CI Government Q2 2024 Financial Report Gazetted

The Cayman Islands Government’s Quarterly Financial Report for the Six-Month Period Ended 30 June 2024 was published in the Cayman Islands Gazette on Friday, 9 August as required by law.

The unaudited financial results for the Second Quarter 2024 show a $203.2 million surplus for the Core Government and a $216.4 million surplus for the Entire Public Sector (EPS). 

Net Assets of the Government were $2.4 billion, with overall bank account balances of $584.0 million in cash and deposits.

Surplus

The overall EPS Surplus of $216.4 million was $55.3 million higher than the 2024 Budget anticipated for the period, a positive variance of 34%.

This favourable position was due to actual revenues being higher than budgeted revenues by $27.6 million for the period.

Additionally, Statutory Authorities & Government Companies (SAGCs) contributed $13.2 million to the overall surplus for the EPS; exceeding their estimated results for the first half of 2024 by $14.0 million, when compared to an expected deficit of $0.8 million.

Comparing year-on-year numbers, the EPS Surplus was $50.2 million higher than that achieved for the same period in 2023 with SAGC second quarter results being $12.9 million higher than the prior year. 

Revenues

Compared to the same period in the prior year, total revenues of Core Government have increased by $58.6 million, largely due to increases in various categories of coercive revenues.

The first six months of 2024 generated coercive revenues of $673.1 million, which was $15.7 million more than budgeted expectations and $51.9 million higher than the prior year-to-date (2023) actual results.

The positive variance in 2024 coercive revenues compared to budget was mainly due to:

• Exempt Companies fees being $11.7 million higher than the $92.4million expected for the Second Quarter due to increased registration. When compared to prior year-to-date performance, the 2024 results were $17.9 million greater.

• Partnership fees exceeding budget by $6.5 million owing to higher than anticipated registration in this category. Compared to the prior year actual there is a $6.3 million positive variance.

• Private Fund Fees performing $3.8 million better than the $58.0 million anticipated due to an increase in the volume of funds registered. The current year results for these fees are $3.8 million higher when compared to actual results for the prior year-to-date performance.

It should be noted that the aforementioned fees are regulatory licences due at the beginning of each calendar year and tend to be favourable to budget throughout the Second Quarter. These regulatory licence fees then level out for the remainder of the year.

Stamp Duty on Land Transfers was also significantly higher than budgeted through the Second Quarter, with a positive variance of $11.9 million due to higher volumes of property transactions coupled with increasing property values. The 2024 stamp duties of $45.7 million are $9.2 million more than collected in the comparable time period in 2023.

Notwithstanding the overall favourable results in revenues collected, when compared to the 2024 Budget, there were certain areas that fell short of projected expectations.

In particular, these included Other Import Duty with a negative variance of $11.4 million against budget, but which was still $1.7 million more than collected in the same period in 2024.

The Department of International Tax Co-operation Filing Fees, a new coercive revenue stream that was slated to be introduced in 2024, showed a $6.3 million negative variance compared to budget due to the commencement date being deferred to 2025.

The Second Quarter generated coercive revenues of $183.6 million, which was 11.1% or $18.3 million, more than the Second Quarter of 2023 coercive revenue of $165.3 million.

The majority of this change is attributable to higher Domestic Levies on Goods and Services with a $16.5 million positive variance and increased Levies on Property with a $3.9 million positive variance.

Expenses

Expenses for the first six months of 2024 amounted to $511.6 million, which was $13.7 million lower than budgeted. However, total expenses of Core Government have risen by $21.4 million when compared to the same period in 2023.

Costs relating to personnel for the first six months of 2024 amounted to $227.1 million, thereby resulting in a savings of $22.0 million when compared to a budget of $249.1 million. This favourable variance is the result of established posts remaining vacant across several Ministries, Portfolios and Offices.

However, 2024 personnel costs are higher than those for the same period in 2023 by $11.1 million.

Expenses for supplies and consumables of $71.3 million were recorded for the six-month period ended 30 June 2024, which were $10.6 million less than the $81.9 million budgeted. However, supplies and consumables costs were $4.8 million higher than prior year-to-date costs of $66.5 million.

Ministries, Portfolios and Offices anticipate that as the year progresses costs will align closer to budgeted projections as more projects come online.

The savings against budget in staff costs and supplies were offset by higher-than-budgeted levels of expenditure in Outputs from SAGCs, Outputs from Non-Governmental Suppliers, and Transfer Payments.

Outputs from SAGCs of $98.0 million were $8.4 million more than the anticipated year-to-date budget of $89.5 million.

Payments to the Health Services Authority (HSA) exceeded the year-to-date budget by $7.3 million. The adverse variance with respect to the HSA is due to actual costs for the Care of Indigents of $11.8 million exceeding the budget for this category.

When compared to the prior year-to-date actuals of $88.3 million, the 2024 expenses of $98.0 million are $9.7 million more – mostly related to increased funding paid to CINICO and the HSA in 2024 when compared to 2023.

Outputs from Non-Governmental Suppliers of $38.9 million were $17.0 million more than the year-to-date budget but have decreased by $7.4 million than the same period in the prior year.

The increase is mainly due to expenditure on “NGS 55 Tertiary Care at Local and Overseas Institutions” (NGS 55) being $17.2 million more than its year-to-date budget. The costs for NGS 55 are currently $26.5 million and is less than prior year-to-date spending by $5.6 million.

Transfer Payments of $35.8 million were $2.5 million more than budgeted for the six-month period. This variance is mainly due to overages in spending on Seamen Ex-Gratia with a $1.3 million negative variance, and Financial Assistance with a $4.2 million negative variance.

When compared to the prior year-to-date actuals of $31.9 million, the 2024 expenditure level of $35.8 million represents an increase of $3.9 million.

Cash Position

Cash and Cash Equivalents (including fixed deposits with maturity durations not exceeding 90 days) were $166.7 million and Marketable Securities (comprised solely of fixed deposits with maturity durations exceeding 90 days but not exceeding one (1) year) were $417.4 million, for a total of $584.0 million with respect to bank account balances. Due to the significant cash balances on-hand, the Government continues to place funds on fixed deposits.

Forecast

In conclusion, the report noted the Second Quarter’s performance has positioned the Government to be optimistic about its overall performance for 2024. 

However, the report signalled increased costs as more personnel vacancies are filled and further projects come online over the remaining two quarters of 2024.  The report advised that these costs would have to be diligently monitored to ensure unnecessary spending is not incurred.  

“Should planned increases in activity (in both Operating and Capital) materialise during the remaining months of 2024, the current surplus (to 30 June 2024) will be significantly reduced,” the report noted.

The Cayman Islands Government’s Unaudited Quarterly Financial Report for the Six-Month Period Ended 30 June 2024 may be found online at:

https://www.gov.ky/publication-detail/unaudited-quarterly-financial-report.-(ex58,-s1)

The relevant extraordinary Gazette may be found online at:

https://www.gov.ky/publication-detail/extraordinary-gazette-58