Surplus falls short of target
(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 by further 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.
|Cayman Islands 3-Year Budget Plan to the FCO (sent on 24 May 2010).pdf||320.21 KB|
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