Finance Minister explains potential for deficit at end of 2025

Minister of Finance Hon. Rolston Anglin answered the Opposition’s criticism of financial projections that indicated a potential deficit at the end of 2025 ahead of Finance Committee proceedings in Parliament on Friday, 6 June.

Minister Anglin was presiding as chairman of Finance Committee at a session called by the Government to vote on supplementary expenditure requests totalling $43.2 million needed to fund health and welfare payments after previously approved funds were exhausted.

Prior to beginning committee proceedings, Minister Anglin explained the Government’s current financial position and projections for its 2025 end-of-year performance.

He said, “I have listened very carefully to all that has been said over the last few weeks and I want to assure the members of this committee, and the listening public, that our budget process is sound. Our budget system is sound, and there are a number of things that all of us have known - anyone who's elected will have known for many years, and that is the trends around how the Cayman Islands budget performs. The first three months of the year is always when the government earns the vast majority of its revenue.”

Minister Anglin continued, “If you use look at those months in isolation, you will see that those months will always provide a significant surplus of revenue over expenditure. However, in the last nine months of the year, historically all of those months will produce - when looked in isolation - a deficit. And so, the first quarter of the year always funds the activities for the entire fiscal year and that is because financial services fees are due before the 31st of March.”

To illustrate the point, all Members of Parliament present were given a snapshot of the Government’s actual financial results each month for the years 2021 to 2024 and January to April 2025.

Minister Anglin explained the 2024 numbers, saying, “Honourable Members will see the core government's cumulative monthly operating surplus for the first three months total $251.8 million and the cumulative monthly operating deficits reporting for the remaining nine months total $191.7 million, leaving a significantly smaller surplus for the entire year of $60.1 million by the end of 2024.”

He continued, “Honourable Members, 2025 is no different than the trend in behaving the same way. The cumulative monthly operating surplus for the first three months totalled $262.1 million and already for the month of April there was reported a deficit of $22.1 million - which is double the deficit of the same month in the last year. While the operating surplus of $262.1 million at the end of March 2025 is commendable, it is important to recognise that this amount will be depleted over the remainder of the year due to the monthly deficits between April and December.”

The Finance Minister pointed to supplementary expenditure requested by the previous administration during the first four months of the year preceding the April 2025 General Election as contributing to a potential deficit for the Government at year end.

He said, “Members would also note that what was also not mentioned in the recent dialogue around this issue is what is contributing to the possible deficit for 2025, unless corrective action is taken, is that the previous Cabinet approved supplementary expenditure and funding totalling $58 million in the first four months of 2025.”

Minister Anglin explained that $38.3 million of the funds requested by the previous administration were in operating expenditure and $19.7 million in capital expenditure.

These supplementary expenditures, he said, in particular the operating expenditure of $38.3 million, will contribute to the reduction of the $262.1 million operating surplus that was reported at the end of March 2025. 

The Finance Minister continued, “The supplementary expenditure would also contribute to the $26.2 million deficit that is being projected in the 2025 Pre-Election Economic and Financial Update or PREFU – a deficit that could arise unless corrective action is taken by Government.”

Since the PREFU pointed to the possibility of a deficit existing at the end of 2025, the task of the current Government is to avoid such a possibility and to produce an overall surplus for 2025.

Minister Anglin concluded his discussion of 2025 financial projections saying, “To ensure the Government maintains its financial stability and return to prudent fiscal responsibility, the Government has begun taking corrective actions with the aim of curtailing expenditure during the remainder of the 2025 financial year and assessing planned legislation that was expected to generate additional revenue.”

The Minister then moved forward with the Finance Committee proceedings, and put each of the appropriation requests individually to Members for a vote, allowing MPs to ask questions of the requesting Ministries prior to casting their votes.

A full recording of Finance Committee proceedings on Friday, 6 June 2025 may be found at:

https://www.youtube.com/live/tYTc6g4euPQ?si=eXtfcX3d5XteRWsB