Financial sector fuels government surplus
(CNS): Government coffers are still running a surplus even at a time of year when government revenue usually falls off dramatically, Finance Minister Chris Saunders revealed Thursday. He said that fees coming in from the financial services sector this year have prevented government from going into a deficit in the second half of the year, as had been predicted. While government is now beginning to spend more per month than it is taking in at this time of year, revenue from the first half of the year and a smaller monthly deficit for July and August than expected is keeping core government finances in the black.
Speaking at yesterday’s COVID-19 briefing, Saunders revealed the latest public finances up to 31 August and said there was still a surplus of CI$147 million for central government, which is better by CI$16m than the original budget first set down in November 2019.
The minister explained that for this eight month period, government has collected $731m in revenue and spent $584m, which left a surplus that was even better, to the tune of $92m, than the same time in 2019. He said that the year before last provided a better comparison for the public finances than 2020 because of the COVID-19 lockdown.
He said the situation was supported largely by two revenue lines from the financial services, namely $50m in new fees from private funds an additional $36m from liquidated entities. The fund fees are now an annual revenue stream that government can depend on, he noted. Thanking those in the finance industry who had lobbied for those fees, he said that without them government would have felt the missing tourism revenue.
The minister pointed out that customs revenue was more than collected in 2019 but this may be fuelled by the increase in world prices rather than people buying more stuff. For example, the volume of alcohol was down largely because of the lack of visitors.
However, when it came to spending, COVID-19 was really biting, he said, as government was anticipating spending around $200m more this year than in 2019, largely as a result of the pandemic, either directly or indirectly.
Nevertheless, the surplus was easily covering the gap between the increase in average monthly spending and the revenue. Government is currently spending around CI$73m per month and in August it still collected around $63m, which was much higher than he expected. The average deficit is now expected to be about $15m per month, so, taking the depreciation and other accounting elements into consideration, things were far better than anticipated.
“We are covered where cash is concerned and that is one of the reasons we have not had to withdraw from the facility,” he said, referring to the line of credit that the previous government secured last year.
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Category: Government Finance, Politics
The whole ‘we don’t have the money to we have to open up’ is false. We should move away from tourism. retrain locals involved in it and keep the quarantine at 14 days until the science is proven out and other countries get their health systems in order. Anything less is endangering vaccinated and unvaccinated.
Covid is never going away.
“The minister explained that for this eight month period, government has collected $731m in revenue and spent $584m, which left a surplus that was even better, to the tune of $92m”.
Brilliant calculations and finance wizardry. I guess our financial future is in safe hands.
Hmm, I guess you don’t understand the budgeting system…never mind, if you can’t understand that, it explains A LOT!
If true, it means both the financial and tourism sectors are overtaxed in normal times.
Not for long with you at the helm.
Government has money that’s why the borders will remain closed until they start suffering not much will change. Hopefully government can help small businesses with funds to keep them afloat. If not eventually everything will close with borders being closed without a set plan.
Thank you to the accounting firms on island for all you do in keeping us economically sound
You’re under the impression that the accounting firms are synonymous with the financial services industry?
What about the law firms, the director services firms, the asset management professionals? All paying large amounts of fees to the government annually and all contributing hugely.
Very odd to single out accounting in that manner.
I assumed the OP was being sarcastic….
Thank God the previous Government left us in very good financial shape. The new government continues to ride that wave. At some point conditions will change and for the sake of everyone who cares about the Cayppman Islands I fervently hope that by then the current government will have some good ideas of their own.
* Cayman Islands.
Don’t forget the hotels that are still paying fees because they thought they were going to open. Done. Dead. Gone. Soon only CIG parasites left working. Good bye to the Cayman Islands we knew. Hello to the new go away, stay away, and don’t come back island.
Oh, you mean the hotel franchises owned by millionaires and billionaires with insurance and decades of retained earnings? Pity that handful of 1% if you want. Similarly, the duty free Kirkconnell barons that clutch Billions in treasuries that can’t weather payroll. If any of them are laying-off workers, it’s a conscious business decision they are making counter to the social good, and we should remember that for what it is. The Stingray tour locals should have re-tooled their businesses a year and a half ago using the free professional consultant services that were extended. If they are laying-off their staff now, that’s a choice, predicated on business inflexibility, and probably a gift to those employees to get out of there. What we haven’t seen are entrepreneurs popping up with actionable contract plans to beautify these islands. There are lots of public infrastructure works that need doing, that supports our Tourism/Resident Quality of Life. Pitch the Minister of Tourism on a sidewalk; paint/stencil the bike lanes (look right), make some planter boxes for Hotel Tourism Zone, etc. Where’s the entrepreneurial initiative? Lots to do, and the opportunity and time to get it done! ALT should be donating the lumber and nails. The hotels should be adopting their roadway frontage. Where are they?
Time for another pay rise for our dedicated Ministers and M.P’s?.
Not in anyway because of CIMA, but definitely INSPTE of the best efforts of CIMA …..not that they will not purloin this in to some form of vindication and victory of their continuing best efforts…to
“Let just see how far we can go in strangling this golden goose, before it cro….OOOPS, Uh Oh…..!!”
And yet the government largely ignores feedback and sensible requests from the industry while doing nothing about the mostly unaccountable and in some cases actively harmful practices of CIMA and other bodies.
Don’t get me started on the registrar’s lack of responsiveness and fetish for making up their own irrational rules without any legal basis.
The way to avoid a long term deterioration in the financial services sector here is to be proactive and forward looking we’ll in advance rather than complacently assuming that Cayman is guaranteed continued success without government promoting the right conditions.
PACT is going to kill the golden goose for some anti-vax zealots, and paranoid Jamaicans. Excellent plan. Two enthusiastic thumbs up for their ability to think past their noses. This is insanity.
SO, you think “anti-vaxxers” are to blame? Do you not know by now that the vaxxed can carry and spread the virus? Who are the ones who are able to travel freely and move around without impediments? Those who are vaxxed and as it’s a fact that they can still transmit and catch the virus, who do you think will be spreading it?
Where is the sense in what you said? Wake up!!
Anti-vaxxers are very much to blame for the more serious concerns resulting from the spread of the virus – have a look at how much more likely you are to need hospital treatment or die if you are unvaccinated.
As such, they are very much to blame for the continued need to keep the borders closed and for the other restrictions that are in place.
An Island with universal vaccination would not need to keep these in place.
Pretty simple.
You are behind the times. Just as many vaccinated as unvaccinated now due to ADE and side effects. You might have higher viral loads and delayed showing of symptoms. You are more dangerous. You will have to line up for your 3rd dose soon for delta
99.9999% of all COVID 19 deaths and hospitalisations since the start of the pandemic were unvaccinated
Happy to get my 3rd jab!
This is simply false and likely the result of Facebook “science” or some random Twitter thread.
Read up on the viral load point (there’s a good recent article in the Atlantic for example).
All items of evidence from reputable and expert sources are in accord that the vaccinated are far less likely to die / be hospitalized.
Therefore, not opening up because of a fear of the resulting death to is almost exclusively a fear about the unvaccinated.
Not to mention that the unvaccinated are also the ones that lead to a concern about medical resources being stretched such that other illnesses and conditions cannot be properly addressed.
Look at Bermuda for some real world statistics on the point of you don’t believe the abstract data.
What are you babbling about. Yes disappointingly the vaccinated can still catch and spread covid. They are about 50 times less likely to get sick or die from it though. We are staying closed not because we fear the vaccinated will catch it but because they fear the unvaccinated will catch it and die. In the US 40% of the population are unvaxxed but they make up 95% of those in hospital. a couple of weeks ago 100% of the 100+ people in hospital in BVI were unvaccinated. Educated yourself!
The last thing this government needs is any encouragement to spend even more money
Touching words from the Hon Minister Championing the importance of pensions.
He should perhaps also encourage the owners of restaurants to meet their monthly pension obligations, instead of repeated court appearances for having failed to do so.
Absolutely. The behavior is shameful. Imagine swindling your employee’s pensions and blatantly refusing to pay them.
They somehow escape prosecution despite repeated court appearances. Do have friends in high places I wonder.
…”Spending freely, what came easily, realised nothing…”
Capt. Wentworth.
The financial services sector has grown dispute the ineptitude of CIMA, but they continue to do their level best to destroy the sector.
Don’t forget work permit fees. 😒
Title should be “Government is still able to steal money from the financial sector whilst destroying the incomes of thousands of people that rely on tourism”
Or, alternatively, “tourism ultimately not necessary to support economy. time to retool.”
5.58pm – so you think rejecting hundreds of millions of dollars of additional revenue into the cayman islands from tourism is a good economic policy?
Anything for money right?
So cheap tourism at any cost?
3:50pm – I didn’t realize people spending $1,000 USD + a night at the Ritz was “cheap” tourism
It APPEARS so, but unless you have no degree in finances, critics like you will never understand the full picture
Bring back Roy, this needs a professional experienced Accountant, not a wannabe politician.
They better remember that a CHUNK of that money was from one time items. Chris pointed that out very clearly!
…NAH..Dem not gonna focus on dat….
Not sure why people would be angry about this news. Oh wait, because it doesn’t fit into their narrative that we need tourists or we’ll be screwed. Well, seems like we’re doing ok so there goes that theory…waiting for the doom and gloom comments to come…
Well, I will explain it to you. The financial services industry can move to other favourable jurisdictions that do not cause their highly vaccinated staff to be held hostage. If they leave for greener pastures, we are well f#cked.
That suggests that those currently in FS feel like they are being held hostage. That’s not my observation from my colleagues.
Obviously you didn’t watch the briefing! It was clearly stated that we CANNOT sustain the current cash bleed of $73 million per month.
Great. Now that finances are in order, what about budgeting for significant expenses that govt. will have to pay for, but which there appears to be plan for?
PACT does not appear to be people-driven, accountable, competent or transparent. What a waist of a vote. I guess I should have voted for Vincent Frederick.
Waste
Not doom and gloom, just a simple fact.
Two million cruse passengers paid an $18 fee each to come to Cayman.
That’s $36 Million loss to the coffers.
Hardly, government had assigned the port tax years ago to pay for the new port facility.
Who cares. They have more than enough money. Population is small. Help the people in need and use there money we have.
2 million cruise passengers left trash to clean up, were a burden on the roads, and generally had a greater economic footprint than $18 to Cayman, meaning the wastes of space cost us more than they generated….
At what cost to our environment seen and unseen and quality of life. Not worth it IMO
2+2=6 carry the 1!
So the government ignores work permit abuses and opportunities for Cayman in the financial sector….just more of the Alden pig PPM policies
Plenty of Caymanians are excelling in the financial industry. You just have to be extremely sharp and driven to make it.
That’s not at all true…..you need to be friends from Canada or of a slimy recruiter to excel. Caymanians with more value don’t the senior opportunities. The local lawyers recognized this and decided it was easier to form new legal regulation than confront the greedy mioptic government.
You don’t have a clue what you’re talking about.
Caymanians that have comparable education and expertise as foreign candidates are in HUGE demand – as someone within the industry, we are constantly looking for them and I know many that are succeeding.
Why on Earth would a serious financial services business (particularly a global one) CHOOSE to pay high work permit fees unnecessarily?
Here we go with the excuses again. If you are Caymanian and are sufficiently qualified and experienced to work in said field and you are not employed. You NEED to take a good critical look at YOURSELF to determine what the issue is. Stop blaming the expats.
Thank you to the accounting firms for getting the Private Funds Law over the line.
No thank you to the law firms and directors who vehemently opposed this at every turn, looking to scope out any entity they can.
What happened to the lawyers prediction of a mass exodus of private equity funds out of Cayman? Quite the opposite. You guys look pretty foolish now, dont you?
Yes you must be thrilled that your lobbying of government for the fees from private funds (which in and of itself I find a startling admission – wasn’t the whole rationale the important regulatory imperative of ensuring investor protection for investors in closed ended products?) is allowing the government to continue to shaft the tourist industry, the quality of life for residents of the islands for whom the ability to travel on and off the island without extended and onerous quarantine is of huge importance, and impose an economic burden on future generations of Caymanians, while ignoring science and preventing businesses from planning for the future. Bravo! Well done! You really got one over on the lawyers and directors.
*BVI WANTS TO KNOW YOUR LOCATION*
BVI is also stealing a chunk of our digital asset related entities right now – its like a mass exodious. The big firms are just sending everything that would fall into VASP to the BVI which has 0 regulation for that.
Regulating digital assets is sensible and many serious players (which the jurisdiction should be focused on) are open to it.
The problem is that CIMA has, 9-10 months following numerous applications having been made, still failed to complete the licensing process because they are inept and underfunded.
The government is startlingly neglectful of its primary source of income in the financial sector and treats it with a regrettable disdain.
Good. Digital assets belong in BVI. Cayman’s 12,000 plus private funds don’t care.
Go away.
I wish the laugh button was still here.
…$36m in from liquidated entities – a once off – is pretty damming….
What an ignorant comment.
The audit firms very clearly pushed for as broad (and unnecessarily so) a net under the Private Funds Act as possible – so that they can then collect more audit fees. If you think this was some sort of benign and well thought out policy initiative, you’re naive.
Further, it’s asinine to judge whether or not the long term effect of an over-zealous, terribly drafted, opaque piece of legislation such as the Private Funds Act will be to reduce fund numbers here when we are just over a year in. It would be like falling out of a 10 story building and commenting how well things are going as your fall past floor 5.
Ultimately – neither profession has covered itself in glory and setting the against each other is bad for the jurisdiction and this the government’s golden goose.
What a way to spend your life; doing superfluous audits that no one will ever look at. You must be very proud.
Not as glamorous as associate lawyers mindlessly pulling template offering documents from their network, inserting the name of the fund, and charging $50k.
Pays your Oxbridge student loans I guess.
What a childish comment.
It’s a simple fact that the auditors have pushed for the law to mandate audits in a number of instances in which they are patently unnecessary, or indeed, where they are already being done elsewhere, but now have to be moved to Cayman so that local auditors can make more money.
Ask your colleagues elsewhere whether they are entirely pleased with this openly self-interested behavior of the local audit profession.
Ultimately, there is a simple truth here – steps have been taken that unnecessarily increase the costs of doing business in Cayman, which, it is fair to predict, will make the jurisdiction less attractive in the long term, and this has been done primarily due to the self interest of the audit firms.
Trying to pretend otherwise is disingenuous, naïve, or both.
Most lawyers are highly paid proof readers
There’s no such thing as an “Oxbridge student loan”.
Pretty obvious the audit firms lied that the unnecessary additional audits wouldn’t increase client’s overall costs.
Yes well done. You got government to extort money from these funds so that you can provide a duplicate “service” not one investor actually wants, needs or cares about.
Did you know that you can increase the amount of money you have by decreasing expenses. Shocking!
Governement doesnt seemt to understand this life hack, the only way to increase the amount of money you have it charge even more. This is exactly what the EY report said NOT to do.
Get us off this damm greylist already. Good thing FS can carry literally the entire country or we would be the next Haiti. We already got enough courrupt politicians to match!
#fakesurplus
Was thinking the same.