GOVERNMENT DEFICIT AVOIDED BUT ‘PREFU’ WARNING ECHOES IN FINANCE COMMITTEE MEETING

By Staff Writer

The PREFU (Pre-Election Economic and Financial Update) took centre stage at last week’s urgently called meeting of the Finance Committee, which sought and received approval for additional government spending.

Published just before the April 2025 election as required by law, this year’s  PREFU had cautioned that “For the financial year ending 31 December 2025, the Government is projected to have an Operating Deficit of $KYD26.2 million.”

However, coming out of the Finance Committee meeting - which included extensive debate around the subsequent estimated ballooning of the projected deficit to around $KYD60 million by some officials - the government secured approval for the additional spending while avoiding the looming projected deficit.

Supplementary (or additional) spending totalling $KYD108 million (adjusted from the requested $KYD107m) still brings the government perilously to the limits set out in the Framework for Fiscal Responsibility (FFR) with the British government. Exceeding this would trigger UK intervention for spending approval.

“The supplemental appropriation requests before you reflect the needs of our community and the government’s commitment to responsibly address emerging pressures, while maintaining compliance with the Framework of Fiscal Responsibility,” said Hon. Minister of Finance Rolston Anglin, chairman of the Finance Committee.

Outlining the overall impact on the government’s finances, Min. Anglin explained that the government’s 2025 operating revenues are forecast to be $KYD1.185 billion. That is $KYD4.9 million more than originally budgeted. The operating expenses are projected at $KYD1.174 billion, or $KYD92 million more than originally budgeted.

He said the operating surplus is now adjusted downwards to $KYD10.274 million, which is $KYD42.883 million less than the $KYD53.157 million originally budgeted.”

The additional funds, along with what Min. Anglin described as “a soft spending freeze” in the civil service, will be used to bolster government spending in education, healthcare, infrastructure, commitments by Cayman Airways, and social support.

However, even with the additional expenditure, Finance Minister Anglin assured that the “government is forecast to maintain compliance with all six of the principles of responsible financial management as at 31st December 2025 with cash reserve.”

During the meeting, a query from former Premier and Minister of Finance in the previous United People’s Movement(UPM) administration, Juliana O’Connor-Connolly, led to prolonged and intense discussion surrounding the PREFU system. Of concern was ensuring that the resourcing of the Ministry of Finance, which produces the report, is adequately resourced.

The PREFU report and the deficit it projected shifted the focus of an already intense election campaign when it was public in April, just shortly before the polls.

It became the focal point of the campaign.