

    It should now be clear to everyone why this government can’t be trusted and why we need to elect a different group of people next year. Why some of this expenditure is taking place in the face of a significant deficit and after having to secure a large credit facility is beyond belief. In my opinion it speakers to the unethical nature of those involved in the process. There is just no justification for much of this expenditure.

    • Anonymous says:

      The problem with voting in the Cayman Islands is the fact that there are often no competent choices available. What most people try to do is to vote for the people that they think will do the least amount of damage to the country while at the same time accepting that they can’t change the ultimate outcome.

    • Anonymous says:

      You don’t seem to have a different set of people to choose from. Maybe if you opened up the qualifications a little? Maybe some one who understands business and finance and not just vote buying? Just saying.

      • Anonymous says:

        Yes, it IS difficult to find people with integrity that would want to run for public office in the Cayman Islands. We have been unable to break away from the “buddy system” that lets the unqualified and/or dishonest politicians remain in office. Vote them OUT!

    • RT says:

      I don’t know who the thirteen of you are who agreed with the poster @3:14 pm, but I can tell you this, I hope it ain’t any of you planning on running, for if you can criticize without knowing all the gpfacts, it certainly shows you would would fall into the category of charlatans, rumermongeters. a day certainly not fit and proper. Having said all of that have a nice week.

  9. Anonymous says:

    Very disappointed to see Roy participating in this charade. Give it to us straight, what are the costs of Covid and what are the blackholes that are normally covered up by a strong income stream. Only once we see the books warts and all can we chart a way forward.

  10. Disorder of Cayman says:

    There are NO rainy days. As far as CIG is concerned.

  11. Anonymous says:

    PPM fiscal management is as clear as mud. This reminds me of 2009 all over again

  12. GTE voter says:

    Mr. Roy please do not become a robot when you know better just to get the ppm elected. That behavior will continue the slide into third world status due to financial mismanagement incompetence and lack of transparency. If you do that we will vote you out for being as useless as the rest.

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