May '22 Surplus $30 Million Over Budget

The Cayman Islands Government’s unaudited financial results for the first five months of the year show a $179.5 million Operating Surplus for the Entire Public Sector (EPS); this amount is $30.0 million more than the projected year-to-date Operating Surplus of $149.5 million. 

Total Operating Revenues of Core Government for the five-month period ended 31 May 2022 totalled $568.9 million, which is $51 million over the prior year, and $23.0 million ahead of budget.

Total revenues had surpassed the half-billion mark by the end of April 2022, which is an unprecedented achievement. Total Operating Revenues of Core Government for the four-month period ended 30 April 2022 totalled $509.5 million, marking the first time that revenues have exceeded half a billion dollars in the first four months of a financial year.

Deputy Premier and Minister for Finance & Economic Development Hon. Chris Saunders presented the May 2022 Year-To-Date (YTD) figures to Cabinet on 21 June 2022.

He said, “I was happy to present to Cabinet the overall year-to-date financial position of the Government for the first five months of 2022. The May numbers are following a similar trend as prior months, with higher than budgeted revenues and surpluses. I maintain a cautious optimism as most of the Government revenue collected in any given year comes in the first half of the year due to various financial services fee structures. However, the May year-to-date numbers shore up our positive position heading into the historically leaner second half of the year.”

With the surplus running ahead of projections, Deputy Premier Saunders announced that approximately 20 percent of the existing Surplus would be diverted to the Government’s Energy Assistance Programme announced in Parliament earlier this month.

Deputy Premier Saunders said, “With oil, and therefore energy prices, showing no sign of meaningful abatement in the local market and indeed worldwide, we will use a portion of the surplus to assist our people with the challenges this increase in the cost of living has caused. We are fortunate to be able to take this and other initiatives as announced by the Premier and look forward to offering this additional support during such a challenging time to provide much-needed financial relief to our people.”

Revenues: Better than budget in several categories

The better than budget revenues in the first five months of 2022 were owing largely to better-than-expected performance in a several areas. Specific areas contributing to the better than budgeted expectations included:

• Land Holding Companies Share Transfer Charges were $2.2 million better than budget as significant increases are related to higher volumes of property transfer.  Compared to the actual results for the same period in the prior year, there is a $1.2 million favourable variance;
• Mutual Fund Administrators Licence Fees surpassed projections by $3.9 million due to an increase in the volume of funds registered.  Compared to actual results for the same period in the prior year, the 2022 fees received are approximately $3.6 million more;
• Partnership Fees were $4.1 million better than budget, due to the level of registration outperforming the anticipated increase.  Compared to the actual results for the same period in the prior year, there is a $7.4 million favourable variance;
• Private Fund Fees were $3.5 million over projections, due to a higher number of Private Funds being registered than anticipated.  Compared to the prior year actual results there is a $7.7 million favourable variance;
• Work Permit Fees were $5.5 million more than anticipated, representing an upturn in demand for workers as the economy moved into phase five of the post-pandemic border reopening.  Compared to actual results for the same period in 2021, these 2022 fees are $7.1 million or 25% more; and
• Stamp Duty – on Land Transfers amounted to $13.2 million more than projected, as there continues to be higher than expected volumes of property transactions coupled with high property values.  Compared to actual results from the same period in 2021, the 2022 duties are $4.3 million less.

However, there were areas still performing below expected projections. These included “Other Import Duty” which came in at $11.2 million less than expected but compared to actual results from the same period in the prior year, there is a $10.9 million favourable variance.

Included in the note to Cabinet was a breakdown of revenues collected for the first five months of the year in several categories with a comparison to prior years as summarised in the following table: 

Expenses: On Budget but above prior year

2022 Year-to-Date Expenses for May came in right on budget, with actual expenses amounting to $381.7 million with $381.6 million being budgeted.

However, compared to the prior year-to-date actuals, the 2022 total expenses are $31.3 million higher.

Surplus: Central Government – Better than Budget and an increase over prior year

For the first five months of 2022, Central Government recorded a surplus of $187.2 million, which was $23 million better than the projected surplus of $164.2 million, and $19.6 million higher than the prior year.

Surplus: Entire Public Sector – Better than Budget and an increase over prior year

At the end of the first five months of 2022, the Entire Public Sector had a surplus of $179.5 million which was not only $30 million better than the projected surplus for the period of $149.5 million but was also an increase of $24.7 million over the EPS surplus for the same period in 2021.

Cash: Below budget

The Government’s cash position at 31 May 2022 was $469.4 million. This amount is represented as Operating Cash of $304.5 million, $284.2 million of which is held in the form of fixed deposits, and Reserves and Restricted Cash (all held in the form of fixed deposits) of $164.9 million.  

Also included in the note to Cabinet was a comparison of the May 2022 YTD financial performance compared to the previous three years, as summarised in the following table:

Deputy Premier Saunders observed, “The May year-to-date figures continue to show improvement when compared to previous years’ monthly YTD results, which show strong confidence and performance in our Financial Services sector, a high volume of sales in our Real Estate sector combined with high property values, and steady growth in work permit fees as the hospitality industry and the Islands continue to re-strengthen post-COVID.”

He continued, “The Tourism sector is obviously not recovering as rapidly as we had hoped, particularly due to the late start following the emergence of the Omicron variant earlier this year. However, I anticipate that tourism numbers will begin rising once further travel restrictions are lifted and we roll into high season toward the end of the year. Despite some shortfalls in individual revenue line items, the overall outlook for Government finances remains sunny. We are keeping a close eye on the numbers and tracking both upward and downward movements monthly in order that we can be as nimble as possible and respond quickly to any unexpected issues.”

Premier Hon. Wayne Panton said, “Our Government’s commitment to fiscal discipline, a strong and resilient economy and continued investor confidence has led to a May year-to-date surplus of $179.5M. This better than budget surplus will help us navigate through the choppy global economic waters that are ahead yet allow us to responsibly help those in our society that need support. We intend to continue to be fiscally disciplined as we dynamically build on our existing strengths to fulfill Cayman’s potential as a leader in sustainability in the world and one of the best places on the planet to live, work, visit and invest.”

He continued, “I also extend my gratitude to all Cabinet Ministers and Parliamentary Secretaries for their ongoing adherence to fiscal discipline and give my sincere appreciation to the entire Civil Service for their ongoing daily operational assistance.”

Premier Panton also thanked His Excellency the Governor Martyn Roper and Deputy Governor Hon. Franz Manderson for their support.