Public spending increasing as earnings fall

| 12/11/2020 | 38 Comments

(CNS): As government faces a significant decline in revenue due to the COVID-19 pandemic, the latest quarterly report from the finance ministry has revealed that it is spending much more this year than it budgeted. But although the ministry blames the pandemic, the public spending is not all about fighting the virus. Recent Finance Committee hearings gave the first hint of a public spending hike for 2020, and that is confirmed in the government books for the third quarter.

Between 1 January and the end of September, government earnings declined by $78.5 million but core government spending rose by $56.3 million over the original budget forecast.

Although the government accounts currently appear to be in the black, the decline in tourism revenue over the last three months of the year and the anticipated further increases in spending are expected to push the public purse deeply into the red.

Government is pointing to the decline in revenue as the major cause of what will be a significant deficit by the year end, but the latest figures show that during the third quarter of this year revenue fell by only 1.1% when compared to last. Core government earnings were short by only $1.8 million on the money collected during those three months in 2019, largely as a result of the reopening of the economy.

But although the decline in the comparative earnings was small, the spending was much higher. Expenses during July, August and September increased by 10.2% ($18.6 million) compared to 2019. Overall, the Entire Public Sector deficit for the 3rd quarter alone was $45.3 million, which was more than double the $21 million summer deficit last year.

Nevertheless, government’s cash position at the end of September remained solid and higher than the budget forecast, with a total of CI$498.8 million in the bank.

However, looking forward, the quarterly report forecasts that government will not achieve its initial 2020 budgeted performance.

“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 along with the fall-off of revenue due to slowed tourism and local economic activity for the rest of the 2020 year,” the ministry stated in the report.

And while COVID is playing a part in the change in fortunes for the public purse, the audit report indicates that, in addition to the extra spending associated with tackling and coping with the pandemic, there are areas of increased spending unrelated to the virus.

Spending on staff and supplies is down, but there has been an increase in expenditure related to Cayman Airways especially as a result of the grounded Max 8 aircraft, even before the border closure. Other major expenses include the John Gray High School project and the airport upgrade costs, as well as regular additional spending on healthcare for uninsured or under-insured patients here and abroad unrelated to the virus.

See the Quarterly Financial Report in the CNS Library

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Category: Government Finance, Politics

Comments (38)

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  1. Well I was thinking for a while to stay further on the island , but it seems that our local .gov has such a poor grasp of the situation that moving to the BVI looks more and more attractive by the day , the cost of doing business on island is past the stupid range and many in the financial industry are thinking about moving operations altogether (thanks Tara Rivers for that one) . I hope our local elite enjoys their roasted golden goose dinner keeping in mind those might be fewer and wider apart as they realize the new program will not provide the same returns .

  2. Anonymous says:

    This is exactly what a failed state does right before it fails. Great! Hopefully the UK takes over before all the money is gone and the debt is still sustainable. Or Caymanians will never be in charge of themselves again. Time for expat rule. They will do much better. Caymanians will need to find a new way to feed themselves instead of living off of the economy of others.

  3. Anonymous says:

    this is not sustainable. governor…we need top economic experts brought in asap.
    the scale of the economic disaster facing cayman is beyond the scope of anybody in cig.
    chamber of commerce needs to petition the governor asap.

    • Big Bobo In West Bay says:

      This time next year, there will be no choice but to implement personal income taxes and property taxes. Of course no one wants this, however, the path CIG is currently following is not sustainable.

    • Hubert says:

      Direct rule now before we have a full scale economic disaster in 2021.

  4. Pie in the Sky says:

    When are we going to learn how much CAL has cost us this year. I wager it will dwarf previous years’ losses, but on the positive side all their staff who were allowed to stay home received their full salaries.

  5. Anonymous says:


  6. Anonymous says:

    If you think quarantine for residents is expensive,add in foreign “homeowners” who are the real priority by our government as they were supposed to bring in local spending. But theyre not renting a car (2 week isolation cant go anywhere), not renting a hotel room (they have a vacation home) and some are bringing their own food supply. Then theyre gone a few days after 14 day quarantine. The public purse is paying for their wristbands and all quarantine/HSA associated fees/overheads and theres nothing getting put back into the economy….other than the possibility of Covid virus, of course.

    • Anonymous says:

      People are coming to spend two weeks indoor house arrest then leaving?

      Where is your information coming from?

      Sounds pretty far fetched to me…

      • Anonymous says:

        My neighbours from Canada just did this.
        So did a couple on the next street in our neighborhood.

        Just because you are unaware of it doesnt mean its far fetched. They just came to check and maintain their vacation home since theyve been cut off since March.

    • Anonymous says:

      Because they are coming here just for the 2 weeks ( and bringing their food in their luggage!) ? Right. What complete and utter tosh.

    • Anonymous says:

      You think expats are expensive, how about non working disfunctional Caymanians who contribute nothing and take, take, take. At least expats work and pay for themselves for everything they need. We get nothing from your Government. We pay for the flights, the food, the houses we live in and EVERYTHING else we require. Most Caymanians live off the welfare trough you call a government. Do you know why CIG has a billion dollar health care dept?

  7. Anonymous says:

    Wait ‘til MPs ( CIG ) start buying cookers and refrigerators, plus a bit of home tarmacing here and there in the hope of saving the election next year

    • Anonymous says:

      Stop putting returning residents into quarintine, this is costing the CIG too much. How long can this last? Just test at Airport and let them go. If posittive then you can quarintine. Too much money wasting foolishly.

  8. Anonymous says:

    The government has just gotten what they have always wanted.

    An exclusive luxury island where only the extravagantly wealthy could live.

    The global citizen program is doing what it set out to do. BUT ALSO INCLUDES HOUSE & LAND PURCHASE. The people that are coming here have a true fear of their families well being. These are not tourists. Real estate is booming as people ARE taking advantage of condominiums for the global program and moving their ENTIRE families here.

    The private schools are at capacity with kids that would normally be in boarding schools abroad.

    This is a real socioeconomic impact on our land and culture as we open our island to people who are not permited holders or have on island employers.

    We all have to look past the smoke and mirrors and realize the free for all government has put the Cayman islands in with the global citizen program.

    It is a direct bypass to a permit; during a time where the whole world has learned to work remotely. And not only have we allowed it but also canceled any future revenue growth as it will ONLY cost $1,300 bucks. CHEAPER than a permit.

    Tourism is over. Believe this. The global citizen will NOT be staying in hotels past their quarantine period and will be renting like residents once given the all-clear including all of their dependents.

    We as Caymanians are about to become a third world-class in our country.

    With imports in shambles, the cost of doing business will be passed onto consumers.

    Our time is coming and the global citizen program is the start. Stop spending your money and buy ANY property that you can if you are a Caymanian.

    • Anonymous says:

      Property is already difficult enough to purchase unless you are a multi-millionaire or a retiree with stringent saving principles all your life.

      Caymanians being third-world citizens is all about United Nations and NATO formality at this point.

      The Members from Red Bay, Little Cayman, West Bay West, and George Town North are all looking at Monaco citizenship as their jump ship Plan B’s and don’t care if you live or die next year unless you vote for them!!! George Town East is a wild card by association.

      Every eligible Caymanian in every polling district needs to cast a responsible vote next May 2021, for party or for independent, for any future generations to have any sense of a shot to a decent life IN THIS COUNTRY. 5 month political cycles for 4 years of unadulterated power needs to end NOW AND FOREVER MORE!!!

      One more chance to stand up to all the oligarch bullies, cannot afford to miss!! Any future generations are fully dependent on your choices and will look back in honor or in shame by your actions or inactions.

      Educate yourself and your families on the true character of each candidate independently, their policies, track records and mobilize the people before it is too late and the Cayman Islands are nothing more than rocks in the Caribbean Sea. Remember: 10 member majority.

      Do not fall for the gimmicks of ‘soon come’, full stomach vote butter-creaming or next term trick-o-nomics!

    • Anonymous says:

      Global citizen program is a farce… One approval out of thirty odd applications. Stop the xenophobia. The issue is not foreigners. It is a dire education system and poor governance. Stop blaming expatriates and focus on the real issues

    • Anonymous says:

      You as Caymanians were always third world class in a third world island that has upped itself by bringing in expats and expat businesses. Now the expats and businesses are leaving you. Did you expect anything different? Repeat after me: Cayman islands are just islands. They are not even close to being a country. If the UK moves out you will be at the mercy of the rest of the world.

  9. Anonymous says:

    This island is going down the cludgie.

    • Anonymous says:

      Aye, because the country is run by a bunch of politicians who are either sleekit or bampots, kept in place by glaikit voters.

  10. Tiger says:

    Imported products are withheld by Customs. Import duty is not collected for months, therefore resulting in a major reduction of government revenue

  11. Anonymous says:

    I am so proud to work for CIG. My friends in the private sector are so jealous that I work for an organisation that cares for its employees.

    2 of my Caymanian friends have joined the service this year. Although they have found that the work is much more complex and varied than in the private sector. They get a sense of purpose working for the Government.

    But the real shocker was to discover how much hand holding the civil service has to provide to the private sector. I have explained to them that supporting our colleagues in the private sector is a key function of any government. We are fortunate to have a talented private sector and we must continue to hold their hand and work together. Caymanstrong!

  12. Big Mac Attack says:

    Is Big Mac using his government credit card for online gambling now or what?

    • Hancock says:

      No he just uses it for defence costs. Let us hope he gets five years in quarantine even though the cig will have to pay for it. Sorry West Bayers, no fridges at Xmas.

  13. Bean Counter says:

    They will not cut spending considering the decrease in revenues. That is fiscal mismanagement and irresponsible. Such actions will lead to a significant deficit position which will force some form of direct taxation on the people and businesses in the near future. The PPM have learnt nothing from the 2005-09 mess they created. Cayman cannot afford this type of mismanagement. VOTE them all out in 2021

    • Jotnar says:

      Sadly BeanCounter they are not only not reducing spending, they are increasing it.

      Covid has undoubtedly caused additional expenses, but as the revelations at PAC have shown, funding is being allocated to Covid justified line items then spent on other items. When it comes down to actual hard spend items like the BA flights, food vouchers for hospitality unemployed, medical supplies and even NAU spending, actual expenditure has been less than budget allocations and in some cases like the BA flights and PCR kits negative.

      And worse still, Covid is being used as an excuse to get the UK to waive the fiscal responsibility rules. That then opens the doors to borrow money and do whatever they like with it. Covid just get used as a generic excuse. Spending more money on Cayman Airways ( because you signed up to leases you can’t get out of even tho you can’t fly the aircraft? ) Oh it’s Covid. Spending $ 120m on the airport? Oh, we need to keep the construction sector afloat because of Covid. To re building JGHS to repair the disaster you had originally overseen? Same answer – critical to spend money with local construction because of Covid. Spending millions on the Governors pet Cayman Regiment project? We need them to deal with natural disasters – like Covid.

      Covid – the fits any issue excuse for incurring debt and spending money like water – completely coincidentally in the run up to an election. Nothing to see here – please move on.

  14. Anonymous says:

    Cut costs by getting rid of non-performing staff.

  15. Anonymous says:

    We are so fortunate to have leadership that can perform brain surgery and launch spacecraft into outer space. Who knew we had such talent in what represents the population of a small town. Unlike said town, we have so many more public servants. 1 in 5 Caymanians! We are blessed that the other 80% can pay for them! Or does someone else pick up that tab?

  16. Anonymous says:

    Chickens are coming home to roost…………….

  17. Anonymous says:


    • The All-Seeing Eye says:

      Yes,… it is Aldenomics, but the greed and stupidity started long before Alden’s contribution!

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