$135M surplus expected to fall to just $16.5M by year-end

Cayman News | 18/11/2024 | 0 Comments

(CNS): At the end of September, the Cayman Islands Government was sitting on a whopping surplus of $148.6 million for the entire public sector and CI$135.7 for core government, but officials have confirmed this will likely dwindle to around $16 million by the end of the year.

According to the unaudited third quarter public finance results covering the last nine months, the government collected an additional $52 million over its forecast predictions. However, all of that and more is already spoken for. Finance ministry officials expect the surplus to drop by over CI$119 million by 31 December. Officials told CNS that core government will have a surplus of around $16.5 million by 31 December 2024.

Core government’s 2024 operating revenues are forecast to be $1.098 billion by the year-end, almost $3 million more than the $1.095 billion originally budgeted. Meanwhile, operating expenses are expected to climb to $1.081 billion, almost $31 million more than the $1.050 billion originally budgeted. The CIG had expected a surplus of just under $44.5 million, which is now forecast to be about $16.518 million.

Despite the dramatic expected decline from the position held on 30 September and a drop of some $30 million on the forecast surplus, core government will maintain compliance with the 2024 Principles of Responsible Financial Management, with the Cash Reserves Days at 96.4 days, officials have confirmed.

The third quarter report also documents that from 1 January to 30 September this year, government revenues increased by $67.8 million compared to the same period in 2023, while at the same time, government total core expenses were up $43.3 million.

The revenue came overwhelmingly from the financial services sector. Other Company Fees – Exempt Companies alone added more than CI$112.6 million to the government coffers due to increased registration.

Partnership fees and Private Fund Fees also did far better than forecast, even with a shortfall of $9.5 million in revenue from the sector than had originally been expected because the start date for the new coercive revenue stream for International Tax Cooperation filing fees has been deferred until next year.

Meanwhile, sky-high property prices brought in more stamp duty than expected. Land Transfers brought in $17.9 million more than expected due to higher volumes of property transactions coupled with increasing property values.

The 2024 stamp duties of $68.5 million are $10.8 million more than the comparable quarter in 2023. Miscellaneous Stamp Duty also came in at $5.4 million more than expected and $2.3 million higher when compared to actual results for the same period last year.

However, these whopping revenue raisers were countered somewhat by a decline in what the treasury terms ‘other import duty’, which was down by over $16 million but still on par with 2023 results.

The government also gave up close to CI$6.8 million in duties through waivers and concessions. While most went to Caymanian first-time buyers and buyers of second properties, more than $1.5 million was given away on multi-million dollar developments.

Although government made savings on its personnel bill because of the number of positions that were not filled, it still spent $341 million on government workers, which is around $17.4 million more than the government spent on its headcount in 2023.

Payments to the Health Services Authority (HSA) exceeded the year-to-date budget by $16.6 million. That money was largely due to actual costs for the Care of Indigents, which exceeded the budget by $14.3 million, with the government forced to add $13.5M through Finance Committee.

The government also laid out more than expected, as it does every year, on the notorious budget line item, Tertiary Care at Local and Overseas Institutions. This year, that exceed the woefully inadequate original budget by over $24.5 million. As of 30 September, the bill for this line item was already at $38.5 million but parliament has already approved an additional $34.4 million, increasing the total 2024 Budget to $53 million.

The government’s welfare and scholarships bill also continues to increase. With changes to the legislation, the Department of Financial Assistance has paid out $7.7 million more, helping families in need and over $4 million more than expected on scholarships.

Parliament has approved additional funding of $10.6 million for Financial Assistance to take it to the year’s end and is expected to spend $11.1 million more this year than last helping the unemployed, underemployed and families on low incomes.

Overall, statutory authorities and government companies were reporting a significant operating surplus at the end of September of almost $13 million, a far better result than the expected deficit of over $1 million.

But even as the Cayman Islands Monetary Authority, the Civil Aviation Authority, the National Housing Development Trust, the National Roads Authority and the Port Authority were all doing better than expected, other SAGCs have not been doing so well. The unfavourable performance of Cayman Airways Limited, the Airports Authority and the HSA will mean that the surplus will fall before the year is out.

While officials said the third quarter’s performance has positioned the government to be optimistic during the final quarter of the year, ministries, portfolios, offices and statutory authorities are all expected to make a final push to meet planned 2024 objectives, significantly reducing the surplus.