Early bumper surplus may buffer looming deficit

| 07/05/2021 | 46 Comments
Finance Minister Chris Sanders at Wednesday’s press briefing

(CNS): With the ongoing negative impacts of the COVID-19 pandemic and the closure of the borders to tourists, the government is expecting a large deficit by the end of 2021. But Chris Saunders, the new finance minister, has revealed that the first quarter results for public finances are showing a much bigger surplus than expected, which might help the country deal with the expected problems ahead. Each year government takes in a significant part of its annual earnings in the first three months, when most of the fees relating to the financial sector are paid. An overall CI$202 million surplus for this first quarter, $40 million more than forecast, provides a buffer against the financial turmoil ahead.

Speaking at the PACT Government’s first press briefing since the election, Saunders reminded the public that, in accordance with the pre-election financial forecast, the Cayman Islands Government is facing a deficit of more than $157 million by December 2021. And while he plans to avoid borrowing if possible, Saunders made a commitment that government will put people over profit. He said the current debt ratio is only 5.1% and government still had access to the line of credit secured by the previous government, so there was no pending cash flow crisis.

However, he warned that without tourism revenue government will be relying on stamp and import duties. The minister said he will try to cut that expected deficit by adopting policies that keep money circulating in the local economy, such as by encouraging people to support the local farmers and also increase fuel efficiencies to reduce the money going overseas, but the combined pressure of public spending to support those suffering by the closed borders and loss of fees from the sector will create a difficult environment.

Saunders said that he has been tracking customs duty compared to last year, which was fuelled by the pension withdrawal, but so far this year both import and stamp duties were equal to or more than last year, which he said would help keep the domestic economy going. He explained that there had been a direct hit to the country’s domestic economy with the loss of tourism as well as the impact on the public purse.

“We definitely need tourism back; there are no ifs, ands or buts about it,” he said, noting the loss of as much as a billion dollars taken out of the economy. But he made it clear that government will not be opening the borders before it is safe to do so.

Tourism Minister Kenneth Bryan confirmed that the stipend which is being paid to workers in the tourism sector who have been furloughed or who have lost their jobs as a result of the border closure will continue beyond June, when it was due to come to an end. But Bryan said that there was no plan yet to increase the payment from $1,500 which had been a campaign promise made by the PPM.

See the full press briefing on CIGTV below, set to start at Minister Saunders’ comments:

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Category: Government Finance, Politics

Comments (46)

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  1. Anon. says:

    I am skeptical of any financials coming from the Government.

    They have many “accountants” but it appears that part of the Government operates on a cash accounting basis while the other part is doing accrual accounting.
    So what is the true position of the finances? We never really know.

    This “surplus” means nothing.

    It is not actual money in the bank and their calculations on paper are dubious.

  2. Anonymous says:

    Chris didn’t “reveal” this. The figures are the exact same ones Roy gave before the election and come from the financial update that’s required to be published before a general election. These numbers have been public for weeks.

  3. Anonymous says:

    I think this is an outright lie.

  4. Anonymous says:

    Alden McLaughlin was the worst leader (whether Premier or, under the old Constitution, Leader of Government Business) that the Cayman Islands has ever had. PPM was running Cayman into the ground.

    Balls now in the PACT’s court to do better, so the PACT better not mess this up. Wayne will need to run this government, which is not a Walkers style of doing things, to ensure that the Government is, indeed, “people-driven, accountable, competent and transparent”.

    So far, it seems that their is not much transparency and it does not appear to be people-driven. Wayne and Chris, I support this PACT government, so don’t mess up and loose support from myself and many others. This is your chance to make it or break it.

  5. Anonymous says:

    This should probably (or at least hopefully) put to bed the ludicrous notion that tourism makes up 50% (or as I’ve seen suggested in some posts on CNS, 66%) of Cayman’s GDP. Cayman’s GDP is driven mostly by financial services and development. It has been that way since the 70s and will continue to be that way for the foreseeable future – unless some populist government bows to the will jealous malcontents.

    • Anonymous says:

      4%. Before COVID. It has been in CNS articles many times. People either don’t read articles, or have reading comprehension issues.

  6. Anonymous says:

    Ever hear of accrual accounting?

  7. Say it like it is. says:

    Let us see what CAL’s bottomless debt subsidy is before we crow about ” a much bigger surplus than predicted”.

  8. Anonymous says:

    “We definitely need tourism back; there are no ifs, ands or buts about it,” he said, noting the loss of as much as a billion dollars taken out of the economy. But he made it clear that government will not be opening the borders before it is safe to do so.

    Who is qualified to make that call? Who can see the future of covid? The whole world is teeming with corona so, as our duly elected leader I ask who has the adequate knowledge to monitor and set guidelines for such an opening?

    The future is uncertain especially now during a global pandemic.

    People over profit is the right way. I’ll hold you to your word.

  9. Anonymous says:

    bottom line is we are running at a $10-20m deficit per month. this is not sustainable.
    his policy/strategy mentioned above is a joke.
    will you cut expenditure…will you cut the overstaffed, underworked, underperforming civil service???
    perfect time to bring in the recommnedations of miller-shaw and e&y reports.

    • Anonymous says:

      Ok so cut the civil service and make ppl unemployed, then they head to NAU, or rob other ppl?? Rock and a hard place eh

      • will start at says:

        Cruise business as people are getting to understand was a valuable source of income for the local people. Taxis according to Elon Musk have a 10 year maximum life span as AI and automatic electrical vehicles will no longer need humans to run any. So that industry will be gone. What will Government plan to do with the elderly people who are faced with the ever increasing cost of living? Development prices are constantly going up unless we start using prefabricated construction tech. Rent is going up not down. Building material costs have gone up by 35% or more. Land prices higher too. There must be plans to retire people, farming is good but if you can’t afford land how will you buy it? All of the things we need to stay home is going up and no job offers to people who are blue collar workers.
        Universal income will be offered and discounts is the key. Children graduating need a job which will start at minimum but elderly will be offered the same thing. Cause we going to help Mr or Mrs so and so. Imagine what you will feel after 45 -50 years to be offered minimum wage and still not have enough. We have 5000 people on a stipend. It is going to be a problem to add all the infrastructure needed to maintain the future of Cayman. Beaches and hotels will have to grow as we pump sand and build to 20-50 story hotels and apartments.
        All of you young people who don’t want development unless its cheap and environmentally stopped, better start coming up with ideas on how to solve Cayman’s future.

      • Anonymous says:

        so civil service is a government funded social welfare program that can’t be cut? thanks for confirming.

    • Anonymous says:

      They gave themselves raises

  10. Anonymous says:

    If you think that the deficit is bad now, then wait until the government has to pay all the Caymanian lawyers that have lawsuits against government and CILPA and CARA.

    That’s when you will see the extent of money that will have to be paid out and how bad the PPM and AG messed up.

    I wish the PACT government all the best, but they are going to have a serious issue finding money to pay for so many messes that the Unity government caused with so many lawsuits.

    Call me psychic, because I just predicted the future. Wait and watch, this will happen.

  11. Anonymous says:

    Truth be told – the only reason we have this buffer now is because of the $400 plus million taken from our pensions last year. They should probably allow a lesser 2nd withdrawal, maybe cap it at $10k this time.

  12. Anonymous says:

    If they dealt with the ridiculous delays at customs they’d bring more duty in. Can’t remember the last time I bothered shipping stuff in. Packages make it half way round the world in less time than it takes to move 3ft through CBC.

    • Anonymous says:

      I dont know why there wasnt a plan to move the displaced tourism workers into the customs/ post office. Gives them a job, adds more workers, speeds up the process. your right they would get a lot more money if we didn’t have to fight to get our stuff

      • Anonymous says:

        Ask Alden. The damage he has contributed to by mismanaging employment will last generations.

      • Anonymous says:

        Not to mention we should all be allowed a one time $500 duty free shipment since we can’t go anywhere. However, only the vaccinated or those that can’t get the jab for medical reasons should be allowed.

      • Anon. says:

        People are already complaining about an overstaffed, underperforming Civil Service but you want to move, in a lot of cases, un-skilled, uneducated persons to Customs?

        I guess maybe they would be actually be “working” for their stipend instead of sitting around collecting $1,500.

  13. Anonymous says:

    Thank you Progressives for the strong financial results.

    • Anonymous says:

      Yeah but we can bet the new finance minister and the PACT will take the glory! We have yet to see the true deceitfulness and inabilities of this new “government”.
      Hon. Panton, please rethink this government! We can only pray! Too much donkey in horse race.

    • Anonymous says:

      second time in 15 years they have left the country with huge deficits

      • Anon. says:

        What an utterly stupid comment considering they just brought them through a pandemic, which is clearly a major contribution to any claimed deficit.

  14. Anonymous says:

    Thanks Chris and PACT for this big surplus!

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