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GOVERNMENT REVENUES RECOVERING AFTER COVID CONTRACTION

Government 13 Apr, 2023 Follow News

GOVERNMENT REVENUES RECOVERING AFTER COVID CONTRACTION

With the broad economy on the mend after the COVID-19 pandemic, the Cayman Islands Government (CIG) ended 2022 with a $47.7 million surplus from revenues reaching $1.02 billion. This surplus is $28.3 million more than was projected.

The better-than-expected results have just been published by the PACT government of Hon. Premier Wayne Panton. They were presented to Cabinet on March 7th, just two weeks before the controversial and acrimonious exit from the coalition of the then Finance and Economic Development Minister and Deputy Premier Chris Saunders on March 21st.

At press time, there was as yet no comment from the ex-finance minister on the budget performance which would have largely been under his stewardship.

However, Hon. Premier Wayne Panton, who has since taken over the finance and economic development portfolio said this outcome was the culmination of the overall trend for 2022 of better-than-expected revenues each month, and particularly demonstrates ongoing confidence in the Financial Services sector and the post-COVID recovery Cayman’s economy.

“I am very pleased to have ended 2022 with a $26.6 million public sector surplus rather than the projected $15.8 million deficit. The 2022 Revenues for Central Government were $80.3 million better than Budget and an improvement of $159.2 million or approximately 18.5 per cent more than pre-COVID 2019.”

The Premier noted however that there were still challenges to overcome, pointing to the ever-increasing cost of living, rising interest rates and fluctuating global economic trends.

But he added: “The silver lining in all of this is that our higher-than-expected revenues and surpluses for 2022 will help us to maintain a positive financial position in the face of both local and international financial pressures."

Mr Panton also said the results also clearly demonstrate that the Cayman Islands remains an attractive jurisdiction for inward investment, as well as maintaining local economic growth.

He said his PACT government’s aim for 2023 and 2024 is “to build on this solid foundation as we also seek to relieve some of the economic stresses on Caymanian families.”

Standout areas of performance over the past year show that the initially projected operating surplus of CI$19.4 million was successfully exceeded by CI$28.3 million, resulting in a CI$47.7 million surplus.

Most notably, the report says, the 2022 results show an Operating Surplus for the Entire Public Sector (EPS), rather than the initially projected deficit.

Drilling further down into the details, the CIG budget performance reports show that revenues surpassed projections by CI$ 80.3 million with the government earning CI$1.02 billion over the full-year projection of $940.9 million.

Areas showing a marked improvement in revenue performance included financial services fees, work permits and property-related revenues.

Financial services fees collected by the Cayman Islands Monetary Authority (CIMA) on behalf of the government totalled CI$ 158.4 compared to CI$ 149.6 in 2021.

Fees from work permits were notably CI$ 21.3 million higher than projected, which according to the report represented “increasing demand for workers as the economy moved beyond Phase 5 of the border reopening and a stronger economic performance than expected especially in the real estate and construction industry)."

Even when the projected increase is not factored in, work permit fees for 2022 totalled CI$ 111.3 compared to CI$ 96.8 in 2021.


 

The tourism sector continues its upward trajectory post-COVID, reflected in government earnings of CI$ 24.1 for 2022, compared to the COVID-impacted CI$ 1.0 million for 2021 and CI$ 13.5 million for 2020.

However, despite the encouraging tourism earnings for last year, that is still way off the peak 2019 revenue of CI$ 47.5 million. The tourism component was also impacted by the government's ex-gratia tourism stipend, which was $16.4 million over budget. To ensure sufficient funds were available, Parliament had approved supplementary funding of $16.5 million for the tourism stipend.

Import Duty Revenues were affected by the continued impact of COVID-19 on the world economy.

“However, when compared to the prior year, the 2022 Import Duty Revenues of CI$226.2 million are CI$20.1 million higher due to the relaxation of COVID-19 restrictions and the re-opening of the Cayman Islands borders,” the report pointed out.

The past year also saw an impact on the government’s overall expenditure caused by higher healthcare costs for tertiary healthcare, health insurance for civil service pensioners, combatting COVID and care of indigents.

Overall, the PACT administration reports that by the end of last year, the government’s net assets were CI$ 2.0 billion, and its bank account balances, including fixed deposits, totalled $351.3 million.

The budget performance report also shows that the government's US Government Treasury Notes, which will mature in June 2023 were held at 31st December 2022 at their purchase price of US$ 333.6 million or CI$ 276.9 million.


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