Archer exceeds his targets

| 26/05/2014

(CNS): The finance minister’s aim for his first budget was on target, the Legislative Assembly heard Monday, when Marco Archer said government expects to exceed the more than $100million forecast surplus for 2013/14 by more than $7million at 30 June. He also revealed that he would be looking for an even bigger surplus next year. Archer has forecast an operating surplus for 2014/15 of a whopping $128million for the entire public sector.  With the minister having achieved this year’s goal on paper, he said, CIG was also on track to meet the three year plan and be in compliance with the fiscal framework for responsibility and all the requirements of the public management and finance law by 2016. (Photo Dennie Warren JR)

The finance minister said prudent financial management was still at the centre of his budget strategy for the 2014/15 financial year. He pointed to strict controls on spending as well as enhanced debt collection and proactive debt management as the key issues.

According to the budget documents, Archer’s unaudited figures appear to be adding up so far and the surplus is being used to pay down debt, cover capital expenditures and boost government’s cash reserves as require by law.

Archer revealed that the operating surplus at the end of next month is now expected to be $108.1million rather than the forecast $100.2million. The surplus was due to more revenue than anticipated and a little less public spending than expected. Government was hoping to earn just over $845million from core revenues and from its statutory authorities and government companies but it is expected to end up taking in over $850million. Meanwhile, overall government and SAGC spending was squeezed down from an expected $549.4million to just over $547million. Government’s debt stands at just over $548.8million.

The minister explained that the revised revenue forecast was down to a combination ofpositive economic growth and new revenue measures approved during the 2012/13 financial year. The most significant areas of better than expected performance was on import duty which is now forecast to be some $5.1 million above original budget projections and mutual fund administrator licences which are forecast to be $4.2 million above original budget projections.

Meanwhile, the revised forecast for operating expenses was down to a series of cost reduction measures including a $3.4million savings in personnel costs because of restrained recruitment and natural attrition. There was also a $0.8 million decrease in financing expenses, due to lower interest expenses resulting from renegotiated interest rates on a portion of the debt portfolio and because government stayed out of its overdraft facility, the minister said.

However, he warned the savings were partially offset by a bigger than expected bill for overseas medical care for those who have either exceeded their health insurance cover or who don’t have insurance, which is forecast to be $ $1.3 million more.

Turning to the forth coming year Archer is aiming higher for 2014/15 and expects core government and the public authorities to bring in a combined revenue of a record breaking $872.6million almost $20million more than this year. However, as much as government is trying to cut its operating costs Archer is still predicting $744.6million will be needed to pay for operating cost and financing expenses which is more than this year’s costs of $743.9million because of the increase in staff and as a result of the statutory authorities.

Government will also be plugging the Turtle Farm’s operating losses and debt to the tune of $9.5million as well as $4.8million to Cayman Airways to cover its losses. The National Housing development trust will also receive $2.8million for its debts and another $1.5million will go to the development banks debts.

Archer announced a new sinking fund which government plans to pay in to over the next four years and it will be starting this coming financial year with a contribution of $4.3million. He said government will also bring debt down by a further $25million and not only will there be no new borrowing the CIG doesn’t require an overdraft facility for the 2014/15 financial year. He noted however, just weeks away from the start of the hurricane season, that the UK had agreed to that facility should Cayman face any natural disasters this year.

Archer also revealed that the delay in the budget was not down to government waiting on the UK as he said his final spending plan was not sent to the FCO until last Monday and the minister gave the go ahead just two days later.

Describing his budget as once again fiscally prudent he said it was not just about complying with the Framework for Fiscal Responsibility but for future of the country. He said the budget provided a healthy surplus, to fund capital expenditures, the cash reserves and reduce debt.

See the full budget in detail in documents posted below.

Category: Politics

Comments (25)

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  1. Anonymous says:
    Ah no. 
     
    The operating surplus has nothing to do with the government doing a good job rather almost all of it comes from increasing 83m in taxes from financial services (47% increase)and increasing 10.5m from tourism (52% increase). If you want to kill off the goose that lays the golden eggs you certainly are going about it correctly. 
     
    And after our operating surplus you still need to fund money losing statutory authorities, meet your debt payment obligations, and spend something on small capital improvements to maintain the status quo. The surplus quickly gets evaporated to near nil and are these not also operating expenses??? 
     
    Time to stop misleading the Cayman people. 
     
    CIC you owe your own staff 200m in pension obligations that date well over a decade and you indicate it will take another 20 years to make good on it. I trust you will follow suit and allow each and every Cayman business who also neglects their staff's pension plans the same courtesy? 
     
    And there is only a faint whisper about the largest expense looming the 2004 665m estimate of the health care cost for retired civil servants equals (conservative) 1.1b today. How much are you putting away for that crippling expense nothing you say? Young Caymanians take note your future has already been seriously mortgaged! 
     
    Applause applause applause ah no. 
     
  2. mccarron mclaughlin says:

    Dont mean to critical but how much payables are sitting around on civil servant desks this time of the year in order to make the numbers look good.

    • Anonymous says:

      That's not how it works, McCarron. The numbers ar not done on a cash basis.

  3. Anonymous says:

    Maybe the Govt can pay for the affordable homes now and support those who cant support themselves….

    • Anonymous says:

      It probably wasn't your intention, but you have succinctly explained the problem. Affordable housing has always been about how much government canafford.

  4. Anonymous says:

    what a farce !!!!

    this is all BS  by the time the duty reduction on fule comes on line next year

    oil will be at 125 a barrell and we will see NOTHING

    WHERE IS THE 4 BUCKS A GALLON OF GAS THAT WAS PROMISED TO ME ..THE VOTER

  5. expectations met says:

    i can see marco getting in for another 4 year term

    • Anonymous says:

      Well, he's the only one doing his job. The others are too busy gallavanting.

  6. Anonymous says:

    The civil service delivers $107m surplus wow! And amazing achievement by Ministers and the civil servants. We are very proud to have such a strong and capable Government.

  7. Anonymous says:

    The public does not know what an operating profit is, what about the bottom line?

  8. Mr Ferrari says:

    Hon Mr Archer where are the consolidated audited accounts for the last 10 years?  Ok I see the surplus is $108 million but if we dont know our true state and dont even consider what happening up north -USA in a few months/ weeks time, what's the real number?  Surplus can be wiped out to a deficit before we get 3 months into this fiscal year.  Sorry Sir but disclaimers on audits dont count so the country is flying blind. Probably best to stick a wet finger in the wind and call out what tomorrow's surplus will be?????????????  Mi nah know Sir !

    • Anonymous says:

      Would you prefer if he had said $108 deficit? Do you expect him to wave a magic wand and have the last 10 years audited? WTH was the point of that comment? Just to be negative about a positive accomplishment. Our true state is that we are a lot better off than we were two years ago. 

  9. Anonymous says:

    Hon. Minister Marco Archer, should've been elected as Our Premeier he has the business sense needed to run our Govt and Country. 

  10. Anonymous says:

    McKeeva is probably looking at his passport and imagining how many more stamps he could put in it with $8 million.

  11. Anonymous says:

    Have the CIGs accounts been independently audited? If not, they are just numbers on paper.

    • Anonymous says:

      The financial year will finish 30th June. Obviously these numbers could have been audited yet. That's all money is these days – numbers on paper. 

    • Anonymous says:

      I would have a guess that maybe the UK Govt may have looked at the numbers……although to agree  to a supposed budget (and forecasted profit) that may not actually have been the case…

      Ive said it before, Govts are not supposed to post a profit, at least not as much as this one. How can it be that they can promise a reduction in fuel duty, regenerate downtown, give a CS pay rise and still predict a surplus? This is pie in the sky stuff surely, someone will end up being shafted and it wont be the govt or its advisors…..

      • Anonymous says:

        Oh ye of little understanding. The surplus is for the which ends on 30th June, 2014. It does not say that they the CS are getting a pay rise only aone -off bonus. 

        CIG is required by the UK to post a surplus (1) to reduce outstanding liabilities (2) to avoid further borrowing for capex. You know, fiscal responsibility. The other day you were screaming how we were too deep in debt and now that we are climbig out of it you are screaming that they have made too much money.  

        It seems that some people take anything positive and find the negative. 

  12. Whodatis says:

    With news like this one has to wonder why are we hanging on to you-know-who?

    Can we carry out a forced retirement and subsequent promotion?

    Just curious.

    • Anonymous says:

      Don’t be mean. We need a “figure head” just as much as a “bean counter”!

  13. Anonymous says:

    Well done, Marco! The right man for the job if ever there was one.