📈 Cayman Islands Government's growing debt projected to cost CI$44M by 2024/25

The Cayman Islands Government anticipates spending approximately CI$44 million over the next two years to finance its public debt. The public debt, which stood at CI$453.1 million at the end of 2023, is expected to decrease to CI$430.2 million this year. However, by the end of the new budget cycle in 2025, the government's debt is projected to rise to a new high of CI$495.1M. Despite this, the government's debt-to-GDP ratio will remain at 7.3%, under the 10% limit set in public finance legislation. 📉

An increase in borrowing will cost the government around $44M over the next two years in financing fees. The government aims to fund capital projects and investments using operating surpluses, but the projected surplus for both 2024 and 2025 will not be sufficient to fully fund the growing list of infrastructure projects. In 2024, the government will borrow an additional $27M but has a limit of up to $123M in 2025. The government already has access this year to borrowings of more than CI$105M from a previous loan that it has not yet used in full. 🏦

Despite the growing debt, Premier and Finance Minister Juliana O’Connor-Connolly stated that Cayman’s debt as a proportion of its GDP and operational revenue was an “enviable metric that few countries in the world can match”. The government plans to monitor its cash reserves and cash needs closely and will only draw down on the loan funds if and when it is absolutely necessary. Due to existing and new borrowings, the government is expected to incur financing costs of up to $18.4M in 2024 and over $24.7M in 2025. 💰