The Cayman Islands has just released its Strategic Policy Statement (SPS), which provides the economic and financial forecasts that inform the budget and guide policy decisions for 2022 to 2024.

The SPS predicts economic growth of 1.2 per cent this year by 4.7 per cent in 2022 and by 4.3 per cent in 2023 followed by an economic expansion of 2.3 per cent in 2024. The economy contracted by 6.7 per cent in 2020.

Cayman’s total employment declined and the unemployment rate increased to 5.2 per cent as the drop in labour demand outpaced the 10.5 per cent fall in the labour force. The economic recovery in 2021 will be led by a projected 10.3 per cent growth of the construction sector.

Tourism expected to peak in late next year

The tourism industry is expected to contract by a further 88 per cent as the borders remain closed, and stay-over tourism is not expected to peak again before late 2022 or early 2023. Operating revenues of $2.7 billion are projected over the SPS period will be driven by the financial services, real estate as well as the planned full reopening of the Cayman Islands borders to stay-over tourism in first quarter 2022.

Fees from the financial services sector are expected to contribute revenue of $1.1 billion over the three-year period ending in 2024. In line with the fiscal rules set by the Public Finance Management Act, government aims for a fiscal surplus, with planned operating expenditures of $2.6 billion during the three-year period.  The anticipated surpluses are $25.5 million, $34.3 million and $65.2 million in 2022, 2023 and 2024, respectively.

Government’s cash balances are, however, expected to decline from $441.7 million in 2022 to $291.6 million in 2024. In addition, government intends to borrow $230 million in 2021 and another $100 million in 2022, to fund capital projects, through its previously arranged $330.5 million line of credit with local banks. Core government’s debt is expected to reach almost $500 million at the end of 2022, with plans to reduce it by $100 million by the end of 2024. 

Capital investments by statutory bodies

Statutory authorities and government companies are expected to receive $103 million in capital investments from 2022 to 2024, with $30 million for the Cayman Islands Airport Authority and $20 million going to the National Housing Trust. The University College of the Cayman Islands is earmarked for $10.2 million. The Cayman Turtle Centre and Cayman Airways stand to receive $9 million each.