The Cayman Islands economy is showing some positive signs for 2013 in tourism and government finances, Premier Juliana O’Connor-Connolly said.
Speaking at the Cayman Business Outlook conference last week at The Ritz-Carlton, Grand Cayman she noted government finances during the first six months of the 2012/13 budget year, which runs from July to June, were ahead of expectations, and air arrival figures for 2012 should top 300,000, the best result in 11 years.
“I am happy to report that for the first six months of the 2012/13 financial year the government’s finances have performed better than our budgetary expectations,” Ms O’Connor-Connolly said. For the period 1 July to 31 December, 2012, the government recorded total revenues of $218.52 million, which were some $5.2 million higher than the year to date budget. Operating expenses of $263.40 million were $11.8 million less than the budget, resulting in an overall net deficit of $44.9 million for the period, about $17 million better than expected, she said.
The Cayman Islands government typically collects most of its revenues during the first months of the calendar year when many licences and other fees are due. For the entire budget year 2012/13, government forecasted that it would collect total revenue of $649.45 million, incur $567.2 in operating expenses and record an overall net surplus of $82 million.
Cayman’s total debt in December 2012 stood at $586 million, which was approximately $13 million less than in July 2012. Government expects to pay down the debt to $573 million by the end of the budget year.
Ms O’Connor-Connolly pointed also to the territory’s triple-A credit rating, which was confirmed by Moody’s in December 2012 with a stable outlook. “This is quite an achievement as the global economic turmoil continues,” she said.
Tourism air arrival figures were another area giving hope for a further positive development of the economy, Ms O’Connor-Connolly said.
Following a drop in air arrivals by 20 per cent after the global financial crisis in 2009, “the turnaround achieved by the Department of Tourism is nothing short of remarkable”, she said.
“This is especially true since they achieved their goals while the department itself underwent budgetary reductions. As a matter of political stamina, targeted marketing, promotional effort and increased airlift, visitor arrivals trended positively during the years 2010 and 2011. By the end of 2011 the Cayman Islands had the best-ever visitors arrival that we have had in the past decade.”
Last year, this trend was confirmed with an increase of 3.8 per cent through November. “When the final figures are in for 2012, we have a legitimate expectation that air arrivals will again top the 300,000, giving us the best air arrival figures in the past 11 years,” Ms O’Connor-Connolly said.
It would also be the first time in more than a decade that the Cayman Islands has registered 300,000 air arrivals over two consecutive years. For 2013, the Department of Tourism has targeted more than 320,000 air arrivals despite budget restrictions, which meant that in the current fiscal year advertising had to be cut for the first time.
“Having learned to do more with less, DOT will explore new areas of opportunity,” the premier said. “For example, they aim to maximise relationships with industry giants such as Orbitz and generate destination awareness through positive PR.”
The picture is much less positive, however, when it comes to cruise arrivals. Cayman has experienced a steady decline of cruise passengers since hitting a peak of more than 1.9 million in 2006. Ms O’Connor-Connolly noted, “part of the reason for this decline is, we believe, a lack of berthing facilities”.
While the Florida Caribbean Cruise Association, with which government officials met in January, confirmed that Cayman remained in high demand with cruise passengers, new cruise facilities are needed, she said.
“Until we can complete a berthing facility immediate improvements will be identified and implemented to enhance the cruise visitor experience, for example by the addition of more shading and benches,” she added.
Overall a pick up of work permit figures showed that demand for labour was increasing, “but too many Caymanians still remain unemployed and we all need to partner to eliminate unemployment in the Caymanians for all our residents”, she said.
The economy has shown modest growth with a 0.9 per cent increase in gross domestic product in 2011 and an expected 1.2 per cent growth in 2012. Meanwhile, inflation grew by 0.9 per cent last year.
“Over the past two years we have seen some improvements. Although we can see some semblance of sunlight, we are not out of the dark woods by any stretch of the imagination,” Ms O’Connor-Connolly concluded.