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KY | Nov 2, 2020

Cayman Islands Government forecasts CI$168-million deficit

/ Our Today

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Ballooning public expenditure due to COVID-19

Finance Minister Roy McTaggart (Photo: Cayman Marl Road)

By Durrant Pate

The government of The Cayman Islands is forecasting a CI$168.7 million deficit by the end of this year as a result of the COVID-19 pandemic.

The bad news of the forecast came out of a meeting of the Cayman Islands Finance Committee, which has started its hearings on the appropriation changes to this year’s national budget.

While everyone was expecting the bad news given the amount of unprogrammed public expenditure, the committee heard that the changes to the 2020 budget arose from the mitigation and suppression of the COVID-19 pandemic.

Detailing the unprogrammed expenditure

Finance Minister Roy McTaggart pointed to an additional CI$40 million that had not been budgeted but was spent on COVID-19 testing, air-bridges between the United Kingdom and Grand Cayman, and other specific COVID-19 virus-related spending.

The finance minister made reference to another CI$23.1 million that has been spent since the start of the year on financial assistance to the most vulnerable, as well as displaced tourism workers and non-Caymanians stuck on the island as a result of the border closure.

McTaggart detailed how CI$16.3 million was spent on operational support for Cayman Airways Limited to keep the national flag carrier afloat during these times of uncertainty.

In addition, CI$9.5 million was spent on micro and small business relief efforts, while CI$3 million was used to buy laptops for students in public schools to reduce gaps in education equality exposed by the need for online learning during the pandemic.

McTaggart detailed how CI$16.3 million was spent on operational support for Cayman Airways Limited to keep the national flag carrier afloat during these times of uncertainty.

Loan guarantees to help businesses

At the same time the national accounts were also impacted by the government-guaranteed loan scheme for medium and large-sized businesses.

Under this assistance programme, the Caymanian government will guarantee or be liable for 50 per cent, or $100 million, of a maximum loan facility of $200 million offered to businesses.

In addition, the government will offer its own line of credit to businesses to the tune of almost $400 million and a loan to the Cayman Islands Airports Authority.

Most of the Appropriations Bill reflects increases in spending, there are however decreases in some areas. But the increases in the budget far outweigh the cuts in national expenditure.

While the Tourism Ministry has offered up some of the biggest savings in a number of areas, totalling more than $15 million, the increased spending of more than CI$30 million still left the ministry in the red.

The Finance Minister conceded that the government will be temporarily outside the requirements of the public management and finance law regulations.

However, McTaggart has disclosed that the UK, which supervises Cayman’s fiscal management rules have indicated that once the government breaks the Framework for Fiscal Responsibility, help will be provided.

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