Government released its Strategic Policy Statement this week which provides in broad terms the economic and financial forecasts that inform the budget and guide policy decisions for 2022 to 2024.

Here is a breakdown of the main projections:


The SPS predicts economic growth of 1.2% this year, and 4.7% and 4.3% in 2022 and 2023, respectively, followed by a more moderate economic expansion of 2.3% in 2024.

Last year, the economy contracted by 6.7%, with all sectors, except healthcare and the government, impacted by the pandemic. At the same time, Cayman’s total employment declined and the unemployment rate increased to 5.2% as the drop in labour demand outpaced the 10.5% fall in the labour force.

The economic recovery this year will be led by a projected 10.3% growth of the construction sector as several large-scale hotel projects, including the NCB Hilton, the new Hyatt at Pageant Beach, the Mandarin in Beach Bay and the Indigo are under way.

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In addition, government anticipates construction activity at John Gray High School, the long-term mental health facility and on Cayman’s road network.

The tourism industry, in contrast, is expected to contract by a further 88% as the borders remain closed, and stayover tourism is not expected to peak again before late 2022 or early 2023.

Fiscal policy

Government said it will maintain a prudent fiscal policy despite additional healthcare demands and the impact of COVID-19 on the economy. Last year, government recorded a net deficit of $101 million. This year core government’s operating deficit is forecast to be $15.8 million, due to higher-than-normal expenditures on support payments to displaced tourism workers, local businesses and vulnerable citizens.

According to the projections, operating revenues of $2.7 billion over the SPS period will be driven by the continued strong performance of the financial services sector and the local real estate market, as well as the planned full reopening of the Cayman Islands borders to stayover tourism in first quarter 2022.

Fees from the financial services sector alone 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.

The projects include the continued expansion of educational facilities at John Gray High School, the Lighthouse School and all other schools, which will receive nursery and learning support classrooms.

Government intends to fund a new Sunrise Adult Training Centre, acquire land for farming and conservation, and modernise the telecommunications infrastructure.

Other capital projects include the expansion of the weather service network and improvements to the road network and the prison facilities.

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.

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.


Aside from the unpredictable nature of the pandemic, vaccination rollouts and border reopenings in Cayman and the rest of the world, the SPS points to potential inflation and financial services regulation as key risks affecting its forecast.

Inflation is largely influenced by Cayman’s major import market, the United States, and expected to fluctuate around the 2% mark.

A fast economic recovery in the US in combination with short-term mismatches in the local labour market, however, could result in inflationary pressures over the medium term in Cayman. In addition, the financial services sector faces increased risks from international regulations.

“Notably, the addition of Cayman to the FATF grey list and continued talks of the European Union adopting stricter criteria on economic substance could lead to an additional burden on the sector,” the SPS stated.

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