Government’s financial position marginally ahead of budget
Government reported a slightly higher revenue from financial services and work-permit fees and lower expenditures than forecast for the first two months of 2022.
The Ministry of Finance said in a press release that revenue of $355.4 million in January and February was $2.7 million higher than budget projections and represented a $44.9 million increase over the same period in 2021.
Operating expenses of $146.1 million for the year to date were $9.1 million lower than the budget estimate due to savings on personnel costs along with supplies and consumables.
This resulted in an operating surplus of $209.3 million, which was $11.8 million more than forecast.
Government’s higher revenue was based on better-than-expected income from partnerships fees ($4.0 million more); mutual fund administrators licence fees ($3.4 million), private funds fees ($3.2 million), and work-permit fees ($2.4 million).
This helped offset lower than predicted revenue from exempt companies ($2.4 million less) and tourism accommodation charges ($1.9 million).
On the expenditure side, government spent $6.7 million more on transfer payments to individuals and businesses affected by the adverse economic and financial effects of the COVID-19 pandemic.
Finance Minister Chris Saunders said, “While the year-to-date numbers for the first two months of the year are positive compared to the prior year, the Government is nonetheless mindful of the cash balances at the end of February 2022 being CI$53.8 million less than the prior year and CI$179.4 million below the same period in 2019.
“This clearly illustrates that we are still feeling the effects of the global COVID-19 pandemic.”
Government’s management of cash for the first two months of 2022 reflected “a high level of prudence”, he said in the press release, as for the first time in three years the government increased its cash position for January and February, recording a $27.6 million rise.
“We will continue to monitor cash, while prioritising expenses and minimising borrowing. Although Government does have the authority to borrow at this point, we are only interested in borrowing as and when it is absolutely necessary in order that we keep interest expenses down,” Saunders said.
The ministry lauded government’s net asset position which reached $2 billion after the first two months of 2022, based on $3 billion in assets and $1 billion in liabilities.
As of 28 Feb., government valued its property, plant and equipment at $2 billion and had bank balances of $542.2 million.
However, it should be noted that government’s net asset position is skewed at the beginning of the year. According to its own budget, government projects having net assets of between $1.3 billion and $1.4 billion at the year ends of 2022 and 2023, respectively.
At the end of February, government had $367.6 million in operating bank balances, which are available for government’s day-to-day operations, and $174.6 million in reserve and restricted deposits, which would require authorisation by Parliament’s Finance Committee to be spent.
Over the past three years, government’s debt has decreased from $417.4 million to $227.8 million at the end of February 2022.
The Islands’ debt-to-GDP ratio is less than 5%, one of the lowest in the world, the ministry said.
However, government’s debt position is expected to grow to $485 million at the end of the year and stay close to that amount at year-end 2023.
Premier Wayne Panton said in the release that government would continue to manage its finances prudently and “remains cognisant of the global challenges remaining from the pandemic, which are further compounded by the events in Ukraine”.
Source: Cayman Compass
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