$25M deficit better than expected
(CNS): Despite the uncertainty about the future economic fortunes of the Cayman Islands, so far public finances are doing better than expected. Government is now running at a monthly deficit of around $25 million but that is much lower than had been projected, according to Premier Alden McLaughlin. And with a line of credit about to be confirmed, government should be able to support the local economy through the ongoing pandemic.
However, speaking at the COVID-19 update briefing on Wednesday, McLaughlin warned that while government revenue was doing better than expected, “that doesn’t mean they are doing well”. He said the deficit of about $25 million per month was putting public finances firmly in the red.
Government has come to an agreement with a consortium of banks regarding a line of credit and a signed deal is expected before the end of the month, McLaughlin explained. However, he does not think government will need to dip into this contingency cash during the remainder of this administration, so long as things do not get any worse.
But he warned of much more troubling times ahead. “Assuming things don’t get better generally… and we are in pretty much the same situation worldwide,” he said, there will be “a massive challenge for the next administration”.
Government is doing a lot of thinking and planning about what might happen, he said, but right now it is able to navigate the current set of circumstances because of the financial stability that it has created over the last seven years. But things are going to be very difficult over the next few years, he said, noting the grave situation the world is facing.
The premier said the reason why Cayman is doing better than expected is because people are spending money in the local economy. While the staycations have not been enough to make up for the gaping hole from the missing tourism, when it comes to local dollar spending, anecdotal evidence suggests that August has been better than usual for some bars restaurants because residents didn’t leave for the summer and spent money here instead.
“I think all of us are a bit surprised that we are doing as well as we are as there are no tourist here,” he said.
Despite being in the red, McLaughlin said Cabinet did not foresee a serious looming crisis for public finances over the next year. So government will continue to do whatever it can to help supplement incomes and support people who are impacted by the decline in tourism. He added, “We can spend money to help people get through this.”
The premier said that the financial services sector appeared to “be doing incredibly well” and he had been told that August “was the best year …ever, certainly with respects to funds”.
McLaughlin said he was still amazed by the massive optimism all around. “One wonders on what it is based,” he said, but added that global markets are still doing well and there is no evidence yet of any global recession.
See the full update briefing on CIGTV below:
Category: Economy, Government Finance, Politics
Out 900 licensed food & beverage vendors maybe 10 doing great (Tillies, Morgans, Coral Beach, Brasserie etc). Some bankrupted already. Many considering every day if it is worth keeping the doors open. Small business owners not associated with Dart are surviving month by month. Big and corporate doing good. Not much empathy by civil service employees. New WORC website is a disaster for both employers AND employees and everybody knows it.
Nah…all the usual empty, high end restaurants which are just money laundering fronts will be just fine.
How can 900 licensed restaurants and bars survive? Hotels and Dart owned businesses on prime locations got some business. Small businesses got breadcrumbs left.
They were expecting 12M, so 25M is good for them.
You wait until January 2021 when the layoffs at the Banks and Law firms are added to those in Tourism then get back to us.
The government continues to squander the treasury of the people of the Cayman Islands. They bet big on a September vaccine and lost.
Nobody but Trump bet on a September vaccine. I think CIG now
realizes the actual difficulty in developing a working vaccine and is not betting on one anytime soon.
Trump? He’s guaranteed a vaccine, a great vaccine, the best vaccine anyone has ever seen by the first week of November.
Go back and watch the early Covid briefings. It is all there.
Why bring Trump into every conversation? He didn’t create the virus, he is not a doctor to treat it, and he is not a biochemist . Neither Trump nor Johnson or whoever can stop the virus by giving orders. When virus runs its course it would disappear or become harmless. When vaccine is ready it will be available. Use your own brain and don’t blame Trump or Putin or Kim Jong-un for everything.
That’s because Trump is such a loser and is an easy target…Sorry Trumpster your “chosen one sent from god” is always going to insight.
Hopefully, one day you’ll see the light before it’s too late.
I didn’t vote for Trump or Hillary. My comment is not about Trump.
One way of cutting costs is to stop paying to quaratine Caymanians who casually are going away or coming back to the island. I can understand if someone had to go away for urgent medical treatment but system is being abused!
Wonder how much Cayman Airways is loosing each month this year.
Oooh, what about the Turtle House?
Probably not much more than usual…
25m a month = 300m a year deficit or a reversal of 450m from our previous position.
and these idiots will not even consider reducing expenditure or reform the civil service??……zzzzzzzzzzz
welcome to wonderland.
And is that $25m before including entities like CAL or the turtle farm, or is it just direct CIG? Suspect the former since the non governmental entities have separate accounts- but will be showing up soon to ask for cash.
Open the Borders and get on with it. We cannot stay in a bubble forever. The longer the current situation goes on the worse off we will be when we do eventually reopen with our immune systems in tatters.
Unfortunately, logic can’t overcome emotions for those without the ability to think critically.
LOL, all you “critical thinkers”…SMH
Where is the belt tightening? 50 Million dollar per month deficit is high; when are we going to reduce expenditure?
what a bunch of clowns, who obviously do not understand the basics of macro-economics.
every top economist in the world is predicting a severe recession with many years of slow recovery.
time for roper to bring in top economic advisors from overseas….the scope of this challenge facing cayman is beyond the grasp of our 3rd rate mla’s….
Why bring top economic advisors from overseas when we already have you?
Maybe because what passes for leadership here is stating there is no evidence yet of a Global Recession.
There is actually already a wikipedia entry for this recession: en.wikipedia.org/wiki/COVID-19_recession
And even if it isn’t yet Global the U.S. is in recession already and that isn’t great for us.
edition.cnn.com/2020/06/08/economy/recession-economy-coronavirus-nber/index.html
yep…thanks for your input.
Deficit spending is just delayed taxation and/or future cuts to spending on healthcare, public pensions, schools, hospitals roads etc. There is no magic money tree folks…
CIG is driving this economy off the road and mortgaging the well being of future generations.
Everyone who is applauding this ongoing obsession with zero covid should ask themselves whether $25m per month is a cost worth paying?
That’s $800 every month for each Cayman citizen. The belt tightening afterwards will need to be very harsh
Don’t act surprised when your comfy civil service jobs and salaries are slashed, pension benefits are cut, your healthcare isn’t covered, new taxes are introduced, scholarships abroad no longer offered etc etc…
Don’t think you can just milk more of the expats either to make up the shortfall. These are global citizens with many options and will leave to greener pastures if they think they can better treatment elsewhere (see the welcome mat being laid out by others in the region
“McLaughlin said he was still amazed by the massive optimism all around. ‘One wonders on what it is based,’.”
These off the cuff musings are often quite revealing. Even if unintentionally so.
17,000 CI per month
I can well understand our Civil Servants being optimistic they can sail into the sunset without a worry in the world.
Trust me, the Civil Service is not optimistic. But there is informed concern, and there is doomsaying. We’re not doomsaying is all.
How about actually putting Govt back to work? Time to end the Great Civil Service Vacation of 2020.
LOL
They are back to work.
No, they are back in the office.
Well , back to the office.
Speak for yourself mate, most of us never stopped working and have been getting things done the whole time. The problem a lot are having now is additional work on top of the day-to-day, which is reducing throughput.
Wait until the foreclosures starts avalanching in when people realize that their mortgage hasn’t really halted, except now they have no job to paid the bills.
Wait until all of the companies default on their business and trading fees, and all the work permits fees stop coming in at the end of this year.
Let’s see what you have to say in February/March of next year and how great the New Zealand model was to follow. Maybe the Swedish model would have been a bit more suited and realistic for us.
Ah yes, the Swedish model. You do realise they lost plenty lives by it, don’t you12:59? I would like to see you as Premier announcing in this small jurisdiction that Ms so and so and Capt so and so and Sister or Brother so and so, all elderly Caymanians who had lived here from the time the mosquitos ruled and helped the foreigners build the place up, had died because, like Sweden, we were trying for herd immunity. Yes, the problems are horrendous and the future grim but throwing our old and/or vulnerable people in the cemeteries was surely never an option. If we are going to go down, let us go down together, Rock Hole, Windsor Park, Vista Del Mar and Yacht Club together.
Brilliant 5:03. Thank you.
Deluded, I would say.
I suspect you think it’s “deluded” 6:56 because you are not a Caymanian with parents and grandparents here but maybe a new Caymanian (welcome, if you are) or an expat, to whom the lives of elderly Caymanians are not of paramount importance.
I thought you would like it😉
Alden…any thought for cost cutting yet? No voluntary redundancies? No right-sizing of departments? No consequences for poor or inefficient service?
We get that the bleading has to happen, but the waste needs to stop.
It would be very interesting to hear any stories from people who have had a very rough ride during Covid.
Personally, I was incredibly fortunate.
I have many friends, ones that I speak with often, that have had the CV. And it is crazy, one buddy had no symptoms, another who was the picture of health said he thought he would die (7 days of uncontrollable coughing), another had a horrible time with it and said he was unable to speak his name at the hospital because he was so short of breath – he had to give them his ID. I know many others – one physical trainer said she felt awful but when she went outside and put herself in the sun the effect was amazing – she thinks the sun was the most therapeutic thing she could find. Maybe the reason Cayman is free of the CV.
The one thing that is common among the cases I hear is just how inconsistent the severity is – no symptoms, mild symptoms, major symptoms, and put on your Sunday clothes.
Who knows.
Yes, me too and apparently quite a few others. I’m sure there were and are many out there struggling, but all I see are new cars in my neighbour’s driveways and a whole lot of delivery taking place from Let’s Eat. And this was pre-pension money, I can only imagine what the spending was like when the pensions were paid out. I never took mine, but clearly others had.
You cant buy an appliance in ALT because of the pension spending and two car sales places told me they sold cars like fury. Caymanians hate saving; after all, Government will take care of them one day because “we are caymanians”.
Just like America will always take care of Americans via Social Security.
And just like England will always take care of the British via its Social Security.
What is your point?
We do not have social security. Part of not having taxes.
American Social security is actually a percentage of salary being involuntarily paid in and held by the government. It is separate from income taxes.
It is not the government taking care of you because you didn’t save for retirement.
So you are saying Brett Hill was right!
Brett Hill was right. So was David Legge. We do not do truth well around here.
But by law they still needed to ante up the money, just because he was against it doesn’t mean he didn’t have to hand the $$$ over.
I took just enough out of my pension pot to pay off my mortgage in full. No other purchases of cars, appliances, other nonsense. Whatever else happens, we’ll always have a home.
Well done 2:44am. I suspect you are in the minority though.