(CMR) The Cayman Islands Government is optimistic about its financial performance for 2023 after reporting a surplus for the first quarter of 2023. However, the Government will have to diligently monitor costs over the remaining quarters of this year.
The unaudited financial results for the First Quarter of 2023 show a $235.0 million surplus for the Core Government and a $231.7 million surplus for the Entire Public Sector (EPS).
The Quarterly Financial Report for the Three-Month Period Ended 31 March 2023 was published in the Cayman Islands Gazette on Wednesday, 10 May as required by law.
Net Assets of the Government were $2.2 billion, with overall bank account balances of $512.8 million in cash and deposits.
The overall EPS surplus of $231.7 million was $24.4 million higher than the 2023 Budget anticipated for the period, a positive variance of 11.8 percent.
This favorable position was due to actual revenues being higher than budgeted revenues by $22.6 million for the period and was complemented by lower expenditure levels in Personnel Costs and Supplies & Consumables.
Statutory Authorities & Government Companies (SAGCs) had a negative impact of $3.3 million on the overall EPS surplus. However, the First Quarter performance of SAGCs was $1.5 million more favorable than the SAGCs’ expected deficit of $4.8 million.
Comparing year-on-year numbers, the EPS surplus increased by $21.7 million when compared to the results through the first quarter of 2022.
The First Quarter of 2023 generated coercive revenues of $455.9 million, $16.2 million more than budgeted expectations and 4.6% or $20.2 million more than the coercive revenue collected in Q1 2022.
The higher-than-expected revenue collected was mainly attributable to Mutual Fund Administrators Fees and Private Fund Fees performing better than anticipated due to an increase in the volume of funds registered by $3.5 million and $4.6 million, respectively.
Also, Tourism Accommodation Fees were $7.1 million higher than budget expectations due to the increase in stay-over tourism following the reopening of the borders in 2022. Work Permit Fees were also $4.5 million higher than expected, reflecting the continued increased demand for workers following the reopening of the borders and a stronger economic performance than expected.
There were certain areas of revenue that fell short of projected expectations, particularly Other Import Duty, which amounted to $4.0 million less than expected. However, when compared to the 2022 year-to-date results, Other Import Duties earned $4.4 million more in Q1 2023.
Expenses for Q1 2023 came in almost exactly on budget, with actual expenses amounting to $238.4 million, while budgeted expenditures were $238.8 million for a positive variance of $0.4 million.
Personnel Costs were $8.0 million lower than expected, while expenditure on Supplies & Consumables was $6.1 million lower than projected.
However, these savings were offset by higher-than-budgeted levels of expenditure in Outputs from SAGCs by $4.0 million, Outputs from Non-Governmental Suppliers by $5.0 million, and Transfer Payments by $5.1 million.
Outputs from SAGCs of $45.2 million were $4.0 million more than the anticipated year-to-date budget of $41.2 million. Payments to the Cayman Islands National Insurance Company (CINICO) and the Health Services Authority (HSA) exceeded their year-to-date budgets by $1.2 million and $2.9 million, respectively. The variance with respect to CINICO is due to higher-than-expected actual costs for Health Insurance for Civil Service Pensioners. The adverse variance with respect to the HSA is due to actual costs for the Care of Indigents of $3.8 million exceeding the budget for this category.
Outputs from Non-Governmental Suppliers of $17.7 million were $4.9 million more than the year-to-date budget and $2.2 million more than the same period in the prior year. The increase is mainly due to expenditure on “NGS 55 Tertiary Care at Local and Overseas Institutions” (NGS 55) being $4.8 million more than its year-to-date budget. The costs for NGS 55 are currently $10.2 million and exceed prior year-to-date spending by $1.9 million.
Transfer Payments of $18.3 million were $5.1 million more than budgeted for the three-month period. This overall variance is mainly due to the overages in spending on Scholarships and Bursaries of $5.4 million and a $1.3 million variance on Financial Assistance.
Government’s Cash position ended at $512.8 million at 31 March 2023. Operating Cash & Deposits were $339.3 million, and Reserves & Restricted Deposits were $173.5 million.
The accumulation of cash is as a result of higher-than-expected revenues together with a delay in capital projects in the prior year.
It was also noted that since Financial Services fees are due at the beginning of each year, the Q1 coercive revenue results of $455.9 million are expected to be the highest revenues earned in any single quarter for 2023.