[Cayman Airways] 2017 generates bonus surplus

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[Cayman Airways] 2017 generates bonus surplus

Unread post by bimjim » Mon Oct 30, 2017

https://caymannewsservice.com/2017/10/2 ... s-surplus/

[Cayman Airways] 2017 generates bonus surplus


The public purse appears to have earned a bonus this year as forecasts suggest that government’s surplus for the 18-month financial period from July 2016 to December 2017 is $8.9 million more than predicted. Finance Minister Roy McTaggart told his political colleagues on Friday that by 31 December core government would have a predicted surplus of $55 million, following its first extended fiscal period of 18 months. Before detailing his expectations for spending and earnings over the next two years, he set out the current fortunes of the public purse.

McTaggart revealed that core government generated $934.8 million in revenue for 2016/17, a whopping $26.3 million higher than the forecast $908.5 as a result of a boost in stamp duty on land and a boost to imports of cars and fuel. But because government spending was $17.4 million more than the original budget called for, the bonus was not as hefty as it could have been.

Surprisingly, it was not the civil servants’ wage bill that pushed up costs for government during the current fiscal period, as that fell by $7.7 million. The increase in spending was driven by a higher than expected number of uninsured, underinsured and indigent people needing overseas health health care to the tune of $10.3 million plus $4.8 million to fund various legal cases, none of which are likely to be detailed. Cuban migrants cost government $3.1 million, and $7.6 million was needed for other operating expenditures and depreciation.

Government is also facing significant losses from the statutory authorities and government companies. According to the budget delivered by former finance minister Marco Archer, the SAGCs should have delivered a surplus this year of half a million dollars; instead they are now expected to have a combined net operating loss of $8.9 million, a miscalculation in the wrong direction of some $9.4 million. McTaggart pointed the finger at the national airline and a fall in ticket sales.

“The deterioration is primarily related to Cayman Airways, which has seen a significant reduction in its passenger loads on its Cuba and Miami routes and will thus experience a larger loss than initially forecast,” he said.

But given the significant earnings government made over the last 18 months, it can weather the unexpected costs and the losses from the public authorities.

However, McTaggart gave no indication that the people can expect any windfalls themselves as he made it clear he is intends to ensure that government maintains a healthy bank balance.

“Some people ask, why must the government generate operating surpluses? Simply put …it is always wise to spend less than you earn and to manage your finances so as to always end each financial period with a surplus – it is the wise and prudent thing to do as it ensures that you will have the financial wherewithal to deal with unexpected circumstances,” he told the Legislative Assembly. “Maintaining an operating surplus is a key component of ensuring compliance with the Principles of Responsible Financial Management and the FFR to which this government is committed to maintaining over the long term.”

He spoke of the need for public sector agencies to control expenditure spending and improve performance.

“By aggressively managing our expenditure we will continue to generate cash from operating activities enabling us to build and maintain our cash reserves while simultaneously generating cash to fund our capital investment programme – and minimize the need to borrow,” he added.

The details of the performance by SAGCs and government departments will be scrutinised during the finance committee hearings, when senior civil servants will be on hand to detail their spending plans and the results of the fiscal period, which ends on 31 December.

The Finance Committee is expected to convene following the debate on the budget, which begins Wednesday.

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