Budget calls for $12m surplus

| 13/06/2011

(CNS): Although the premier has said no civil service jobs have been cut and only one new fee has been introduced in the 2011/12 budget, the latest government spending plans will end with cash left over. Under the theme of 'Maintaining fiscal discipline’, McKeeva Bush said there would be no new borrowing over the coming year and the 2011/12 budget called for a $12.1 million surplus. He also predicted that the economy would begin to show more signs of improvement this year and claimed that government had achieved a considerable feat by turning the country’s finances around.

“Operating revenues are expected to be CI$535.8 million in 2011/12,” he said. “Operating expenses are projected at CI$489.9 million … so that the surplus of central government, after deducting CI$33.8 million of financing costs, and expenses arising from foreign exchange transactions, is forecast to CI$12.1 million.”

In his budget address the premier claimed that so far his government’s economic policies were working and the country was back on the right track with an improvement in economic performance.

He said government earnings were more than expected last year as a result of more duties and property taxes being collected. Bush revealed that despite his instructions to the civil service to return a $15 million surplus for this fiscal year end 2010/2011, it was now expected to end with only around $4.5 milllion to spare, leaving him $10 million short for his recently revealed wish list.

However, despite not getting the $15 million surplus he had wanted, the year-end figures are still expected to be way better than predicted. Originally the 2010/11 budget had called for a deficit in excess of $31 milllion.

Bush predicted that government revenues would continue to improve as the economy grew and he promised that government would begin to address the public debt.

“The Government is not budgeting for any new borrowings in the fiscal year 2011/12,” he said. “This is consistent with the government’s fiscal strategy of financing the development of new infrastructure through operating cash flows, and utilisation of certain assets by undertaking Private Financing Initiatives (PFIs).”

He said this was “a major accomplishment” and a policy change from the past. “It demonstrates in a most profound way, one of the significant benefits of the maintenance of fiscal discipline practiced by this administration,” he said as he claimed credit for improving the state of government finances.

“The fiscal discipline has reduced the need for external borrowing and therefore reduced financing costs. As a result, the available resources can now be diverted to provide services which the public needs. Furthermore, the country’s debt burden will fall — thereby protecting the public’s purse.”

He said central government debt was expected to fall to CI$599.3 million by the end of next year from its current levels of CI$625.9 million. 

Although he said there were no cuts in civil service jobs, he didn’t say how an expected CI$8 million deficit budget had been turned around in the space of a week to return the $12.1 million surplus.  

Bush promised only one new fee, which relates to the introduction of regulations for certain types of funds previously unregulated. 

“The government will introduce a single revenue measure during the course of the 2011/12 fiscal year: the hedge funds sector, certain 'master funds' will be regulated by the Cayman Islands Monetary Authority (CIMA) – just as they are regulated in other jurisdictions – and those funds will be required to pay a very modest fee of CI$1,500 per year,” he announced.

Government had received representations from leaders in the local financial services sector, he added, that the fee could be introduced without any adverse effect. He said $4.5 million from the fee would be used to provide a rebate to CUC on diesel duty, which would be passed on to residential consumers.

He also announced plans to examine the proposal for daylight service and that he would be seeking and to enlarge the local population, which last year’s census had revealed was on the decline.

“It is accordingly imperative that my government forges ahead with an immigration policy which seeks in a responsible way to increase the country’s core population with the right people. In the absence of such a policy, the revenue base is too concentrated on a limited few; and social entitlements become more expensive per head,” he stated.

Looking ahead, he said the anticipated domestic economic growth would also stimulate population growth. “In turn, the growth of the population serves to stimulate domestic demand. It is therefore expected that the pre-crisis population level in the Cayman Islands will be re-established by fiscal year 2013/14,” he added.

Bush also said that while government spending was restrained, the private sector would boost local economic growth. “For the next three fiscal years, it is anticipated that revival of domestic demand will rely mainly on household consumption and on investment in residential and non-residential buildings as various private-sector-led projects are commenced,” he said.

“Once underway, the government’s proposals for cruise-ship docking facilities, airport improvements, developments at the Turtle Farm, the start of developments in the Special Economic Zone and the construction of medical tourism facilities will positively impact the previously subdued growth outlook and, over the next three years, GDP should grow with a positive impact on the citizens and residents of the Cayman Islands and on government’s finances.”

He predicted, however, that weakness in demand for rented housing would have a dampening effect on inflation, with the rate in fiscal year 2011/12 forecasted at 2.1% barring major shocks in global prices.

Unemployment, he added, was expected to remain above six percent (6.1%) a marginal decline from the previous fiscal year. “It is expected that there will be a firm upturn in employment in 2012, on the expectation that the financial services industry, as well as the tourism industry, will show a broad-based expansion in the second half of 2011,” the premier predicted.

Bush noted that the country remained in challenging times but that his government had brought a new rigour of fiscal discipline.

Over the last two calendar years (2009 and 2010) the Cayman Islands’ economy contracted by approximately 11%, yet the unemployment rate increased by only 0.7 percentage points, he added. Bush said policy makers, were conscious of the ramifications of unemployment to the extent that it has to be treated as an ultimate indicator of the country’s economic performance.

He claimed that it was remarkable that government has had been able in a difficult economy to turnaround the Cayman’s fiscal condition.

“This augurs well for the government’s objective of creating a vibrant yet stable and sustainable economy: that is the single most important requirement for the creation of sustainable jobs,” he said.

See full budget statement below.

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Category: Politics

Comments (44)

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  1. MER says:

    How can we have a surplus and improved economical conditions with a suppose $500 million debt and reckless politicans???

  2. The Lone Haranguer says:

    We need to pay off this huge national debt, put a $1 extra per gallon tax on all fuel that comes into this country thia will raise $100 million dollars per year, we pay off the debt in 6 years then we begin building a soverign fund for the future after that.

    Sacrifice now live large later.

  3. Anonymous says:

    Without reliable reporting this is easy:

    DB: Misc Receivalbe $15M

    CR: Misc Revenue $14M

    Tadaa!!  Balance Schmalance you anti UDPr's

  4. Anonymous says:

    Collect the Millions that is owed to the Government by Ritz Carlton or Micheal Ryan or who ever it is. My question is why isnt  McKeeva pressuring them to pay up this money knowing that counrty is in such debt and millions is owed to them. Stop with the BS about cutting peoples  jobs and hiking fees collect these millions that is owed. And about PPM  put is in this Debt  I  dont care for either party but the Finaical Secretary should be explainning how could one government have x amount of funds available to them While in control  and when the new government take over the country is in  such debt. No wonder England is giving us a hard time.

  5. Anonymous says:

    he needs to collect the 6 million owed to government from Mike Ryan, every little bit helps nowadays

  6. Anonymous says:

    Where does our government spend most of its money?

    Of the money that it spends where is it used most efficiently, or rather what has the greatest net impact on the economy?

     

  7. Sachamo says:

    Its time to do the obvious Mac, reduce the size of the civil service even though it is political suicide. Be courageous

    • Anonymous says:

      hahah….he hasn't got the guts

    • Anonymous says:

      yup… political suicide and also mean an increase in unemployment, which means an increased in crime. there are many reasons why we just can't arbitrarily reduce the size of government. it can also effect government services and pose harm on the private sector. rather, i think what the premier mention about public-private partnerships, would be a better option to pursue

    • The Lone Haranguer says:

      Yeah Sachamo, but then the do nothing no ideas crowd will get back in by promising to give them back everthing probally with interest, and they will bankrupt this country over the next 4 years because they have no good business ideas and they are big spenders.

      Mac going to try and grow us out of this problem while continuing to allow the civil servants to suck at the teat of the cash cow,

      me make joke we actually have perhaps the best civil service in the world but that does not mean it won't kill us.

      • Anonymous says:

        Mac is GOING to 'TRY' and grow us out of this problem. And here we are thinking Mac started 'TRYING' to grow us out of this problem two years ago. Sorry Mac, we need to retract two years salary and double pensions.

  8. Anonymous says:

    Taa daa $12m surplus.

    Hokus pokus ala kazaam. Me thinks the budget is a big sham!

    Whether it is or not is almost irrelevant now. So many people (Caymanians, residents and apparently the FCO)  just don't think MacDinejad is credible.

    A "desk clerk" has now been appointed to review the numbers. This crisis of confidence has been perpetrated and perpetuated by Mac himself with the "We is broke" speech and the constant blame casting.

    Caymanians, please think carefully the next time you go to cast your vote. We need to avoid this international embarrasment in the future.

  9. Anonymous says:

    The unemployment rate will only go up. We have over 300 graduates this month alone – where are they going to get jobs. Furthermore, it would be intereting to see how many of them are employable anyway. You say the financial and hospitality sector will grow and needs these workers – how funneeeee half of them wont have the education standard to go into finance and the other half will want high paying jobs and not be able to do them and think its beneath them to work in hospitality. Until we change the mindset of these caymanian youth we are doomed.

    • Anonymous says:

      You know…of all the complaints made with very few solutions offered regarding employment in Cayman, I am yet to hear of one that supports our youth or adults seeking employment abroad.  The above blogger complains that we have 300 current graduates seeking employment – I suspect almost every one of them has a Cayman/British passport (as of 2002) which allows them to work in any EU country without a work permit.  Why don't we as Caymanians seek employment in the EU for a few years?  We would gain valuable job experience and expertise working overseas with different groups that could be brought back to Cayman.  I never hear about initiatives to expand the Caymanian people's global views and knowledge by living off-island to improve themsleves (2 years at a college in Florida and returning doesn't count).   Only complaints about ex-pats coming here.  Even if you're not attending college you can still seek employment in the UK just like any UK high school graduate does and see how other workplaces function.

       

      Until a large number of us actually get off our asses and live abroad and experience life outside of our islands, we will continue to maintain the small-island/small-world mentality that plagues us.   We don't have to copy other countries, but we should understand them and that doesn't happen by sitting on the couch watching reality TV from the US.

       

       

       

      • Anonymous says:

        Best idea I have heard yet.Total win win situation. Now if some of Caymanians youth would just do it.

      • Anonymous says:

        Because the EU has its own unemployment problems – 9.4% according to the latest figures – and we are not likely to be welcome in that context?

  10. Anonymous says:

    Honestly from the whole politicizing drama with the public accounts figure with the transition from PPM to UDP everytime any numbers come out it is like reading a fictitious comedy. I have absolutely no confidence in the numbers presented by this or any government under this Financial Secretary. He flip flopped his numbers under PPM claiming he was under pressure duress which I am inclined to believe. However, as a professional there are basic standards of ethics and integrity that we have to adhere to and this is where he has failed miserably.

    If I am an independent observer with this thought process what of the international investor regulator etc?

    We have always prided ourselves on the high standards of our financial industry. However dropping the standards of our laws to hide our incompetence will cause irrepairable damage to our international reputation and our credibility. We have always had a reputation of a stable corrupt free government but we are quickly eroding this daily! I work in the funds business and I can assure you all it takes is a click of a button (in the simplest of terms) to have a significant amount of money leave this jurisdiction!

    Cayman Finance really needs to have a strong word with the Premier before the fallout of this crap hits the international press. Our reputation is currently under serious threat!!!

    I am appalled at Rolston.

     

     

  11. Anonymous says:

    Where are the figures on each ministry?
    What is being spent on crime, education, health, tourism, the port, the airport etc?

    The facts need to be shown to all.

  12. Michael Mouse says:

    Just imagine how much better the budget would look if Mac had the guts to stand up to the civil servants?

    I would make a FOI request for the whereabout of the Premier's spine, but I have so many pending requests . . .

  13. anonymous says:

    Fortunately for all you UDP and PPM'ers, the Economy HAS turned around this year and more moneyis flowing. It will continue to get better.

    You all will only have to fight over what caused it to get better but you will all maintain your jobs and hopefully move forward and pay your bills.

    For the UDPers- The confidence the Government has given to the private sector has made this happen and hard work with government/private partnerships agreements. This is true.

    For the PPMers- The private sector was tired of waiting on the Government's lead and announced projects and moved ahead with their own projects. This is also true.

    Ok Cayman, lets move on now…the economy is improving, you all will be better off.

     

  14. Anonymous says:

    Is this using the new lowered standards, or the old 5th grade accounting methods?

  15. Anonymous says:

    Can McKeeva explain how the Cohen Loans fit into his new fiscal policy?

  16. Anonymous says:

    I hear that ourLaw Enforcement budget has been slashed.

    No persons to fill the already vacent posts, and no replacements for those that leave.

    Oh and UDP please dont try to blame the Commissioner or the Governor when crime does go up as it is sure to do.

    Yes the Governor is responsible for security and the preservation of Law & Order but its the the elected  Government that controls the budget/finance of the departments.

    Buckle up Cayman, its all down hill from here; expect the crime rate to climb, and our Tourism industry to feel it.

  17. Jamba Laya says:

    "…turnaround the Cayman’s fiscal condition."   HAAAAAA haahahaha!!  Man that Mac has a sense of humour that just won't quit.

    Now for the voting:

    Those who believe that Mac's projections are good and useful, please give me a thumbs down.

    Those who think that Mac's economic projections are nothing but a steaming cloud of gaseous recta ejaculate, let's have a thumbs up!!

     

  18. Anonymous says:

     I believe in the Easter Bunny, the Tooth Fairy, that the Moon is made out of green cheese and that the Cayman Islands will have a budge of 12m surplus with out audited financial statements. 

     

  19. Whodatis says:

    (A repost.)

    In this year of 2011 they are enduring areality of almost 20% of its children being fed, clothed and housed by the government in our "mother country" – the United Kingdom – the worst rate of all the nations that make up the European Union.

    (Tranlastion: The UK economy is quite FUBAR.)

    I said that to address your overall argument of a lack of "educated" individuals at the helm and within the electorate of the Cayman Islands being the cause of our new and first-time-ever set of economic circumstances.

    No western nation has had the benefit of "educated" indviduals at the helm to a degree higher than the UK but look at the state of it today!

    "Education" is NOT the key my friend – a proper and functioning system is the key to creating a successful country.

    (Furthermore, you appear to be under the impression that the majority of Brits (its electorate) are educated, upstanding and honorable people. Sadly, many educated people tend to believe that their country is made up of the category of people of which we surround ourselves. This is not the case my friend. There are tens of millions of "benefits Kings and Queens", thugs, yobs, hooligans, drunkards, criminals and all around low lifes that contribute to the population numbers of the UK – as like every other nation.

    E.g. If you have been paying attention at all you woild have noticed that the same old tricks of scaremongering is the tool of choice come election time in the UK. The main element being IMMIGRATION, RACE, and Religious / Cultural differences – and it works! Therefore, can we please remain fair and objective in our posts. The UK is no glorious and superior jurisdiction in this regard.)

    What about the last 3 decades of enviable economic success in the Cayman Islands? Were there "educated" people within the ranks and electorate that suddenly disappeared in the year 2009?

    How many countries can boast of having economic difficulties for the first time in almost 40 years? How many can present a track record of 30 years year-on-year financial surplus?

    The USA and UK are in a pit-hole economically, but they will never "collapse" simply because they OWN and MAKE the "MONEY" that controls the world … never mind the age old philosophy of "supply and demand" ("developing" nations are providing the resources and labor that enables the west to function). Add to this the backing of their military industrial complex and it is clear to the most basic-minded and honest individual that the "greatness" of these nations is a tremendous farce indeed.

    Sadly, even with all of the statistical evidence before us many still insist on spewing ridiculous, hypocritical and unreasonable arguments, judgements and criticisms against this tiny but prosperous island nation.

    Considering all of the above (which clearly is rarely done), I challenge all of the naysayers to present a single "great" western nation that can demonstrate a better economic track record (past and present) than the Cayman Islands today.

    • Anon says:

      As to your last point, how can we possibly compare economic track records when The Cayman Islands accounts have not been audited for several years?

      As a matter of interest will you please name a country or a society that we should use as a model for our development.  You are very scathing about the UK, the USA and European countries.  Where should we be looking for guidance?

      • Gert says:

        Canada's doing quite nicely, but there are natural resources there which Cayman doesn't have so the comnparison wouldn't work.

        We'd need another group of islands that had nothing of substance other than an ability to host tourists (who liked to pay high prices or go diving, or both), and then look what they did.  This isn't a dig at Cayman – we just need a proper comparison. 

        Some might add that we can also host off-shore entities for tax plans, but frankly any off-shore jurisdiction can do that, so let's not hang our hat there just yet.

        • SMB says:

          Gert,

          You are actually a little off the mark here. I don't know if you noticed, but over the past two years both the UK and the US governments sent submersibles into the trench south of Grand Cayman. The interest in this area coincided quite closely with an announcement by the Chinese Government that they were going to stop selling 'rare metals.'

          About twenty miles south of George Town there is a short 'spreading centre' where the plates move away from each other. In this area there exists deep sea vents (black and white smokers). It is believed that over millions of years these vents (and others that are now extinct) have concentrated billions of dollars worth of rare earth metals. The same metals that go into every mobile phone and computers and which the Chinese have now effectively monopolized.

          The sea floor is also littered with what are known as manganese nodules.

          Natural resource recovery in the exclusive economic zone south of Cayman may not be economically feasible now, but it is actually quite likely that Caymanians will once again turn to the sea around them for their livelihoods in the future. Once the EEZ is settled with Jamaica and Cuba, Cayman will have exclusive economic rights to about 40 thousand square miles of sea bed.

          • Gert says:

            SMB, thank you for this information.  I learned something new today.  I looked this up in WIkipedia, but that suggests that the EEZ around here might belong to the UK.  Is it Cayman's?

            • SMB says:

              The EEZ will belong to Cayman. It has been delineated with Honduras already. Negotiations are due to resume with Cuba and Jamaica. The settlement of this area should be prioritised now. Unfortunately until the boundaries are clearly defined there remains the possibility that 'discoveries' could result in legal wrangles over ownership. This would be a great blow to the Cayman Islands.

              I personally think the medium to long term future of Cayman must be in this zone (we have only 100 square miles of land area). We should begin actively trying to develop strategies for reaping economic benefits from this area. The International Sea Bed Authority is based in Kingston, Jamaica and we do not currently have a representative attending the meetings.

      • Whodatis says:

        I agree, the situation that we have found ourselves regarding our accounts is quite unfortunate and was completely avoidable.

        As for where we should be looking for guidance, it is impossible for me to fully endorse any given nation today as they are all either enforcers of or subject to the inherently corrupt monetary system that currently rules the world. (To the uninformed individual that may come across as a vague or random things to say but all I can do is encourage each and every person to gain a better understanding of our monetary system. If upon completion you are not shocked and appalled then you have failed in your task.)

        However, in regards to an approach to administration and accountability, I would imagine that the strongest western national economy may be a good start, especially considering their rather "colorful" relatively recent history – Germany.

        Granted, theirs is not the most vibrant or inviting culture in the world, but when it comes to getting things done … they get things done! (And they manage to do without out-sourcing all of the heavy lifting as well!)

        The end result may not always be pretty, but you can rest assured that every effort has been made to make it as efficient and durable as humanly possible. Lastly, at the risk of promoting stereotypes, they are culturally obsessed with detailing every single transaction in life. The I's are dotted and the T's are painstakingly crossed, and this transcends into their work ethic as well.

      • Anonymous says:

        right, as if accounting standards are any standard to live by.  lehman brother's attest to that fact quite clearly.

         sheep…

    • Forelock says:

      Er, Germany?

      • Whodatis says:

        Er, yes Germany.

        Do some research. Do not depend solely on CNN and BBC for your information on what is taking place in the world today.

        They (and most other mainstream entities) are no longer "news" corporations but mere cheerleaders for the propaganda machine that results in the warped collective mindset of so many (western) Westerners.

        Germany has resisted both a housing market crash (which contributed in a major way to the economic collapse in both the USA and the "follow-fashioners" UK) and the outsourcing of the majority of their key industries to far away countries.

        Granted they are experiencing challenges in regard to unemployment, however their future is looking bright at the moment as in the middle of this ongoing global recession their economy has never been stronger.

        Don't take my word for it though – research it for yourself.

        *Food for thought: Germany now controls a majority share of the recent merge with the NYSE.

      • Whodatis says:

        Lol!

        You got me … twice at that! Good job.

        (Perhaps thrice as you used my own points against me.)

        Yep … its bedtime.

        *I'm on the road this week, limited to composing on a tiny mobile phone – hence the uniquely flawed presentation of my posts.

        :o)

        (Btw, where have all the aliases gone? 95% of the posts these days are "Anonymous" … not much fun anymore folks.)

         

  20. Anonymous says:

    It's possible that the government sucking up a half a billion dollars every year is having an adverse effect on the economy since much of the government's spending is, shall we say, less than productive. It's a miracle that that much can be extracted from the private sector in fees, duty, etc.  Better hope it continues because there has been a big disconnect from reality during the 10% downturn in the economy.

  21. LMAOOO!! says:

    LMAO…….Mac "claimed that government had achieved a considerable feat by turning the country’s finances around."

    Show me the money on AUDITED financials that have been approved by the FCO.

    That "clerk in London" that Mac says has angered him, is very possible a qualified accountant with sound professional ethics!!!

    I'm another seriously concerned Caymanian wanting the very best for this country and its people, and expecting the best from our leaders!!

    • Anonymous says:

      He also claims that shortly things are going to start looking good again…I still haven't stopped laughing….he has been saying this for the past two years.  This is what got us into trouble in the first place, their was denial about the recession.  They finally realized it after two years, hello…..we are still in a recession.  People don't have money to spend, people are being laid off, businesses are closing, not only in Cayman, but all over the world.  We rely on tourism, if people don't have money they aren't going to spend.  If people have to go home after seven years, they aren't going to purchase any real estate.  I wonder what pot of gold he has found at the end of the rainbow to put back into Cayman?  Oh yeah Dart!!!   Dart seems to be the answer to all his troubles….remember the well does run dry!!!!

  22. Anonymous says:

    The amount of self praise and just plain bragging here is extermely disconcerting, while it is acknowledged in the same breath that both the economy and unemployment rates have WORSENED over the past two years. You (and the rest of the UDP in case you did'nt know it) were hired to do a job, MAC. Unfortunatey we can do no better than take your word that you might finally be headed somewhere in that direction. 

    • Anonymous says:

      That's right. And the crime rate hasn't exactly improved either. As a matter of fact it has gone from virtually non-existent two years ago to completely intolerable today, in spite of the Premiers assurances to the contrary. Now in the face of it all and in the middle of an unemployment crisis, he is talking about relaxing immigration policies to increase the population base? What are we going to do with the people? Unleash them on the streets to join the existing criminals? THEY obviously could use the help, since they currently seem to be addressing only ninety percent of the businesses, homes, and individuals in Cayman.  

  23. BORN FREE says:

    Yeah right Mac! That is why he does not want the country's finances audited, especially for the years 2007-2009, because the truth will be told & the people will realise that the country was not bankrupt as he has been shouting from the mountain tops. Now he can claim to have been the saviour & "turned" the economy around. He is playing games with people's lives (especially the civil servants) & think that we are so "fool-fool" that we can't see thru this stupidness. Mckeeva Bush, if the country was bankrupt in May 2009 prove it to the people by having the country's financies audited. Why bring special legislation to prevent this from happening?  

  24. Anonymous says:

    Is it true that civil service personnel costs are just as high or even higher than when all the so called "measures" such as a moratorium on hiring were imposed?