Cayman Islands media are playing up Bermuda’s spending and debt in growing tug-of-war over the Island’s lucrative reinsurance industry.“Bermuda’s government spent nearly $276 million more than it raised in revenues in the fiscal year ending 31 March 2011, and drew down all $200 million of a term loan it got from Butterfield Bank last May,” the Caymanian Compass reported today, citing The Royal Gazette.A Cayman Islands blogger added that funding the additional interest on the debt alone “will mean finding an extra $14 million in revenue each subsequent budget year till the sum is paid off”.“No small beer,” writes offshore recruiting specialist Steve McIntosh in his blog cmlor.com, under the headline “How much?! Bermuda announces flabbergasting deficit.”He continued: “Paula Cox was every bit as sanguine as the ink on the budget documents she stood over, according to a report from Bermuda’s Royal Gazette, blaming ‘an array of very challenging economic and financial circumstances’ for the ‘short-term deficit peak’ in fiscal year ended March 31, 2011, which stood at an eye-watering $276 million.“Not to pile on, but it’s worth noting that these results are just about a year old and that the economy seems unlikely to have improved in the last year given the continued job losses in the international business sector.”He noted a change in Bermuda’s accounting policy that required the restatement of prior year numbers.“Far be it from this recovering accountant to cast aspersions on the motive for a change in accounting policy but let’s just say organisations with this much red ink on their books would be loath to agree to a change in policy that negatively impacted their bottom line.“No wonder Premier Cox has come out all rhetorical guns blazing against an effort announced by the Cayman Islands to attract reinsurance companies, a sector traditionally dominated by Bermuda.“The last thing the Bermuda economy needs is a slide in payroll tax revenue, the treasury’s life blood accounting for $423 million, 42 percent of revenues for the fiscal year.”Premier Cox yesterday hit back at bold statements by Cayman’s Premier McKeeva Bush that the country will win Bermuda’s insurance market.Mr Bush said: “My rating is still AA3 rating what is theirs?” Last year S&P downgraded Bermuda’s sovereign credit rating to AA-.”Backing him, Cayman business leaders suggested Bermuda’s efforts to meet Solvency II requirements make domiciling in Cayman more attractive.But Premier Cox fired back “make no mistake we are fearless in representing our national interest and while we are principles-based, when we speak to businesses owners that are attracted to Bermuda because of what we have achieved, whether on Solvency II equivalence or our quality reputation, we do not hide our light under a bushel and encourage those businesses who seek to re-base here to know that they will be welcomed.”The Cayman Islands has had its own financial struggles; a few years ago after breaking the parameters of a Public Management and Finance Law with a record deficit and record borrowing, the Cayman government was forced to gain special permission from the UK to incur any further debts.But the situation has improved, according to estimates revealed as part of the 2011/12 government budget, the Cayman Islands’ total public or national debt (what government entities owe to lenders) was expected to remain well above $500 million by mid-2014, despite payments of more than $30 million per year until then.By the end of the next budget year on June 30, 2012, Premier Bush said public debt should have dropped to $599.3 million.As a result of those figures, Mr. Bush said the ruling government would not take on any more borrowing in either the 2011/12 budget year or in the 2012/13 year.He expected a surplus at the end of the 2011-2012 year of more than $12 million, but that was changed to an expected deficit of $4.5 million.A jobless rate of 6.1 percent was expected to persist in the Cayman Islands through mid-2012.The Cayman Island’s population is just over 51,000.Bermuda’s 2010 unemployment rate was six percent.Total borrowing or public debt was $944.5 million at the end of fiscal 2011.Revenue was $996 million, while current expenses were $1.27 billion, making for a deficit of nearly $276 million.The accumulated deficit stood at $1.29 billion by the end of March.