The Cayman Islands Government’s Quarterly Financial Report for the Nine-Month Period Ended 30 September 2023 was published in the Cayman Islands Gazette on Friday, 10 November as required by law.

The unaudited financial results for the Third Quarter 2023 show a $111.3 million surplus for the Core Government and a $116.6 million surplus for the Entire Public Sector (EPS). 

Net Assets of the Government were $2.2 billion, with overall bank account balances of $582.1 million in cash and deposits.

Surplus
The overall EPS Surplus of $116.6 million was $47.1 million greater than the projected year-to-date operating surplus of $69.6 million.

This favourable position was due to actual revenues being higher than budgeted revenues by $49.5 million for the period. 

Additionally, Statutory Authorities & Government Companies (SAGCs) contributed $5.4 million to the overall surplus for the EPS; exceeding their estimated results for the first three quarters of 2023 by $19.7 million, when compared to an expected deficit of $14.3 million.

Comparing year-on-year numbers, the EPS Surplus was $34.8 million higher than that achieved for the same period in 2022 with SAGC third quarter results being $20.6 million higher than the prior year.

Revenues
Compared to the same period in the prior year, total revenues of Core Government have increased by $28.2 million, mainly due to favourable variances of $26.7 million and $19.9 million in Coercive Revenue and Investment Revenue, respectively. 

The first nine months of 2023 generated coercive revenues of $791.1 million, which was $26.7 million more than budgeted expectations and $14.8 million higher than the 2022 year-to-date actual results.

• The positive variance in 2023 coercive revenues compared to budget can be primarily attributed to:
  A $2.6 million positive variance in Financial Services Fees Collected by the Cayman Islands Monetary Authority (CIMA) for the Government, due to an increase in the volume of registered funds resulting in higher Mutual Fund Fees of $3.5 million and Private Funds Fees of $2.7 million. This was offset by Securities and Investment Business Licence Fees being $3.3 million less than budget expectations; due to the growth rate of the registered persons regime being less than anticipated. When compared to actual results for the same period in the prior year, the 2023 Financial Services fees collected by CIMA equate to a 0.3% decline;
• Work Permit Revenues collected in the nine-month period to 30 September 2023 amounting to $83.1 million, which is $12.6 million greater than the revenues projected through the quarter and $4.0 million greater than the revenues for the corresponding period in 2022; and
• A positive variance of $14.7 million in Tourism-Related Revenues, reflecting the increase in stay-over tourism following the reopening of the borders in 2022. Compared to actual results for the same period in 2022, the 2023 revenues are $25.0 million more.

Notwithstanding the overall favourable results in coercive revenues collected, when compared to the 2023 Budget, there were certain areas that fell short of projected expectations including:

• A negative variance of $16.3 million for all Import Duty categories, with Actual Import Duty Revenue received to 30 September 2023 amounting to $174.5 million.; and
• A negative variance of $10.7 million in Financial Services Fees Collected by the General Registry Department, which includes Company Fees payable by Exempt Companies being lower than expected by $7.7 million due to a decline in the growth rate of the number of companies in this category. 

Investment Revenues produced $21.2 million, which was $19.9 million more than the budgeted revenue for the nine-month period, and has exceeded the full year budgeted revenue of $1.7 million by $19.5 million. Compared to the same period in the prior year, there has been a $14.7 million increase. Higher cash balances held by the Government have afforded larger balances to be placed on fixed deposits, resulting in higher interest payments.  

Expenses
Expenses for the first six months of 2023 amounted to $734.9 million. This amount was $22.1 million higher than the year-to-date budget of $712.8 million. Compared to the prior year-to-date actuals, total expenses for 2023 are $14.0 million higher.

Costs relating to personnel for the first nine months of 2023 amounted to $323.6 million, which were $20.7 million less than the budget $344.3 million mainly due to delayed recruitment. These costs are $22.9 million more than the same period in 2022, primarily driven by Cost of Living Adjustments awarded in the latter part of 2022.

Supplies and Consumables costs were $102.0 million for the period and were $2.6 million less than the year-to-date budget. Compared to the prior year-to-date costs of $91.3 million, the 2023 expenses are $10.7 million more. It is anticipated that as more projects come online during the remaining quarter of 2023, costs will align closer to the amounts anticipated in the full-year budget.

The savings against budget in staff costs were offset by higher-than-budgeted levels of expenditure in Outputs from SAGCs by $12.6 million, Outputs from Non-Governmental Suppliers by $21.7 million, and Transfer Payments by $10.3 million.

Payments to the Cayman Islands National Insurance Company (CINICO) and the Health Services Authority (HSA) exceeded their original year-to-date budgets by $3.8 million and $8.6 million, respectively. The $3.8 million adverse variance with respect to CINICO is due to the fact that actual costs for the Health Insurance for Civil Service Pensioners exceeded the budget for this category. The majority of the $8.6 million adverse variance with respect to the HSA is due to actual costs for the Care of Indigents exceeding the budget for this category by $8.8 million.

Outputs from Non-Governmental Suppliers of $60.0 million were $21.7 million more than the year-to-date original budget, mainly due to “NGS 55 Tertiary Care at Local and Overseas Institutions” being $24.5 million more than the year-to-date budget of $16.2 million.

The total cost incurred with respect to Outputs from Non-Governmental Suppliers, for the first nine months of the year are $4.9 million more than the same 2022 nine-month expenditure of $55.1 million.

Thus far in the 2023 financial year, Parliament has approved, via section 11(5) and section 12 of the Public Management and Finance Act, an additional $30.8 million for NGS 55.

Transfer Payments of $50.0 million were $10.3 million more than budgeted for the nine-month period. This variance is mainly due to overages in spending on Scholarships and Bursaries expenditure by $10.5 million and Financial Assistance by $4.1 million.

When compared to the prior year-to-date amount of $73.4 million, the 30 September 2023 total year-to-date expenditure of $50.0 million represents a decrease of $23.4 million.

Cash Position
Total cash and fixed deposits as at 30 September 2023, were $582.1 million. This amount includes Operating Cash of $405.7 million with $388.0 million held in the form of fixed deposits and Reserves and Restricted Cash balances of $176.4 million, which is all held in the form of fixed deposits.

Conclusion 
In conclusion, the report noted the Third Quarter’s performance has positioned the Government to be optimistic about its financial performance for 2023. 

However, the report acknowledged that during the final quarter of the year there will be a push to meet planned 2023 objectives and advised that the resulting costs will have to be diligently monitored to ensure spending is not incurred unnecessarily.

The nine-month report also highlighted that Core Government Revenues must exceed the performance of $978.1 million set-out in the original 2023 budget in order to reach the revised target of $1.037 billion detailed in the Strategic Policy Statement tabled in Parliament on 26 April, 2023.

The Cayman Islands Government’s Unaudited Quarterly Financial Report for the Nine-Month Period Ended 30 September 2023 may be found at: Extraordinary Gazette Supplements | Cayman Gazette (gov.ky)