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Cayman continues on path towards debt freedom

The Cayman Islands is enjoying a substantial increase in tourism arrivals, a fiscal surplus and declining debt (File photograph)

The Cayman Islands government has continued to chip away at its half-a-billion-dollar debt, paying off nearly 11 per cent during the first nine months of last year.

The Third Quarter Economic Report 2023, produced by the Economics Unit of the Economics and Statistics Office, revealed that the total outstanding debt of the central government had shrunk to $469 million, from $524.4 million the year before – a reduction of $55.4 million.

The ESO stated that the government had been reducing the debt balance since the drawdown of a standby facility in the second quarter of 2022.

The central government’s overall fiscal surplus was $72.3 million up from $66.6 million for the same period in 2022.

Air arrivals for the three quarters rose by nearly 79 per cent to 323,028, while cruise visitors rose by more than 118 per cent to 936,754.

It meant a doubling of overall tourists to nearly 1.3 million visitors when compared to the same nine-month period in 2022.

Cayman hotel rack rates were on the rise last summer and government revenues from tourism accommodation taxes and fees are expected to reflect that with improved receipts.

Meanwhile, real gross domestic product expanded at an estimated annualised rate of 4 per cent.

The report said: “Available indicators suggest that the islands’ output expanded across all the core sectors.

“The economic growth for the period was led by a growth of 26.4 per cent in the recovering hotels and restaurants sector.”

It further supported growth in the transport storage and communication and other sectors, including electricity and water supply, driven not only by tourism-related activities, but also high summer temperatures.

The report said: “Robust economic activity and a strong recovery in the labour-intensive accommodation sector have driven unemployment levels to record lows and close to their natural rate.

”As the unemployment rate remains close to this natural level, some oscillation is anticipated.

“As a result, the unemployment rate for the year has been revised marginally upwards to 3.3 per cent.”

Finance and insurance services, which continue to be the largest contributor to GDP, expanded by 3.1 per cent during the review period and there were notable economic activity expansions in health and social services and wholesale and retail trade.

The report said: “The strong performance of the economy in the first three quarters of the year has led to an upward revision of the calendar year forecast.

“Economic activities [the segment] in the islands is now projected to increase by 3.8 per cent for 2023, with growth expected to remain strong in tourism and auxiliary services.”

By the end of September, the number of active work permits totalled 36,079, up 3,738 or 11.6 per cent compared with a year before.

The increase reflected the accommodation and food service sector employment, with other increases in construction, wholesale and retail trade, activities of household employers and administrative and support services.

The Cayman government employed 4,629 civil servants by the end of September, up 203 or 4.6 per cent.

• To read the Cayman Islands Third Quarter Economic Report 2023, look under “Related Media”

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Published April 18, 2024 at 7:58 am (Updated April 18, 2024 at 7:24 am)

Cayman continues on path towards debt freedom

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