Surplus falls short of target

| 01/06/2011

(CNS): Although next year’s budget has not yet been finalized, civil servants tell CNS that the public purse is likely to end this year with a small surplus but still short of the premier’s $15 million target. Despite instructions from McKeeva Bush, as minister of finance, to senior government officials to rein in spending during the last few months of the year, CNS has been told that the final core government surplus is likely to be around $4.5 million — more than ten million less than the premier had asked for. However, the final result is still an improvement given that the original predictions for this financial year was for a deficit of over $30m.

In a memo circulated to senior government officials last month the premier had said predictions of a $5 million deficit at that time were unacceptable and he said he needed a $15 million surplus. Bush explained that he would be using $5 million to pay down debt, another five to meet pension liability payments and the last five million would be used towards next year’s operating expenditure.

However, with some ten million dollars less to play with than he had hoped, Bush will need to decide whether the government loans, the pension issue or next year’s expenditure needs the small surplus most.

Speaking on Cayman 27 earlier this week  Bush said that next year’s budget was still in the hands of the UK and the OT minister  Henry Bellingham  who is said to be concerned over personnel costs. The premier will not be able to present government’s spending and earning expectations for the next financial year until the FCO gives its approval.

Bush also confirmed recent speculation that next year’s spending plan calls for a total deficit of around $8 million, despite the original goal as agreed with the UK of a $10 million surplus. According to the three year plan which was agreed between the FCO and the CIG government in May 2010, prior to the start of the 2010/11 financial year government was expecting to deliver a budget surplus for the forthcoming financial year, after an anticipated deficit this year of around $30 million.

However, Bush told the TV station that he was not able to make any more cuts on personnel expenditure, the area where the UK wants Cayman to cut its spendin, as that was in the hands of the governor or the deputy governor.

The latest civil service head count is around 3,600, which, despite entrenchment and recruitment freezes, is still a less than 10 percent cut on the service’s peak figure of 3,900 people in 2008. 

CNS has contacted the deputy governor’s office in connection with what, if any, cuts will have to be made to public sector personnel cuts in the next financial year, but so far there has been no response. The Cayman Islands Civil Service Association recently confirmed that it has not been informed about any new cuts in salaries or benefits in relation to the concerns of the UK. Nor is it clear if the portfolio intends to make head count cuts over and above natural attrition or the existing recruitment moratorium.

According to the three year plan (posted below) personnel costs were to have been reduced by 7 percent for the 2011/2012 fiscal year and byfurther 3 percent in the 2012/2013 fiscal year. It said that the targets would be achieved through a combination of divestment or restructuring of departments as well as through discussions between the governor’s office and the civil service.

The plan had called for personnel costs to come down from the 2010/11 figure of $228,647 to $212,642 during 2011/12 and then a further fall to $206,262 in the last year of the plan, when government is expected to have achieved a surplus of more than $60 million.

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  1. Anonymous says:

    Anti expat rhetoric

    If you want to be popular in Cayman say all the expats are taking jobs, suddenly you earn all the respect of Caymanians. This is true when you say were it not for them there would be more jobs. McKeeva  Bush shot to fame because of saying this in the 80's. However we need to ask ourselves with the reducing number of expats has the economy improved? If the answer is no then 'expats taking jobs' phrase has been overtaken by time.

    Tell Big Mac to worry about the volume of work permits within which Cayman needs for the next accounting period. These are the barrels of oil that Cayman must export. Unlike Opec that limits number of barrels is supply open your gates to the very learned not everyone.

    With work permits comes consumption that certainly boosts the local economy.

    To all residents it is the economy stupid, if somebody tells you to operate below the break even point they are a fox and they are like the PPM who have a name for progress but don't want it.

    A starting point should be to include more economists in the Work Permit Board. Lawyers are important for paperwork, but if you try to tell them about issue like elasticity of demand, fixed costs and marginal costs,etc I wish you luck.

    We should not fool ourselves therefore, so the government has fixed costs that must be paid at the end of the day like salaries for civil servants, sovereign debt etc.

    After establishing a breakeven point the government should opeare at the relevant range of this curve.

    The country cannot be competing with other jurisdictions if at all an investor gets hog wash when they want the relevant employees.

    When business is good offcourse the trickle down comes to Caymanians. The islands taxes will be enhanced because the volume of imports will be great, any other way someone is telling half truths.

  2. Anonymous says:

    here is a easy way to make 15 million.. collect from Mike Ryan what he owes which is i belive 6 mill and stop the Brack shelter project which is 9 and change million..easy!

  3. Slowpoke says:

    How about, if instead of wrangling over numbers that can't be substantiated anyway because there are no current validated accounts, we focus on getting on the “Happiest Countries In The World” list?  This list is based on the OECD Better Life Index (not exactly a left-wing, tax-Taliban agency).

    The top ten countries focused on good schools, a healthy environment, effective medical coverage and a stable social environment.  A political party here in Cayman, that makes its primary objective to get us on that list, will get my vote.  

  4. Anonymous says:

    To save on public sector costs, let's start with some simple ones:

    – Cut all unneccessary overseas travel for Premier and other govt officials.

    – On any travel that is strictly necessary, fly coach. If it's ok for us lesser mortals, it's ok for you.

    – On any overseas trips, wives and hangers on are not paid for out of public funds – make them pay their own way.

    – Get rid of Premier and Deputy Premier's drivers, housekeepers, 'security' and other unneccessary staff and perks.

    – Make Premier pay the country back for improvements to his personal property funded out of the public purse

    – ALL elected officials take at least a 10% pay cut. If the rest of the country has to tighten our belts – so should you.

    – Ban the MLA 'double dipping' of salary and pensions. In fact, ban this for all public sector employees.

    – Implement a 5% pay cut for all Civil Service employees at the top of the pay structure – e.g. Chief Officers etc.

    – Have all govt employees contribute 1/2 to their health care and pension costs – just as the private sector does.

    – Immediately stop all unneccesary vanity projects and those aimed solely at garnering votes in specific districts – the Brac's Hurricane Hilton and the Tower Building site 'bell tower' spring to mind first.

    – Stop paying 'consultant' fees to people like the Speaker's daughter, the failed UDP GT MLA hopeful, and other UDP cronies

    – Get rid of all non-essential expat contract workers within the Civil Service. There is no reason why a clerk should be a foreigner on contract. A doctor, nurse, police officer, teacher, engineer and others with specialised and much-needed qualifications and skills – yes of course – but not regular rank and file clerical personnel.

    – Cut down on the amount of rent paid out by govt departments and statutory bodies – move as many as possible into thenew GOAP. And yes that includes the CIMA.

    – Cut all govt department budgets across the board by 10% – except those that provide essential and emergency services – such as Education, Health, Social Services etc. When times are hard, we have to go back to what our famously hardy forefathers taught us – you cut the suit to fit the cloth – or the flour sack as the case may be.

    Yes – some of these measures may be uncomfortable. But true leaders will sacrifice for their country. For Civil Servants, some of these ideas would also cut their income – but having a job with less disposable income is a far better option than no job at all.


    • noname says:

      In order to do any of this the people would have to have SOME power or control over the elected leadership.  They don't.  Like it or not your all just along for the ride.  What does it take for you to realize you don't have "true leaders"?  They are what they have always been and always will be. Self serving, incompetent, egotistical, failures.  They will not change.  Everything they try to do just proves it again and again.

    • B. B. L. Brown says:

      Slowpoke, When you run for office let me know.  You'll have my vote!

  5. Anonymous says:

    There has to be a reason why the UK doesnt want to sign off on this budget . But the BIG quetsion is what is it that the UK is requesting becasue all I am hearing is second hand conversation. Mr. Bush has a lot ofmouth when he is on local tv but why dont he use some of that when he making all these trips to the UK claiming he doing this and that and I for one havent seen one thind this givernement has done beside run up and down touring the world.

  6. Anonymous says:

    is this the 2nd or 3rd sham budget over the last 2 years?

    • Anonymous says:

      I think this is sham budget no 3, but dont worry they have two more years an we have not seen anything yet.

  7. Anonymous says:

    What a mess….  It is clear that the UK have no confidence in the abilities of the Min. of Finance, the Financial Secretary, and others involved in running the country's finances.  Revenue numbers were positively impacted by some exceptional items this year (the dormant bank accounts initiative which yielded $9+M, the increase in work permit and other fees brought about by last year's hikes but it is expected that reduction in overall volume will reduce revenues in these areas going forward) and still there is a deficit this year.  The are major inefficiencies in the civil or should I say public service which need to be addressed, not only to reduce overall costs, but also reduce the volume of red tape which is a feature of this government.

    Get rid of some of those statutory corporations and merge those departments back into the respective ministries.  Get rid of some of those many boards that serve no meaningful purpose. Getting Cayman's budget problems is actually very easy as it can be done easily by addressing costs, the principal of these being personnel.  The FCO is on the right track.

  8. Anonymous says:

    UK taxpayers are about to revolt.  How much longer will they allow their taxes to be used to support struggling Commonwealth colonies (call them "leaches") while the UK economy continues to struggle with its own debt?

    Is the FCO really taking the first step to unilaterally declare independence for countries such as the Cayman Islands?  One can only wonder what the status of the Cayman Islands will be in five years.  Why should the UK continue to support a government that cannot fiscally support itself?

    • Anonymous says:

      You are a joke!  The UK taxpayers dont pay anything here and you know it! stop deliberately trying to stir up trouble. 

      • Anonymous says:

        On the other hand the people of the Cayman Islands sent $1M in aid to the UK to help them fight the Falklands war when the UK was out of money and almost out of ammunition. Yes the Cayman Islands has provided aid to the UK not the other way around. Do your research next time before you put foot in mouth !!!

        • Anonymous says:

          "Out of money and almost out of ammunition". Dear Jesus! No wonder furriners think we are total idjuts when someone (a Caymanian presumably) can seriously make this idiotic comment. As a Caymanian, I am deeply embarrassed and wish there was a stupidity filter on CNS. The donation, organised by Mr Bert Watler (God bless him), was a splendid gesture from a time when Caymanians were better, much, much nicer people and much less hateful towards foreigners, especially the UK. But to suggest the UK was running out of ammunition – well – what can one say? Are you a product of our government school system, Thu 12:45? Sigh.

    • Anonymous says:

      You appear to be terribly misinformed. The UK tax payers have not paid one red cent towards any of our obligations. We are by no means "leaches" (sic). Quite to the contrary the antics of UK personnel such as the former Governor, and Mr. Bridger have cost this country millions of dollars for which the Caymanian taxpayer should be reimbursed by the UK Govt.  Instead, the Judge from the UK has let the former Governor off the hook for Mr. Kernohan's suit when the handling of the matter was exclusively the Governor's remit and in particular it was his decision to terminate Mr. Kernohan.

    • Anonymous says:

      UK taxpayers?? The UK has never funded Cayman in any way. UK tax monies are NOT spent in the Cayman Islands, not now nor never before.

  9. Joe B says:

    The True position of the Government is the same as yesterday and the all the days before.  The ones choosen to lead the country are not up to the task.  In Days gone by the one with the loudest mouth might have done the trick but in todays world to be successful you must have a good education and training.  To keep expecting something usefull being done after nothing but dismal failures is truley insanity.  Only a move by the people themselves can change Caymans spiral into total failure and that is not likely to happen.  Cayman as it is known right now will not survive itself.

  10. Anonymous says:

    so what happen to taking on board the results of the civil service review? it looks like that was where they supposed to start getting the reduction in expenditure. this is same question ezzard asked. all this work doing civil service reviews and we don't see the recommendations being implemented. the uk plan even assumes that will be done to get the cuts, so why the delay. i thought the review was in second or third phase by now. miller is right again on this one. implement the suggestions and move on.

  11. Anonymous says:

    uk trying to put pressure to force income tax. simple. dont see how they will get any major cuts in civil service in this current situation.

  12. Anonymous says:

    as they say what is the true position? i bet we will still have a deficit at end of june. shambles.

    • Pending says:

      1. Does Government have audited Financial Statements for FYE 2008 -?


      2. Can Governement balance a Budget?


      3. Can Government account for a true position on their finances?


      Does Government spew F**kry?


    • Anonymous says:

      'WE' will most certainly have a deficit because of rising fuel taxes. Will the GOVERNMENT still have a deficit as a result of wasting the proceeds? The answer, my friend, unfortunately and shamefully, is a resounding yes. 

  13. Anonymous says:

    if what cns saying is true the budget is not worse than the plan so why government starving people and not paying bill to get extra money. makes no sense.

  14. Anonymous says:

    i dont understand why the uk would be pushing for more cuts if the current year end is on track to perform better than the 3 year plan which they themselves reviewed and approved. so my friends…lets hear the truth. is the fco really pushing for cuts or is there some politricks being played here.

  15. Anonymous says:

    this is confusing..the 3 year plan does not predict a surplus this year it forecast a deficit of over 30 million. this actually seems realistic and in line with what the PPm had recommended all along. so why is the government hellbent on achieving a surplus of 15 million! by forcing a fake surplus of 15 million all they are doing is not paying some bills. 

  16. Anonymous says:

    This must be one of those Faith-Based Budgets.  If the sermons don't add up, you are suposed to suspend your disbelief. They will generate a surplus out of thin air, and make debt disappear.  You will get sales pitches which amount to buying your vote with your own money. You will nead a calculator and lie detector to fathom the financial truth.

  17. Naya boy says:

    Yes we have alot more that know and practice Creative Accounting in dis ya Gowerment so many have PHD’s in Creating debt and not being accountable for it.

  18. Slowpoke says:

    It does no longer matter what Bush wants, the FCO will decide on this budget. 

    Seeing that we now have a Conservative overlord in the UK, cuts are going to come.  Although this will please Travers and friends, it will have the same disastrous results here as it has had on the UK economy.

    The lower and middle class will be punished, while the rich will get richer.

    Does anybody know what the GINI index (coefficient) is in Cayman?

  19. Anonymous says:

    It's simple. Let the civil service AND, repeat AND, the statutory authorities reduce by natural attrition and introduce contributions paid by the employee, not government on the employee's behalf, for health care and pension costs.

  20. Anonymous says:

    Surplus? Deficit? Given the chaos in the government accounts, no one knows the true picture.

    I know that there are some competant individuals in the Cayman Islands Government who understand accounts payable, accounts receivable, accrual accounting, debits, credits and data entry into a world class accounting system. Many of these individuals are Caymanian. Their frustration with the stupidity and/or corruption of their political masters and mistresses must be immeasurable.

    I really and truly wish I had a positive suggestion for a way out of this mess. Sigh. How does one deal with tribal stupidity and/or tribal smart corruption?

    I sincerely hope that Cayman can muddle through this mess.

  21. Anonymous says:

    Avoid a deficit by postponing paying current obligations until the next fiscal year and when the end of the next fiscal year approaches, postpone some payments yet again in order to keep that derived "surplus" going.  And in the end what do you have?  Yet another country in the same fiscal mess as the United States finds itself in today, but MLA's, don't let that bother you, just keep on spending!

  22. Anonymous says:

    CNS, at the rate they are still spending, even that $4.5 million is wishful thinking, by next month, watch for the announcement that the result was actually a deficit for the current financial year.

  23. Anonymous says:

    does anyone know what the true position is?