Public spending 2021 over budget by $ 186 million
(CNS): The government was only supposed to have spent more than C $ 764 million in the past twelve months, but largely because of the COVID-19 pandemic, public spending has skyrocketed. As of Nov. 25, the finance ministry predicted that by the end of the year, basic government spending will have exceeded $ 950 million, some $ 186 million over budget.
However, the central government operating deficit for 2021 is much lower and is expected to be around $ 29.7 million, given the increase in revenues, as well as spending, which made up for the worst of times. additional expenses. But when government officials and businesses are put into the equation, the entire public sector is in the red to the tune of nearly $ 84 million.
Collectively, statutory authorities and Crown corporations (SAGCs) recorded losses of over $ 54 million, which is well above the initial budgeted deficit of less than $ 17 million. This hole was originally expected to be easily filled with a base government operating surplus expected at the end of this year of nearly $ 75 million.
The news of the impending deficit comes after audited third quarter results consistently showed the government was running a surplus at the end of September. But it appears that pandemic-related spending has absorbed the record revenues that will be collected in 2021. The government will have earned some $ 82 million more than expected, but that is not enough to close the hole created by the impact of COVID-19 on the public stock exchange.
The overall result is that for the first time in several years, the pandemic has led the government to violate the principles of responsible financial management, forcing the UK to step in to approve next year’s budget, which is also expected to generate a deficit. .
However, Finance Minister Chris Saunders told colleagues in Parliament on Friday that the UK has given government approval for the $ 29 million deficit for 2021 and the CI $ 15 million deficit budgeted for the next year, given the pandemic situation, the fact the government has cash in the bank, low debt and will be back in the dark by 2023.
Despite the losses, this forecasted operating deficit is still $ 69 million lower than what the PACT government, when it was first elected to office, predicted it could be the case here. the end of the year, Saunders said.
“Leaving with the prospect of an operating deficit is not the most preferable financial outcome to face a new government,” he said. “Certainly, this posed challenges to the PACT government and forced us to refocus some of our planned objectives and commitments,” he added, noting that a deficit was a violation of the public finance law.
“The UK is aware of the likely deficit for FY2021 but has in no way sought to control the government budget as it understands the deficit… is realistic in a global pandemic and has provided support,” said Saunders in Parliament, adding that PACT is committed to prudently managing public finances and keeping its promises to the people.
The deficit income was fueled by import and stamp duties as well as income from the financial services sector, easing the tourism deficit, but Saunders said it was the pandemic that was wreaking havoc on finances.
COVID-19-related spending represents some $ 115 million in spending that was not budgeted during the development of the 2021 spending plan by the last government. The allowance alone cost the public treasury around $ 60 million, testing and Travel Cayman cost over $ 47 million, while an additional $ 2 million was spent on benefits for vulnerable people and $ 5 million dollars for business.
Tropical Storm Grace generated a bill of more than $ 10.5 million that had not been budgeted, and the government also provided an additional $ 23 million in public cash to charities and NGOs that raise funds. social work in the community.
He said the SAGS losses are being led by the airport authority, which is expected to lose $ 28 million, and the Cayman Turtle Center, which is expected to lose $ 10.7 million. The Health Services Authority and the Port Authority are both expected to run deficits of more than $ 7 million. CINICO and Cayman Airways will lose more than $ 3 million each.
But even if these authorities lose money, they were necessary for the “Cayman miracle to work,” and although they have inherent challenges, they provide essential services and have been economic catalysts, Saunders said.
However, with a cash balance at the end of this year of CI $ 304 million, which is CI $ 20 million more than originally planned, the final deficit will be covered and the government will remain in compliance with all other requirements of the law. . Saunders said that like all countries, the Caymans have suffered from the pandemic and that there will be new challenges ahead in 2022 and 2023.
See all the details of the 2022-2023 budget expectations starting on page 19 of the Plan and Budget document here in the SNC Library.