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Government surplus $30 million higher than budgeted

Updated: Apr 9

Unaudited financial results for the first five months of 2022 show a $179.5 million operating surplus for the public sector – $30 million more than projected by the budget.

Finance Minister Chris Saunders announced that 20% of the surplus would be used to fund government’s energy assistance programme announced in Parliament earlier this month.

Government said it would set aside $5 million to assist families in need with the higher cost of electricity during July, August and September – the hottest months of the year.

The programme aims to help some 22,000 households in all three islands, but more details have yet to be released.

“With oil, and therefore energy prices, showing no sign of meaningful abatement in the local market and indeed worldwide, we will use a portion of the surplus to assist our people with the challenges this increase in the cost of living has caused,” Saunders said in a press release.

“We are fortunate to be able to take this and other initiatives as announced by the Premier and look forward to offering this additional support during such a challenging time to provide much-needed financial relief to our people.”

The finance minister said the May numbers followed a trend set in prior months with higher than budgeted revenues and surpluses.

Government’s operating revenues of $568.9 million through May were $51 million higher than during the same period last year and $23 million ahead of budget.

Revenues exceeded the half-a-billion-dollar mark as early as April for the first time.

Government income from stamp duty on land transfers was $13.2 million more than projected and work permit fees were higher by $5.5 million.

Financial services fees, such as licence fees for mutual fund administrators ($3.9 million), partnerships ($4.1 million) and private funds ($3.5 million), also brought more revenue than expected. In contrast, import duties, although higher than last year by $10.5 million, generated $11.2 million less income than budgeted.

Minister Saunders said the results show “strong confidence and performance in our financial services sector, a high volume of sales in our real estate sector combined with high property values, and steady growth in work permit fees as the hospitality industry and the Islands continue to re-strengthen post-COVID”.

The slow recovery of the tourism sector following the emergence of the Omicron variant earlier in the year should be picking up pace as travel restrictions are lifted and the sector is entering high season at the end of the year, he said

“I maintain a cautious optimism as most of the Government revenue collected in any given year comes in the first half of the year due to various financial services fee structures,” Saunders said. “However, the May year-to-date numbers shore up our positive position heading into the historically leaner second half of the year.”

Government’s expenditure of $381.7 million through May was $31.3 million higher than last year but remained in line with the budgeted $381.6 million for the five-month period.

Opposition Leader Roy McTaggart noted in a statement that much of government’s surplus, for example through higher import duty revenues, resulted from higher prices of goods. McTaggart said government should give back some of these benefits it receives from high inflation to those most impacted by it.

The opposition leader had previously suggested government should eliminate the fuel duty on gasoline and diesel for six months and raise stipends for retired seamen, veterans and those entirely dependent on government assistance.

“It cannot be right that government benefits from the rising prices while the people suffer. So, funding the relief measures I have recommended should not be an issue,” McTaggart said in a statement issued on Monday.

In addition, McTaggart said, government has recently fully drawn down a US$400 million “emergency line of credit” that was “intended to be used for just such a situation”.

IMS is one of the longest established company management firms in the Cayman Islands. IMS is licensed by the Cayman Islands Monetary Authority to provide independent directors, company management and incorporation, mutual fund administration, captive insurance and trust services. For more information about our services, please contact us.

Disclaimer: this publication does not constitute legal or professional advice and should not be relied on as such.

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