Cayman Budget Passes Into Law

by Amanda Banks, Tax-News.com, London

03 November 2005

The Government of the Cayman Islands now has a new budget allowing it to spend $376.9 million for the financial year that began 1 July 2005, Financial Secretary Kenneth Jefferson announced this week.

The Appropriation (July 2005 to June 2006) Law, which authorises budgetary spending, was approved as a bill by the Legislative Assembly on Friday, 28 October, became a law after Acting Governor George McCarthy gave his assent Monday, 31 October, and was published in an extraordinary issue of the Official Gazette on the same day.

Piloted through its stages in the House by Financial Secretary Kenneth Jefferson, this estimate of income and expenditure during the fiscal year projects a surplus of $3.3 million. This excludes spending on extraordinary items such as matters relating to recovery from Hurricane Ivan and damages awarded against Government in a court case.

Explaining the budget, Mr. Jefferson told the House during parliamentary debate that in meeting its spending commitments, Government employed a mix of recurring revenue, borrowing, and use of cash-in-hand.

Government will take $27.1 million from its cash holdings, leaving it on course to have $71.3 million in the Treasury at the end of the financial year.

“The use of $27.1 million of existing cash to help finance planned capital expenditures reduces the Government’s borrowing requirement, and therefore reduces its interest expense and future debt repayment obligations,” the Financial Secretary stated.

Additionally, use of this money to supplement borrowing in the open market does not put at risk Government’s required financial position.

“The forecasts show that the level of cash holdings at the end of 2005/06 will be at a level equal to 76 days of expenditure. This is far in excess of the 45 days position at 30 June 2006, required by the Public Management and Finance Law,” Mr Jefferson added.

The budget allows for $63 million in borrowing to partly finance capital projects. Included are $14.9 million to begin construction of three new high schools and a primary school and enhancement of other education facilities.

“This will ensure that the Cayman Islands has the necessary infrastructure to deliver a world-class education service to its children for many years to come,” Jefferson said.

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