LA approves further deficit

| 30/06/2009

(CNS): Members of the Legislative Assembly voted on the government’s stop-gap budget yesterday, which predicted a deficit for the four month period of more than $50million. Financial Secretary Kenneth Jefferson explained that as the four month expenditure predictions and the anticipated revenue predictions were based on the same period in 2008, government spending would once again outstrip government earnings, leaving a significant shortfall between the two that would be made up out of the government’s new borrowings.

Speaking in the debate on Monday, 29 June, Jefferson explained that of the $573.6 million the government was asking the House to approve, actual government operational costs would be around $185 million, while earnings were expected to be only around $134 million, creating the deficit.

As the government had to approve some form of financing in order to pay bills, meet debt payments, as well as payments on capital projects, the financial secretary has said this budget is simply a continuation of the previous government policy direction, based on last year’s statistics that will provide the current government with lawful funding until it creates its own policy statement and new budget.

He emphasised again that it was not a reflection of what would be the full 2009/10 budget, which would come before Finance Committee once the government had defined its policy objectives, probably in September. He noted that some of the pre-appropriations were for outputs (spending) that had to be paid now but could cover the full year or a substantial part of the entire year’s spending, such as scholarships or payment for the Government’s Office Accommodation project.

He said, too, that civil servants would not necessarily spend the entire appropriation, but warned that government earnings could be even less than predicted given the state of the global economy.

Answering some of the questions raised by members, Jefferson noted that the Special Police Investigation Team’s appropriation of $1.5 million was based on a third of last year’s spending as he said the Portfolio of Internal Affairs was unable to provide any information on what was happening with SPIT and what they would need, but Jefferson said as the investigation is continuing it was prudent to allocate some funding for it.

Although Jefferson answered some of the criticisms hurled at him from the opposition benches on Friday regarding his sudden revision of government finance for this financial year (see Jefferson hits back), he did not address the fundamental question which had been raised. He did not explain why he had stated on 5 May to the then Cabinet that predictions for the financial year 2009/10 were holding true and government was on course for a $29 million deficit but then, around one month later, had offered entirely different statistics to the incoming administration. Jefferson, however, said he would offer a statement in due course.

Continuing his own speech about the appropriations, Education Minister Rolston Anglin insisted it was not a budget and not a reflection of what the government intended to spend over the year. He warned however, given the economic situation, that there would be a deficit in any budget the new government creates because of the costs, borrowings and global situation, and he said people could not expect the new United Democratic Party to sort out the problems overnight.

Despite his comments on Friday that the civil service and his own ministry in particular was over manned, he said there would not be any personnel cuts and he said the government was not prepared to send people out to find work in a soft private sector market. However, he said the government would work diligently to cut costs.

Before the motion was put to the vote, Jefferson noted that as government borrowing and revenue had now surpassed the net-debt ratio limit of 80% and cash reserves had fallen below 90 days, the House would have to seek approval from the FCO for any new borrowings from 1 July.

Following thecall from Leader of Government Business McKeeva Bush for a division, the members approved the appropriation by a vote of 15 ayes and one abstention from the third elected member for George Town.

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Comments (9)

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  1. Anonymous says:

    No matter whose fault it is, there is one thing for certain: the govt needs to cut deep in its budget otherwise Cayman will have so much debt it won`t be able to function. Law enforcement, education, health care, road work, tourism, etc will all suffer if the McKeeva is too weak to make the required tough decisions. I wouldn`t be surprised to hear of salary cuts or lay offs within the overstaffed civil service, sadly.

    • Anonymous says:

      PPM fault

      The PPM has destroyed the country’s finances.

      If we have a deficit now – what do you believe will happen when the schools are finished and we have to employ 100 new employees?

      PPM should have spent our money better.

  2. Anonymous says:

    Thanks PPM for ruining the finances of the Country.

    Alden & Kurt should be proud of themselves.

    • Anonymous says:

      Your comment clearly shows a lack of understand or deliberate ignorance to the global financial situation and the impact it’s having on, not only Government revenues, but private sector profitability as well! Do you even know the sources of our Government revenues? Do you truly understand that this is happening everywhereand we are certainly not immune to to this global crisis.

      But it is never too late to educate yourself! start by looking at the budget document that is available on the Government website and ask your MLA’s questions to clarify and issues you may have. Come on take the challenge and impress us with a more informed unbias intelligent comment in the future.

      • Anonymous says:

        When Mac told Kurt to slow down on spending Kurt said ‘no, we can’t live in fear’ – so now we are living in debt.


    • Anonymous says:

      Jeffereson is the one that should be thanked….. because it now looks like he doesn’t know how to calculate.  He is giving one figure when one party is in and then another when the other is in,  he sounds to be a typical UDP person.  I wonder if they don’t get back in the next election what he’s going to say then, I know if I was the new government I couldn’t work with him.

      • Anonymous says:

        The PPM is, again, trying to suggest that it was mislead.

        Why does the PPM  always blame everyone except itself? Luckily the people know better and voted 1/2 of them out.

        The remaining elected members of PPM needs a break, just like chuckies, ossy, lucille and whatever the other guy from george town was name again.

        • Anonymous says:

          To: Anonymous (not verified) on Tue, 06/30/2009 – 12:14.

          Perhaps you need to get a clearer understanding of the role and responsibility of the Financial Secretary. Any govt. will dependent upon an accurate statement of the financial affairs of the country and it is his responsibility to provide it.  Forget the UDP vs. PPM rhetoric and just focus on the issue at hand.

          • Anonymous says:


            The PPM are laughing at the good people of the Cayman Islands who trusted them to manage its affairs properly.

            Remember their election brag to "take the country back" – well with the debt they left the country in, there is little doubt that the people can have it back now.