CI$75M deficit for 2020 well below forecast

| 05/02/2021 | 38 Comments
Cayman News Service
Finance Minister Roy McTaggart at Thursday’s press briefing

(CNS): Contrary to predictions by government that it would end 2020 in the red to the tune of CI$168 million, the finance minister has revealed an expected deficit of around $75 million once the numbers from all the public sector entities as well as core government are finalised. Roy McTaggart said there was also $449 million in the bank, giving government room to prioritise health and safety over money in the face of the COVID crisis.

At Thursday’s government press briefing, McTaggart said the public finances were “in a much better place than we anticipated at the start of the pandemic”, following the predictions his ministerial team had made just a few months ago.

Breaking down the numbers, he said that central government was looking at an operating deficit of just over $50 million. But the combined deficits of the government companies and authorities would increase that to the estimated overall figure of $75 million. However, with $449 million in the bank, government will be able to fill the hole left by the operational debt.

Government’s broader debt position is also relatively stable, as the long- term debt is now at $249 million. In addition, the administration has not yet touched the US$400 million line of credit that was secured last year as a buffer against further economic fallout from the COVID-19 pandemic.

McTaggart said a number of revenue areas had performed better than expected, which explained the drop in the forecast deficit number. “One of the reasons the deficit isn’t likely to be as grave as was initially projected was the great performance of a few of government’s revenue categories when compared to the original revenue projections,” he said.

Stamp duty on land transfers exceeded its initial 2020 projection by
$20.6 million, Mutual Fund Administrators Licences were almost $6 million more than forecast, and a number of other areas brought in an additional $4.2 million in unexpected revenue, such as the sale of medical supplies to countries in the region relating to COVID-19. The deficit was also lower than expected because some spending was less that budgeted, including personnel and consumable costs, which had savings of around CI$43million.

McTaggart said the deficit itself was largely fuelled by “significant COVID-19 expenditures” in 2020, though the Finance Committee hearings last year revealed that government had spent additional money on things unrelated to the pandemic.

The finance minister said that the preliminary figure for COVID-19 expenses last year is about $65.4 million, which includes around $33 million in health-related costs, testing, PPE and quarantine. The other half was spent on direct payments to support families and businesses impacted by the pandemic.

Given the health crisis, the situation relating to public finances is encouraging. However, it also highlights the continued problem that has been raised by the Office of the Auditor General about the consistent inaccuracies in budget predictions, which undermines government’s ability to properly plan public spending throughout the year.

Ezzard Miller, the chair of the Public Accounts Committee, raised the issue again recently. He questioned why budgets are being set that are not reflecting the realities or revue collection. Miller said that while it may seem like government is doing well by not running deficits, the large surpluses in recent years due to the persistent under-predictions of revenue means much needed community projects are not being financed. He said this has the appearance of hoarding public money to make government look good.

But McTaggart made a commitment Thursday that government would use the money it had saved to support the people through this crisis, as he announced an increase in the stipend for laid-off tourism workers.

“Whilst our local economy continues to perform well, we know there are many in our tourism sector who are still suffering due to our borders being closed,” he said. “Some time ago, government had determined that if our finances allowed we would look again at the assistance that could be provided to displaced tourism workers.”

Given that the deficit is half the size forecast, he said the payments for this month through to the end of June would now increase from CI$1,000 per month to $1,500.

He and the premier confirmed that this payment would not be means tested and anyone who is already receiving the stipend will automatically get the increase. The new payments are expected to cost the public purse around CI$7.5 million, which is part of the 2021 spending plan.

Meanwhile, Commerce Minister Joey Hew is also giving away more money. He said at the press briefing that all those who had applied for a micro and small business grant but were refused the first time around would now get the $3,000 one-off payment.

The minister said Cabinet had approved the payments and no further action was required by those who had previously applied and the payments would be made electronically in a few weeks. The missing money for others who have been cleared for business assistance and loans would also be coming to them very soon, he said.

Another boost for those who lost their jobs in tourism was the health minister’s announcement that he would be reintroducing the health insurance premium payment schemes. Despite Dwayne Seymour’s recent comments when asked by CNS at an earlier briefing that he did not think many people needed the help, government will now pay premiums for around 1,900 tourism workers. He said the premiums would begin in March and be paid until June.

Government will also be looking to help anyone who lost their insurance cover as a result of the pandemic and now owes money to the hospital.

Seymour stated clearly that even though the law mandates that everyone must have health insurance, no one will be punished as a result of being without cover during the health crisis. He said this was to ensure that people in need are not afraid to come forward and apply for the payments via the Health Insurance Commission.

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Category: Government Finance, Politics

Comments (38)

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  1. ppm Distress Signal says:

    Roy The pretender to the throne! Nuff Said

  2. Catcha Fire says:

    ROY is the PPM’s lysol spray on their own very stink Doo Doo. As for you timmy & 415 get help soon eh! This government miraculous actions very determined and lead by circumstances not brilliant leadership? Please for God Sake do not muddy the water NOW! with your undying loyalty mumbo jumbo of How Great Thou are! before they overplay their very overconfident bullshit and F#@&! this up!

  3. Anonymous says:

    “..better place than we anticipated..” simply means we don’t know where and how much we are spending for there’re no limits…

    Looks like they simply anticipate…public purse considered bottomless..then why to even have budget?

  4. Anonymous says:

    A deficit is a deficit. I still don’t see how our so-called representatives found the money to recently expand their benefits package.

  5. Anonymous says:

    Hear Hear, most of us over the age of 40 want to go back to (1) Holiday Inn.

    We do NOT want to get to 100,000 residents
    Sustainable Tourism with Caymankind, not greed.

  6. Timmy says:

    Simply a world class performance by CIG. Haters read and cry! Cause we voting PPM in 2021. No one can do better.

  7. Anonymous says:

    In other words “we still do not understand finance” and we got lucky this time.

  8. Anonymous says:

    Thank you honorable premier and the rest of your wonderful team, you have saved Cayman.Please waive the constitution and stay our premier.

    • BeaumontZodecloun says:

      You must be his housekeeper. I don’t blame you. It must be a fairly good gig.

      Still, calling for the suspension of the democratic process makes you either a person trolling for giggles or a really, really selfish person.

      I’m hoping it was just for the sardonic giggles.

      Who cares.

      • Anonymous says:

        You are a selfish person, we have the greatest leader and team in the world so why should we change it?

    • Fair and Balanced says:

      It is sad to read a comment of a “Please waive the constitution and stay our Premier” because, it shows a tremendous lack of knowledge and common sense.

      Our constitution cannot be waived, sorry.

      The current Premier can get re-elected in May 2021, become as high as Deputy Premier and even act as Premier sometimes when the Premier is away from the Islands.

      But present Premier will have to wait until May 2025 to become Premier again. I’m sure you’ll remain a loyal fan until 2025.

  9. Anonymous says:

    Still waiting for a sovereign wealth fund with an accompanying law that when the fund hits 1 billion that annual dividends are paid to Caymanians. Its the peoples money… take care of it and let it grow and then return it. Our domestic financial institutions near worthless.,

    • Anonymous says:

      Where have you been? It’s all Bush and the Bushits money. You only get some to buy your vote. Is that what you meant?

  10. Anonymous says:

    I agree with 5″02pm and 8″o4pm but it’s good that the government helping these people because theirs a lot of elderly caymanian that really works in tourisim that is having a hard time getting a job, God bless the government I would not say its because of election coming up I guess whosoever were in would have done the same for its people its really a lots of people suffering today because of COVID unless you are in those tourisim people shoes we just don’t know, God bless

  11. Anonymous says:

    Half the story is all your going to get. If it’s bad news then your eyes will see before your ears will hear.

  12. Anonymous says:

    Surely this guy is guaranteed to be the next premier. Caymanians would be silly not to vote him in, in times of instability you need a finance guy and he seems reliable and with real world experience. Cayman is booming, there is cash to support the 1000 a month payments to tourist sector workers for the next year until we gradually allow tourists in once all caymanians and residents are vaccinated and a vaccine passport system is in place, and mctaggart clearly is capable compared to the many inept caymanian politicians. What a fortunate country we are in right now with no lockdown and vaccines coming so early compared to the rest of the world, with a booming economy. Lucky lucky caymanians.

    • Anonymous says:

      Yes sorry he will be our next Premier. Not that he doesn’t have the business or Accounting background, but because is is loyal to his Party and NOT the people 🙁

      Many women wrote to him last weekend 1-1 to “do the right thing” and remove Big Mac for guilt of violence to women, no reply.

      At least the Governor replied directly to every woman that wrote to him, not Roy.

    • Anonymous says:

      I think we all had an awakening that we do not want or need cruise ships.

      When we reopen, Cayman needs to pass a law for Tourism minimum wage of $9.00 per hour ($1,701) per month to replace cheap hotel labour with locals!!!

      Stayover tourism only…. and vocational training for locals- no more work permits for A/C Technicians, Construction, hairdressers, Spas, only allow passport Caymanians to drive taxis instead of owning and outsourcing (to Jamaicans) Restaurant and Bar staff should be locals too.

      The exodus of 5,000+ work permit holders was our covid saver for Cayman. Now let’s get smarter instead of greedy and learn to live on our own without slave labor wages.

      Brand name hotels like Marriott, Kimptoon, and Ritz re not going to close up shop over $9 per hour local wage if made a LAW.

      Train a Caymanian to stand on their own. Jobs for Cayman!!!

      You listening Election Campaigners??? We made it this far, now let’s plan for a Cayman future focused on sustainability

    • Anonymous says:

      Tongue in check comments may be? In any case, term limits mean that Alden McLaughlin is not eligible to be Premier 2021 – 2025. I will be voting for him as overall he has been good for the Cayman Islands though I would have to be homeless and starving by the road side before he would help me or my family.

  13. Anonymous says:

    I wonder how much they’ve saved on not wasting money on stupid civil service trips half way across the world to collect awards for providing awful services?

    • Anonymous says:

      Hear Hear. New Parliament should heed this cost savings and zoom meetings only. Gravy train (and Casinos Mac?) off the table.

      No more jollys.

  14. Anonymous says:

    It is not just tourism workers that have lost their jobs due to the COVID-19 crisis. But nothing is being done to assist those. They are people whose families need to eat too and have health insurance. They are deserving of help.

    • Anonymous says:

      Cayman families that need work should protest work permit renewals. It is sad to see most retail and service industry still hiring cheap labor.

      Install a livable wage and vocational training so we can stand on our own two feet.

  15. Anonymous says:

    Increased foreign ownership saves the day again with huge surges in stamp duty property transfers during Covid but at what price to the long term residents of these islands?

  16. Jotnar says:

    So we are meant to celebrate that our finance minister got his budget estimate wrong by 56%? Just because he forecast a bigger loss? I guess we should be grateful that it wasnt the other way around, like the airport overspend, but what confidence does it give you in the ministry that as recently as October they were forecasting a loss of $168 million fior the year, and 3 months later (but closer to the election) the loss to December the result is now magically $75 million? What happened in November and December, or did they basically have no idea what the actual position was in October?

    • U. Knowit says:

      Don’t they ALWAYS juggle the figures to make things look better before elections? Is a pork chop greasy???

  17. Anonymous says:

    a $200m reversal in government finances is nothing to celebrate.
    this is classic switch and bait by ppm.

  18. Anonymous says:

    At least the PMFL, with its complicated provisions, gave us the sort of fiscally responsible regime that has resulted in the government having money in the bank for the proverbial rainy day. This is something the present excellent auditor general would expect of any modern financial system but those of us with memories of the old days of cash accounting remember how “the money ran out” at the end of each year and people in the private sector who had provided services to government couldn’t get paid.

  19. Anonymous says:

    Tell us more about how we need to destroy the environment to support tourism or go bankrupt.

    • Anonymous says:

      Hear Hear, most of us over the age of 40 want to go back to (1) Holiday Inn.

      We do NOT want to get to 100,000 residents (traffic, pollution, environment, dump, slave labor wages)

      Your PROUD PEOPLE want stayover tourism and zero unemployment. Our smaller population model worked well before so stop the greed and protect your people.

      Sustainable Tourism with Caymankind, not greed.

  20. Anonymous says:

    Is the Auditor General paying attention to this “election giveaway plan” by the PPM?! Half the persons on the tourism stipend wasn’t working prior to COVID or has gain back full-time employment and are therefore making more now than prior to COVID. This money could be used for those truly in need like our elderly people or families with no income. Some of the money is being sent overseas by the status holders and persons that are well over the retirement age and wasn’t working are also receiving. The country will have to pay for this all. Then of course they gave themselves and the top civil servants a huge raise which was poorly publicized and they still have not published the new salary scale on the Portfolio of the Civil Service website. They are robbing the country just to win elections but I hope the Caymanian people are able to see through this and VOTE THEM OUT!

  21. Anonymous says:

    So Minister, having waived a whole law (if you actually have the power to do so) can you also confirm that we do not have to comply with the pensions and traffic laws. I mean, while you are at it, you might as well confirm an unregulated free for all for all the least scrupulous employers and other bandits making hay of the backs of the most vulnerable during this crisis.

  22. Anonymous says:

    Long-term debt and/or lines of credit are not assets on any balance sheet, except those prepared and reimagined by those unprepared to broach a personal pay and/or job cut. Everyone, including PAC-official Ezzard, are calling for “the money”, that doesn’t exist, to be “distributed” instead of “hoarded”. Why is the Cayman Islands, which is supposed to be a savvy world financial player, so comfortable relying on a Pharmacist/HR manager to pretend to know anything about accounting? Ezzard only worked at Deloitte in the limited-capacity as an HR manager, not as a qualified accountant. You can’t make this stuff up.

  23. Anonymous says:

    Dwayne Seymour: he did not think many people needed help with health insurance after losing their jobs! How on earth did he think that?

    He just opens that big mouth without engaging his brain (or perhaps he does)!

  24. Anonymous says:

    Why give the tourism workers that can work 1500 an only give the old seamen that’s too old to work 950 ?

    • Anonymous says:

      How many “old seamen” are there now, 3:39? They seem to get more and more each year even though hardly any went to sea in the last 40 years. Is it these young foreign girls some of them are marrying that are adding to the welfare list?

    • Anonymous says:

      Wny give people more money a year later when they all could very easily have found other jobs by now. Lol at how many permits have been granted in the last 6 months alone, many in positions that don’t require professional qualifications.

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