GEORGE TOWN, Cayman Islands (CNS) – With the release of the government’s unaudited accounts for the first six months of 2021, there is still no signs of the anticipated deficit by the year-end, as government revenue continues to increase. The results for the first half of the year show a government surplus of CI$155.8 million, which is $23 million better than expected, and more than half a billion dollars cash in the bank.
Core government revenue has increased by $125.6 million compared to last year, which was directly impacted by the COVID-19 lockdown. This increase is largely from financial sector fees and stamp duty. While government is still collecting more cash, its total expenses have risen by $45.6 million, which was largely due to the support given to displaced tourism workers and businesses impacted by the border closures.
Government’s cash position on 30 June was $211.5 million higher than anticipated in the 2021 plan and estimates. The accumulation of cash is a result of higher than expected revenues together with a delay in capital projects. The debt situation is also very stable, with a balance of $231.4 million. Scheduled repayments are being easily met and $34.2 million is due to be paid off within one year.
“While the second quarter’s performance has positioned the government to be optimistic about its performance for 2021, this will be greatly impacted by the continued economic effects of COVID-19 expenditures and fall-off of tourism-related revenue and local economic activity due the extended closure of the borders,” government stated in the report.
The overall fiscal performance reported for all of government, including the statutory authorities and government companies, continues to look good, as the surplus stands at $142.5 million, almost 20 percent more than what was forecast in the current budget, because even though expenses are increasing due to the pandemic, revenue is continuing to grow.
A new unbudgeted revenue stream from the registration of Private Funds contributed a whopping $48.5 million, while stamp duty raised $33.8 million, as property transactions grew, as did the prices.
While import duty and other fees brought in more cash than expected, there was no revenue from tourism, and some other areas underperformed against projections, such as partnership fees, security investment business licences and work permit fees. But despite falling short of expectations, all of the categories still performed better than in 2020 and the financial sector still funds more than half of the government’s earnings.
But as government collects most of its offshore revenue at the beginning of the year, revenue is likely to fall further in the next quarter while expense are expected to rise. So far this year, spending is being fuelled largely by the support being offered to displaced workers and small businesses.
Transfer payments have grown by $35.5 million, or 140 percent this year so far, as almost $61 million has been spent supporting people through the border closures, and parliament has already approved supplementary funding of $55.9 million to ensure the cash does not run out.