(CNS): The Cayman Islands Government earned a record $446,906,000 in the first three months of this year, the most it has ever collected, surpassing budget predictions and resulting in a whopping first-quarter surplus of almost $221 million. CIG collected over $73M more at the start of 2022 than in pre-pandemic 2019. As well as the increase in revenue, government managed to save significantly on expenditure, fattening out the public purse and putting PACT in a strong position for the economic uncertainties ahead.
While the first quarter is always government’s highest-earning period because of the money collected from offshore business fees, 2022 has had a bumper start with much of the extra cash due to those fees and the performance of Cayman’s financial sector, which is making up for all the lost tourism revenue. Government earnings for the first quarter of 2022 were not only the highest ever but also surpassed what the finance ministry had projected in the 2022 budget by almost $13M.
Although government is spending more than ever on public services, expenses for the first quarter were less than expected for this year, amounting to almost $226M, some $5.6M lower than forecast. However, this was still $67.6M more than in 2019, before the pandemic began changing the shape of the budgets. The government’s cash position has improved and is over $83.6M more than expected. Bank account balances on 31 March 2022 stood at over $535M and debt has fallen to a new low of just $218million.
The healthy public finances were welcomed by Finance Minister Chris Saunders, who said the detailed results reflected the strength of the financial industry. “When we examine the revenues driven by the financial services sector that are collected by the Registrar of Companies and CIMA, we see that the confidence in our financial services sector remains strong, despite the many global challenges.”
While the tourism sector is beginning to recover, it is well short of pre-pandemic levels, and duties on fuel and alcohol, which are charged by volume and not value, are also still below 2019 levels. “The silver lining in all of this is that overall confidence in our economy and our stewardship of government finances remains high. The results speak for themselves,” Saunders added in a press release about the results.
According to the unaudited report, while offshore fees dominate government’s earnings, providing around 64% of coercive revenue, import duty was the other big earner, as well as stamp duty and work permit fees.
The massive increase in earnings has covered the increase in public spending, which has been fueled by the growing demand for public services and the extra money government has had to spend as a direct result of the pandemic and on health care.
The ex gratia stipend added $12.1M dollars to the spending side of the balance sheet and the statutory authorities and government-owned companies collectively underperformed, recording a combined net operating deficit of $5.2M for first quarter of 2022. While some SAGCs did better than expected, including the Port and Water Authorities, others, such as the HSA, underperformed.
But the civil service payroll tab was much lower than expected, saving around $8.5M on predicted personnel costs, largely due to the number of vacant posts.
In the report’s conclusion, the government accountants said the first-quarter performance gives the CIG cause to be optimistic but over the remaining three quarters of 2022, costs will have to be diligently monitored to ensure spending is not incurred unnecessarily.
“It is anticipated that there will continue to be economic effects of the COVID-19 pandemic. The continued relaxation of international travel restrictions is likely to boost revenues in the economy in areas such as tourism over the coming months,” they added.
Premier Wayne Panton said the results reflected one of the first priorities of the PACT government, which was to stabilise the government’s financial position following the negative impact last year of the pandemic. Thanking Saunders for “his diligence in containing overall expenses… while simultaneously increasing our cash position”, he welcomed the surplus.
He also noted that government’s financial success is achieved in partnership with the civil service. “The positive results are a testament to civil service’s commitment to ensuring value for money, careful timing, and where possible, reducing expenses while maintaining or increasing standards of service,” the premier said.
Comparison of the Q1 financial performance over the last three years:
|Operating Expenses, Financing Costs and Non-Operating Costs||$158,256,000||$180,898,000||$207,981,000||$225,941,000|
|Operating Surplus of Central Government||$215,404,000||$172,291,000||$196,231,000||$220,965,000|
|Surplus/(Deficit) made by Statutory Authorities and Government Companies||$1,343,000||$4,964,000||$7,447,000||$(5,247,000)|
|Surplus of the Entire Public Sector||$216,747,000||$177,255,000||$203,678,000||$215,718,000|
|Total Bank Account balances||$747,145,000||$659,621,000||$611,208,000||$535,374,000|
Summary of breakdown of revenues collected in several categories compared to prior years:
|Import Duty Revenues||$51,758.000||$50,445,000||$45,110,000||$53,677,000|
|General Registry Fees||$131,627,000||$126,454,000||$139,288,000||$151,231,000|
|Work Permit Revenues||$21,409,000||$20,212,000||$17,974,000||$26,694,000|
|Other Coercive Revenues||$11,663,000||$10,574,000||$12,811,000||$11,399,000|
See the full report in the CNS Library.