CIG FINANCES LARGELY ON TARGET

By Staff writer

The latest quarterly report on the financial performance of the Cayman Islands Government concludes that the second quarter’s performance has positioned the government to be optimistic about its overall performance for 2023.

The unaudited financial results for the Second Quarter of 2023 show a $165.9 million surplus for the Core Government and a $166.2 million surplus for the Entire Public Sector (EPS).

Net Assets of the Government were $2.2 billion, with overall bank account balances of $398.2 million in cash and deposits.

Surplus

The overall surplus of $166.2 million was $22.7 million higher than the 2023 Budget anticipated for the period, a positive variance of 15.8%.

The report says this favourable position was due to actual revenues being higher than budgeted revenues by $27.4 million for the period.

Additionally, Statutory Authorities & Government Companies (SAGCs) contributed $0.3 million to the overall surplus for the EPS; exceeding their estimated results for the first half of 2023 by $9.8 million, when compared to an expected deficit of $9.5 million.

Comparing year-on-year numbers, the EPS Surplus was $20.5 million higher than that achieved for the same period in 2022 with SAGC second quarter results being $13.6 million higher than the prior year.

Tourism leads revenues

On the revenue front, compared to the same period in 2022, total revenues of Core Government increased by $19.5 million, largely due to increases in various categories of coercive revenues.

The first six months of 2023 generated revenues of $621.2 million, which was $14.1 million more than budgeted expectations and $7.1 million higher than the 2022 year-to-date actual results.

The tourism sector has had a significant impact on government earnings, according to the document.

“Tourism Accommodation charges coming in at $12.4 million higher than budget expectations due to the increase in stay-over tourism following the reopening of the borders in 2022 amounting to 84% of pre-pandemic numbers. When compared to the 2022 results, the 2023 revenues from Tourism Accommodation charges are $19.6 million more.”

Work Permit Fees collected amounting to $9.1 million more than anticipated due to continued increased demand for workers following the reopening of the borders and continued economic growth. Revenues in this area increased by $3.2 million over the same period in 2022.

Meanwhile, motor vehicle charges exceeded forecasts by $5.3 million due to a higher-than-expected volume of vehicles being imported. However, it is pointed out that notwithstanding the overall favourable results in revenues collected, when compared to the 2023 Budget, there were certain areas that fell short of projected expectations. These included the categories of Other Import Duty(OID) - down by $8.3 million and Other Company Fees - Exempt Companies with a shortfall of $7.7 million.

Government spending

Expenses for the first six months of 2023 amounted to $490.2 million, which was $14.5 million higher than budgeted with total expenses of Core Government rising by $12.6 compared to the same period in 2022.

There were some savings recorded due to unfilled vacancies, the repprt said, but noted that was offset by higher-than-budgeted levels of expenditure including that incurred by Statutory Authorities and 7 Government Companies(SAGCs).

“Payments to the SAGCs Cayman Islands National Insurance Company (CINICO) and the Health Services Authority (HSA) also exceeded their year-to-date budgets by $2.5 million and $4.4 million, respectively. The variance with respect to CINICO is due to higher-than-expected actual costs for the Health Insurance for Civil Service Pensioners while for the HSA that was due to actual costs for the Care of Indigents exceeding the budget by $6.6 million.”

Increased payments for scholarships and bursaries pushed Transfer Payments to $31.9 million, which is $5.4 million more than budgeted. 

Operating Cash and Deposits were $222.9 million and Reserves and Restricted Deposits were $175.3 million, for a total Cash and Deposits balance of $398.2 million.

Outlook

According to the report, while the Second Quarter’s performance has positioned the Government to be optimistic about its overall performance for 2023, it pointed to increased costs as more personnel vacancies are filled and further capital projects come online over the remaining two quarters of 2023. 

It advised that these costs would have to be diligently monitored to ensure unnecessary spending is not incurred. 

The half-year report also highlighted that Core Government Revenues must exceed the performance of $978 million set out in the original 2023 budget in order to reach the revised target of $1 billion detailed in the Strategic Policy Statement tabled in Parliament in April.