Borrowing to be budget jam
(CNS): Although the UK has not yet refused the Cayman Islands budget proposal for the next financial year, which was submitted to the FCO last Thursday, the request for borrowing is likely to prove a stumbling block. Last year the premier insisted that his government would not add to the country’s borrowing levels and had acknowledged that the UK would not allow the CIG to get further into debt, but the UDP administration has included a borrowing requirement in this year’s financial spending plan. Although McKeeva Bush has not disclosed the level of borrowing, he has described it as a modest amount.
The new borrowing, the premier has claimed, is to begin a solar panel installation project to help those who struggle with CUC bills, as well as cash for the new juvenile detention centre and money to complete both the high and primary school projects. While the amount of borrowing has not been disclosed, it is believed to be over $25 million since the planned solar panel project alone is estimated to be around $15 million.
In December the government delivered a strategic policy statement (SPS) entitled 'Maintaining Fiscal Discipline’ relating to its spending plans for the forthcoming budget year of 2012/13 in which the premier had predicted a surplus by the 30 June in this financial year -- a prediction that has reportedly not come to fruition and government is facing a deficit at the financial year end.
Although government says it has managed to balance the books with a small surplus, sources tell CNS that the documentation sent to London does not include capital expenditure in the operating expenses, which will push the budget into a significant deficit. With this, on top of a request for more borrowing, the UK may well ask the government to make deeper cuts. Currently the total for core government operating expense, excluding statutory authorities, is said to be over $498 million, as set out in December’s SPS, but no revenue predictions have yet been revealed.
Despite claims by Bush that his government has made great strides to improve the country’s finances, public spending is still set to increase over the next three years as the SPS made no cuts in public spending. Government is relying on projections of increased revenues to deliver surpluses but it is not clear where government hopes to increase revenue in the coming twelve months.
The UK is believed to have acknowledged receipt of the Cayman government’s budget documents, which the premier admitted were submitted late. The new Financial Framework Agreement signed between Bush and the OT minister Henry Bellingham last year requires that government send the budget to Britain three weeks ahead of when he plans to present the documents to the Legislative Assembly.
Although the premier has indicated that he hopes to arrange the Throne Speech, which is delivered by the governor, for this Friday, signalling the start of the presentation, sources tell CNS that the UK is unlikely to approve the budget without further changes, forcing the government to enact some form of emergency legislation to enable it to access the public purse past midnight on 30 June.
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