Government in cash flow snag
(CNS): Despite the strict parameters that now surround government’s budgetary process and the supervision from the UK, only five months into the fiscal year it appears to be hitting early cash flow problems. Sources tell CNS that government is already close to its overdraft limit and hitting problems paying bills as a result of pressure from ministries drawing down large partsof their annual budget in the early part of the fiscal year. Government collects a significant proportion of its revenue in January but with the UK clamping down it cannot exceed the overdraft limit agreed with the FCO, making it difficult for government to pay bills.
With no appropriations (additions to the money voted for government spending by Finance Committee) the Cayman government cannot exceed the allocations the Legislative Assembly voted for in August, no matter the circumstances, and it cannot exceed agreed levels of borrowing, including its short-term loan.
With government almost at its overdraft limit, unless it collects more significant revenue before January it could have a difficult Christmas.
So far, the UK’s economic adviser assigned to the Cayman Islands, Richard Holmwood, hastaken part in at least two meetings with the newly established Budget Unit, which is chaired by the deputy governor and tasked with keeping an eye on government spending and earnings. However, it appears that the demands and needs of some ministries are already putting the closely supervised budget under strain.
Along with the need to pass the Framework for Fiscal Responsibility into local legislation, the creation of the Budget Unit was one of several conditions imposed by the UK in exchange for approving the UDP administration’s final budget before the elections. The British also required their economic advisor to be assisted by the CIG when he makes what were expected to be quarterly visits.
Given the tight reins that the UK is keeping on the CIG’s budget for 2012/13, no ministry or portfolio will be allowed to exceed spending this year, which means that any ministry drawing down on more of its allocation earlier than expected will be forced to make it to the end of the year with what remains of its allocation as it will not get extra cash and any spending over the budgeted amount will not be lawful.
Holmwood, who is known as a ‘trouble-shooter’ and is also supervising the TCI budget, is expected to keep a watch on spending on behalf of the UK and the Overseas Territories director and ultimately the minster. According to UK reports, the former overseas territories director, Colin Roberts, has moved to a new position within the FCO and Peter Hayes has been appointed as the new territories boss. Hayes, who was appointed in October, was previously High Commissioner to Sri Lanka and High Commissioner to the Maldives.
"I am delighted to take up this role at such an important time, as we take forward the ambitious agenda for re-energising the relationship between the UK and Overseas Territories," he said last month. There is no news yet of any planned visit to Cayman by the new OT Director.
Category: Politics
Coming Soon:
Fire 20% of the civil service (but not the top brass); cut their pay by 15% across the board (instead of leaving alone those workers making $2,00 a month and cutting the salaries of brownnoser rubberstamps at the top by 50%)!!
Most of Government is indeed a "Zombieland!"
I can agree with the selling turtle farm to a university or something like that and maybe some other interests but selling CAL is not the right idea.. They are subsidized by government to provide a service and not a profit… Knowing this… Another airline buying CAL they will not swallow the debt. In fact we may easily see flight prices double or triple in some cases ( busy season)
So dont be so fast to chop CAL its our local friendly airline that affords us the means to travel affordably..
Mark my words on this.
If the US is heading for a fiscal cliff, Cayman is heading into a fiscal black hole.
send dem two squandering premiers that have either spent excessively and greadily over the past 2 years to collect the money they have caused this country to lose and have them repay the money that have squandered.
Past 10 years of wasters & crooks, more like…
Surprise surprise. The CIG hasn’t magically learned to manage money since the last budget crisis. As long as the govt keeps spending like there is no tomorrow the country will suffer and have to keep raising fees and things will continue to get worse. There can be no more waste or misappropriation. No more $41,000 2 week holidays. It is the only answer.
Government should start deducting from Mac and Deputy Juliana salary to get back all the wasted travel expenses. Thats away to help with cash flow. Stop all travel NOW to cut expenses
If we take away JuJu's and KeKe's passports and government credit cards then we wouldn't have a cash flow problem.
How much more time will it take before Caymanians realize that their grotesqly over sized and inefficient Governemt is the problem, not the solution.
This cost is already more than $14,000.00 each for every person living here.
When will Caymanians demand that Government dpwn sizes itself and eliminates unnessarry spending.
Examples of what can be cut abound, including the police helicopter, Cayman Airways, more MLA's , FOI office, and many useless Commissions.
I am too patriotic to agree to sell majority interest in Cayman Airways. I fly Cayman Airways whenever I can as they are one of the friendliest services and one of the safest that I have flown.
I would sell or give away Boatswain's Beach (KEEP Turtle Farm) before even thinking of selling one share of CAL. What is the Government doing in the amusement park business?
Why would you want to cut the FOI office? In my opinion, if it were not for the FOI office, a lot of what you know today would still be under wraps and you and me would not be able to make better, more-informed decisions about our government and how it is being managed.
What is the Government doing in the amusement park business?
leave aside your patriotic love of CAL….. it is an uncompetitive loss making failure of an airline that has done untold damage to cayman with it's outrageously high airfares…..
DEFINITELY NOT NOT NOT THE FOI OFFICE!!!
the obvious solutions are always ignored…..
implement miller shaw recommendations
sell turtle farm
sell CAL
bring in casinos (for tourists expats only.!…not the good christian caymanians!)
get rid of stupid sunday trading laws….
allow cruise ships to open their casinos so they can stay overnight
allow bars clubs to open past midnight saturday….
bring in daylight saving time (hows that 'review' going?…..zzzzzzzzzz)
these are the answers and they are all free!
Apparently God gave us free will but the nanny state has to legislate to make sure we can't exercise it. Hence no casinos and Sunday trading limits. The truly Christian thing would be to not legislate and let people be guided by the Good Lord to behave themselves.
PS I won't behave myself. But then I don't believe in God. So I don't have to.
what do you expect……. a poorly educated electorate votes in poorly educated politicians?????
Here's how we can save money. Have a national election to elect 6 Cabinet Ministers. They run as a ticket and you can have more than one ticket, but no one can appear on more than one ticket. Then have district election to represent one representative for each of the seven districts; George Town, West Bay, Bodden Town, East End, North Side, Cayman Brac and Little Cayman.
Cabinet will bring bills and to pass will require a majority vote of the district representatives. That way we have true democracy and we have proper checks and balances.
Not only that, but we have reduced the numbers to 13 instead of the current 15. And while we are at it, their pension calculations will be revised to be calculated on the same parameters that currently applies to civil servants; not 4 terms and maximum pension benefits at an exorbitant scale.
It's time to amend the Constitution.
What cash flow problem?
Just transfer money from social services into the travel budget and the problem is solved.
It is simply a matter of priorities.
Sorry folks, a ga try keep all d wotes a kin get this go roun.
i hope they do run out of money…..then they might learn a lesson in terms of spending within your means……
read the miller shaw report!!!!!!
cayman is doomed because it failed to reduce its expenditure and civil service…..
now they are in a vicious cycle of spending and indirect taxation which has the effect of making things worse…..
And what's going to happen when the time comes if they can't meet the civil service
payroll?
All the expat civil servants will leave the island and the civil service will become 100% Caymanian. Woo Hoo!!!
God help us if that ever happens 23:07. A mediocre civil service will become a totally useless one.
And maybe that will be a good thing.
then, just maybe, they will have learnt a lesson……
HEY! maybe we should get some new 'leaders'. Just a suggestion. you know, at least some that would have the common decency and common sense to at least hide their freeloading and ineptitude from us. Jeeeeez, have a little respect for your sugar people!
On top of everything else the premier wants to sell shares to an airline that does not comply with international safety…I for one will not fly cayman airways if that happens and I am sure everyone will agree on this one…not only is he killing the Island he will also be killing innocent people on an airline that has no concious of safety
Where from? The last set of muppets stil owe millions in expenses that cannot be accounted for and any future muppets will use this and the present muppets as a yardstick to ride the gravy train.
The gene pool is depleted my friend.
Every one including teh opposition and the current leaders an bloggers are missing the point. It would be interesting to see what the bloggers comments will be next year after PPm wins election. I patiently await.
If the PPM is the best alternative to the Bushits then the UK will have to ether watch from the sidelines (like you want them to) as the Caymanian way of life goes the way of the Romans and Greeks or take over leadership responsibility until you are ready to take responsibility for yourselves. Now that they have put the T If there are qualified and educated Caymanians ready to step up its now or never time. Last chance at haveing some control over your own future.
Maybe it won’t be the PPM either smiley
What is really scary is that they have a cash flow problem AND they are not paying down on the liabilities for civil service pensions.
And if that ain't bad enough, you should see their pension allotments and how that is calculated. What a rediculous set of politicians.
6 million from Mike Ryan would have helped cash flow immensely. Thanks Mac.
Not really. If CIG had collected the 6 million it would already be spent and the fiscal hole would still be there.
My question is: How much duty SHOULD Ryan (NOT Ritz-Carlton) have normally paid in the first place? Based on a construction cost of say 400million, and a duty rate at the time of 20percent, the duty that should have been paid may have been as much as 80million.
Now, I can agree somewhat with giving a break to a first-class outfit like Ritz Carlton, but please note that the UDP Govt at the time (incl Roy, Gilbert and Frank – Cabinet collective responsibility) gave away possibly up to 70million to Ryan, NOT Ritz-Carlton.
And it seems, after the 2009 elections, the current UDP Govt gave Ryan another 6million by not collecting or securing what was outstanding from March 2009.
If I was a developer, Caymanian or not (Ryan is Caymanian), I would want the same huge break in duty payable, that is, a 87.5percent REDUCTION in the duty amount payable (10mil divided by 80million).
How many of you developers out there are getting those types of duty reductions?
If you are not getting those kinds of duty reductions, ask yourself "Why not?" Or, better yet, ask yourself "What do I need to do in order to get those kinds of reductions?"
Ryan is Caymanian? How?
It would have helped but most likely JuJu and Mac would have spent it all on their travels.
Why you always blame for travel expense? It is a tiny drop in a ocean! They NEED CUT number of staff in civil servants not front line like teachers, police, firemen as it is biggest bill that government pay each month like $30 millions per month, payroll and health insurance also pension compared travel expense is $2 millions PER YEAR! ! Stop blame government as it is governor responsible for civil service. He is the one should take the blame.
CNS: The size of the civil service is dicated by policy. i.e. the elected government.
As a bankruptcy lawyer I see this basic pattern all the time: a company's expenditures exceeds its revenues so it taps into all of the credit that it can find, to keep the lights on while it flounders, and once the borrowing facilities are cut off it spends the last of the cash-on-hand in the run-up to the cessation of operations, and when it runs out of cash it closes its doors and declares bankruptcy (or is petitioned into bankruptcy).This is the same pattern, simply inserting the Cayman Islands government in place of the failing company. When the money is gone and they can't borrow anymore, and payroll is no longer being met and supplies and services are cut off for non-payment of bills, the Cayman Islands will be a very interesting place to be, for a short period of time before the UK takes over.
Bring it UK. A heroin addict has a better chance of saving themself then Caymanian Government does. It would be like cutting their own throats. A UK takeover will be neccesary before Cayman goes so far down that it will no longer function as a country as all business leaves for all the right reasons. Caymanians might want to consider asking for help sooner rather then later. Although it will take longer to rebound a complete meltdown might be better for whoever can stick it out until it recovers. Remember folks, without business and tourist all you have left of value is your land. When that is sold and gone you have nothing. And it won't be Caymanians that own Cayman anymore. Your move.
And 3 more MLAs are about to be added, according to the Premier at a cost of ???? And how many staff will these new MLAs need at a cost of ??? And how are all these new positions really going to benefit anyone except their own wallets?
This must come as a shock for poor Mac.
Guess he will have to take a little trip to some exotic location to recover…
Wherever it is, you can bet it won't have an extradition agreement with the British Government…..hey Misic, got a spare room for rent?
May I suggest Hell
He is saving that one for last.
Poor Hell.
Of course there will be cash flow problems as long as the likes of Julianna o'Connor Whatsit has to travel (business class) to meaninless meetings in the world's glamour spots and stay in 4 star hotels like the Four Seasons. On top of that, there is no real sense of fiscal discipline anywhere in Government, including the Statutory Authorities, many of whose senior staff receive huge salaries, even in excess of government ministers. Check for example the Maritime Authority and Civil Aviation Authority.
…and, in a lot of those places she goes you can hire a 'personal assisant' cheaper than it must be to carry one around..
I think he carries her around 🙂
The same old and we expect different results?
Get these idiots out of office!
Start the petition
Nice idea but you can't replace the government by petition. The only way the current government can be removed before May 2013 is by some of the UDP joining the Opposition in a vote of "no confidence". They have refused to do so twice already.
Reason #527 why our Premier and his party has to go. We can't aford their spending and travelling with gests as if there is no bottom to our treasurery. The governor should clamp down on all travel and have the Premier and all government jet setters turn in their passports. We should have a casino here so the won't be so much travel.
I don't suppose this has affected the travel plans of the Premier and Deputy Premier?
Is there a real necessity for the Ministries mentioned to immediately draw down such a large proportion of their funding for the current fiscal year.
Perhaps they think the money won't be there later – drawing their budget in advance whilst there is still room in the overdraft, so if anyone has to go short it won't be them. Be interesting to see how much of the draw down has actually been spent, or spent in advance of when it had to be paid.
Yes, in their minds there is a necessity to draw down whilst the cash cow still has milk. They will do so again in January (when most fees are due) and spend as much as they can before the election so that when the financial year end comes and there is a new government, it can be blamed on them.
In some cases uneven expenditure is unavoidable. For example August is a costly month in the Education Ministry because this is when new teachers from overseas arrive on island to replace those who have left before the summer. The only way to spread out these expenses over the year would be to leave some kids without teachers……
Which is what is happening in the Brac.
And he calls it re-energizing the relationship. Boy are they smelling their rank.
What do you mean money doesn’t grow on trees?
It's also been rumoured that if you pray hard and long enougth…that money will wall from the sky like rain…….
Oh sh*t, wrong story, that whats a girl at Scarlets told me last week.
Novel idea – CUT THE XXXXX CIVIL SERVICE!!! Enough politics! UDP you are NOT getting re-elected! At least do ONE real positive thing for Caymans future instead of this constant shortsighted BS!
I am not surprised by this news. The wanton spending by the Deputy Premier on useless travel is just one example of this UDP government mismanagement of public finance. If only there was some way that they could be made to pay back money from their own pockets then maybe the country`s finance would be in better shape for the Christmas.
We give, but we don’t take away
For a supposed world class financial center, how is it we seem utterly incapable of managing our own finances with any degree of inteligence? Surely the government is well aware of its likely cash flow highs and lows? It is not exactly a surprise. Yet why is it that so many ministries are allowed to draw down substantial parts of their annual budgets so soon? Is it beyond the abilities of the government to manage their cashflow and limit the drawings of eachministry to match the current cash flow? Surely not each ministry requires alll of its annual cash immediately? The mind boggles at the ineptitude.
Well, since you asked, the people that made it a ‘world class’ financial center and continue to run that are not the ones running he ‘local’ economy
Perhaps just like ‘successful’ people, ‘world class’ financial centers are not really all they are cracked up to be.
I am sorry for all those who are running for a pay check in May. Cayman would be a big fool to vote back in those who were there before and left all this mess that cannot be cleaned up.
Now congragulations to the Off Bench group who thought that by asking UK to meddle in our affairs, would make the road swift and smooth for them. That did not work, obviously.
I always saw that when a bird was able to fly, she did just that and left the nest. I have never heard of the mother bird hunting her down to see where she went.
UK did not know who Cayman was all these 200 years. She did not care whether we sank or drop to the ground.
Amazingly after they saw us began to soar like an eagle, every one of them just ran to this rock and want to take control with selfishness and arrogance. We do not like it, and I do not see the relationship getting any better. Does the UK want us to prosper, NO, they want control, and just because a handful of PPM and Independent is still living in the world of an Uncle Tom Massa mentality.
Okkkaaayyy then 08:15…….put down the kool-aid, nice and slow……
Another way of looking at is is that only in the past 5 years did you start spending crazy amounts of money that you did not have.
You have been smoking and drinking with KeeKee and JuJu. The United Kingdom has always been aware of us. They have been doing what our parents did with us when we were young and that is, "Giving us enough rope" and now "we have hung ourselves.
Getting ready for Christmas…not for the fun, but for the expected crime spat from all the government cronies not getting thier expected bonuses this Christmas.
Ministries draw down money early in the hope it will help request for more money later. Not a single cent must go above the budget. Right now if I was contracting with the government I would want cash up front.
Solve the cash flow hitches. Seize Mad Mac's and sister Ju's passports.
I believe Mac is a citizen of multiple countries. He most likely has Jamaican and Chinese passports as well. Nothing is gonna slow him down bobo..it's off to Bora Bora next for Juju and off to Dreamland for Keke!