Government’s surpluses more than $25 million

Financial services, work permits and real estate fees all contributed to government’s better than expected revenues for the first seven months of 2022, which came in at more than $38 million better than predicted, according to Deputy Premier and Minister for Finance and Economic Development, Chris Saunders, who presented the July 2022 Year-To-Date financial picture to Cabinet in mid-August. Government’s entire public sector had an overall surplus of $129.6 million which was $25.2 million more than the projected YTD operating surplus of $104.4 million.

July 2022 YTD revenues surpassed budget, amounting to $695.4 million, which was $38.2 million more than the year-to-date projection of $657.2 million.  This was mainly due to a favourable variance of $32.5 million in Coercive Revenue, $32.5 million higher than the year-to-date projection and $20.2 million more than that collected for the same period in 2021.

Continuing the trend since the start of the year, financial services fees plus work permit and property related revenues contributed most to the higher-than-anticipated revenues collected, with financial services fees collected by General Registry $2.8 million higher than expected, and financial services fees collected by CIMA $4.4 million higher than expected. Work permit revenues were $6.6 million higher than projected, representing increasing demand for workers as the economy moved into phase five of the border reopening plan, while property-related revenues were $18.5 million higher than anticipated, as there continued to be a higher-than-expected volume of property transactions coupled with high property values.

On the downside, expenses were over budget due to health and tourism stipend costs, partially offset by personnel, supplies and consumables savings. Expenses for the seven-month period ended 31 July 2022 were $551.5 million; $19.2 million more than the year-to-date budget of $532.3 million.

The variance between actual and budgeted expenses was largely due to higher spends of $14.0 million for tertiary health care costs; and $20.6 million more being paid out than the initial 2022 budgeted expenditure for the ex-gratia tourism stipend programme. These higher spends were somewhat offset by underspending in other areas of expenditure, particularly in personnel and supplies and consumables costs in which actual costs were, respectively, $16.5 million and $13.6 million less than the YTD Budget.

To ensure sufficient funds are available for the remainder of the budget year, Parliament has approved supplementary funding in these areas.

Cash position

Total cash and fixed deposits as at 31 July 2022, were $456.9 million. This amount is represented as operating cash of $291.6 million ($276.6 million of which are held in the form of fixed deposits) and, reserves and restricted cash balances (all held in the form of fixed deposits), of $165.3 million.

Unsurprising figures

Deputy Premier Saunders said the July Year-To-Date numbers followed the same trend seen in the first half of the financial year, with the collected fees showing continued confidence in the financial services sector as well as strong and continued growth in the real estate sector. Cayman Islands real estate continued to be a popular investment in tandem with ongoing and new development projects, he stated.

“We have also seen growth in work permit revenue over the prior year, which indicates that local businesses are in recovery mode after the suppressive effects of the pandemic, and are now staffing up to their full complements,” he stated. “Additionally, we are seeing higher revenues from import duties and tourism related fees and taxes compared to the prior year.”

Deputy Premier Saunders said this was not surprising given the recent phased reopening of the borders.

“These two sectors have a symbiotic relationship, with higher tourism arrival numbers resulting in increased consumption and therefore increased imports. With the full reopening of our borders and the removal of Covid-related mandates, we anticipate stronger tourism performance in the upcoming traditional high season of November through April,” he stated.

The Deputy Premier said that with continued good stewardship of public funds, they anticipated that the country’s finances would remain in a positive position through the end of this financial year.