CIG overdraft reached $25m

| 19/01/2012

overdraft.jpg(CNS): Despite claims by government that it has stabilized the public finances and ended the last financial year with a surplus of over $20 million, the premier increased the government overdraft in December by $10 million in order to pay its bills. As a result of cash flow issues, McKeeva Bush wrote to the overseas territories minister on 23 November asking him to permit the Cayman Islands Government to increase its regular overdraft facility from $15 million to $25 million until the end of last year. The extension on government’s current account with the RBC Royal Bank to assist with its cash flow issues cost the public purse some $50,000.

Henry Bellingham, the FCO’s minister, permitted the extension on the government’s temporary borrowing, the governor’s office confirmed, but it had reverted back to $15 million by the beginning of January.

“From1 January 2012, the Cayman Islands Government has been operating on the grounds that its overdraft facility has reverted to its traditional CI$15 million level,” a spokesperson from the governor’s office confirmed. “Any subsequent request for use of the additional $10 million overdraft facility will require separate approval by the FCO.”

In his letter to Bellingham seeking the approval, Bush said that need for the extension was predicted on cash flow statements sent to the UK which had also been estimated in the 2011/12 budget appropriations signed by the governor. He said it was merely a temporary request as government anticipated that cash flows in January would improve as a result of the fees government collects at the beginning of the year from the financial services sector.

Although only a short term loan, the overdraft extension comes in the wake of claims by premier that his government would engage in no further borrowing over the next financial year and at a time when he had emphasised his government’s success in managing the public finances.

 In his New Year message to the people he said the state of public finances has been steadily improving since May 2009. “In the current fiscal year that will end on 30 June 2012, government willnot borrow … I therefore expect that during the present government’s four-year term, there won't be any borrowing,” he said.

Bush said he had reduced government’s debt and the message on borrowing was clear. “The present government minimizes and avoids borrowing wherever possible, whereas the previous government significantly increased the country’s public debt during its term,” he added.

His government had done well on addressing the deficit, Bush claimed, as at the end of the financial year 30 June 2011, central government achieved an unaudited surplus of over $20 million which was why the government rewarded civil servants for their hard work by reinstating the 3.2% cost of living adjustment in December.

See Bush’s letter requesting permission to extend the borrowing on government’s overdraft facility by $10 million below

Category: Politics

Comments (53)

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  1. Anonymous says:

    That's just the overdraft.

    FOI question #1:

    What is the TRUE deficit once we take into account all the unpaid bills at 31st December?

    • Chris Johnson says:

      So Mr Bush borrowed $10m to pay off 2011 debts to be paid out of January CIMA fees etc etc. In my day we called that a Ponzi Scheme. As the Minister of Finance and former director of First Cayman Bank he really needs go back to school. At least Benson and Truman who sat on bank boards had worked in a bank and consequently understood finance.

  2. Anonymous says:

    Idiots should not be allowed to run a country or give me thumbs down on this comment.  Let's all bow our heads and pray. "Dear God, please deliver us from McKeewa"! Amen.

  3. Anonymous says:

    Reduce that overdraft by several million IMMEDIATELY, make RYAN pay up now!!!!!!!!!

    It won't reduce the deficit but it will help cash flow immensely and cut the interest payments due on the overdraft. 

  4. Knot S Smart says:

    We need to get Mickey Mouse to do our accounting!

    Umm. Just wondering – who is in charge of our finances these days?

  5. Anonymous says:

    At 9:15 I know what the thebanking laws and my contract stipulates which it is confidential up for 10 years after I leave to not speak. Do the math its more than 25 years later and I will speak the truth and not lie just to blame one party.

  6. Anonymous says:

    Why are we discussing the same crap over and over again with no different outcome?

  7. Scrooge McDuck says:

    " My fellow Caymanians I would tell you the state of our finances."  " But, then I'd have to kill you."

  8. Uncle Bulgaria says:

    Overdraft, underdraft, wombling free; the Wombles of West Bay, common are we…..

  9. Anonymous says:

    Consider that this overdraft is WITH the $40mln in unallocated/frozen Environmental Protection Funds.  Appalling.

  10. Anonymous says:

    Wasn't there just an announcement that we have $40m reserve acquisition of land/environmental purposes? Why would we need to get an overdraft that costs $50,000 when we can pay the $10m back in the reserve a month later? Makes no sense.  

    • Anonymous says:

      We can't pay the $10,000,000 back into the reserve a month later and we are already at our maximum allowed to be borrowed even with the reserve as a guarantee.

      • Anonymous says:

        I think you misunderstood either the article or my post or both. I was not suggesting that the reserve be used as a guarantee for more borrowing. I was suggesting that there was no need for any more borrowing since we have a reserve that would have cover the additional $10m needed. The temporary increase in the overdraft facility was expressly on the basis that it would be paid back in January. January is a big month for incoming revenue for govt.     

  11. so Anonymous says:

    What this country needs are more unemployed politicians. —   Edward Langley , Artist (1928-1995)

  12. Anonymous says:

    Macanomics has been exposed once again!!!

    No need to fret, Cayman…the Chinese Yuan soon come.

  13. so Anonymous says:

    In other words CIG has failed to comply yet again.  Incompetentkind?  What happens to a person who spends more than they have?  Again and again?  Would you call them a fool?

  14. Anonymous says:

    No surprise there is a rush for everyone to draw on the pension monies.

    Last pig at trough goes hungry.

     

  15. Anonymous says:

    I don't care what any1 says you should be qualified (on paper) for certain jobs….politics in particular is a must. We have a grown man with the mind of a 5 year old running the country which equals disaster. Common sense ain't cutting it cuz that he lacks as well. Keep on digging our graves a lil deeper Sir Mac.

    • Anonymous says:

      Some people are going to take a long hard look at their 5-year-old and be offended by your statement.

  16. Confused says:

    Is anybody in leadership (Premier, Cabinet Ministers, FS, Deputy Governor, Governor) capable or willing to tell the citizens and voters of Cayman the truth or is this just agame for the elected govt and head of the civil service?

    What happened to the ‘surplus’ they all bragged about and reported to the FCO? Every week a new lie and false proclaimation to further embarrass themselves and the country.

    Here’s an idea lets demand that all who are respondible for the mess Cayman is in Cut the salaries of all the over paid jokers, fire them for poor performance over the past 10 years and do not elect anybody who remains in politics because they need the job in 2013.

    • R.U. Kidden says:

      I agree, Mr. Confused.  And they should stop coming up with all the stupid multimillion dollar "projects".  You can't get out of debt by spending more.

  17. Anonymous says:

    who cares?……deficits or surplus…it changes each month….all we know is that nobody know s the true state of the countries finances due to the incomptetence of the government and the civil service……..

  18. UDP Truthalizer says:

     

    "Surplus" – "Deficit"

    • So says:

      See saw…..

      Politics is all about illusion! marketing and sales. Unfortunately most of them have an imaginary product that they are very effective at selling to us. 

  19. Anonymous says:

    Government is already far to large, expensive, and inefficient. And it just gave itself a COLA raise. In the meantime, its revenue is declining, and the private sector contributing  it is fighting to stay alive.

    Cayman does not need 18 MLAs to represent 16,000 voters, a ratio that is 71 times higher than Jamaica, for example.

    Just looking at the annual budget is a revelation. Look at the proportion of income that is being eaten up by the cost of Government.

    Now there is somewhere to look for cuts.

    • Anonymous says:

      Are we really looking to Jamaica as a model of good governance? It is silly to compare the number of representatives in a much larger country. If you make the comparison with Bermuda you will find that we have fewer representatives on a per capita basis.   

      • Anonymous says:

        And you would look to Bermuda as a model of good governance?

      • Anonymous says:

        It may not seem possible BUT, Bermuda is more screwed up than Cayman!

      • Bling man says:

        O.K. mon.  Lets compare wid the USA.  How menny reps dey havin per citizen?

        • Anonymous says:

          If it is silly to compare to compare Cayman to Jamaica because of the great disparity in size it must be ludicrous to compare it to the U.S.  Duh!

  20. Anonymous says:

    One can only imagine just what that overdraft would look like of Gowerment had paid up all it's outstanding bills by year end. God help us.

  21. Anonymous says:

    So the year end surplus of over 20 million included a $25 million overdraft facility. Very well done, Mr. Premier. Did you learn that in China or Jamaica?

  22. Anonymous says:

    …"unaudited" surplus…

     

    A concise phrase; it says much with few words.

  23. Anonymous says:

    Ah please from when i worked at Barclays bank in the late 80 and 5 years after the account was always in the red. Guess what tourism was better then also and no pressure from USA with money laundering.

    • Anonymous says:

      It is inappropriate of you to broadcast this knowledge, regardless of the age of information or its accuracy.  Any privileged information regarding a client is property of the client and provided to the business on a good faith that it will be held confidentially and used as directed by the client. You have stolen information and made it pubic, regardless of vagueness.  

      • Chris Johnson says:

        Unless fraud or laundering is involved and who knows here? Thanks for boring advice. Perchance you are a lawyer?

  24. Anonymous says:

    Isn't the harsh reality of all this that, without proper accounting, nobody knows how much money is flowing through the CIG accounts.

    If you ran even a small parish council like this in the UK the elected representatives would all be suspended and outside managers would come in to sort out the mess. 

    • Chris Johnson says:

      You forget, we are in the Bermuda triangle where things go missing without explanation as in First Cayman Bank. We will never know. It is another issue of Unsolved Mysteries. I just love that programme.

  25. Anonymous says:

     Xxxx, xxxx, pants on fire!

  26. Anonymous says:

    Well this ought to start some good anti UDP Commentary…

  27. Anonymous says:

    SMH