Balancing health and wealth
Thanks to bold action by the Cayman Islands government we have protected the health and safety of our citizens, writes The Hon. Alden McLaughlin, the Premier of the Cayman Islands.
In a year dominated by the unprecedented COVID-19 pandemic, the Cayman Islands is one of the few jurisdictions to have weathered the upheaval relatively well and struck a balance between the safety of our people and the continuation of our economy.
The pandemic has, undoubtedly, impacted our affairs but thanks to bold action by the Cayman Islands government we have protected the health and safety of our citizens. In addition, this administration took steps to protect the health of our entire financial services industry, including the captive insurance sector.
We took early, decisive action in an effort to prevent aggressive community spread of COVID-19 in the Cayman Islands. Our National Emergency Operations Centre was activated on March 3, with the government then implementing stringent lockdown, “shelter-in-place”, isolation and quarantine policies once our first COVID-19 case was confirmed in mid-March. Our ports and airports were closed for cruise passengers and tourists arriving by air, respectively.
Of course, the decisions taken (and continuing to be made) have had a significant impact on tourism. We know the continued closure of our ports for cruise passengers has been hard on local families and businesses that cater to this segment of the economy. We know our cautious approach to the re-opening of our borders is often at odds with air travel policies elsewhere.
Therefore, the government has implemented a number of financial and other programmes to support displaced tourism workers and to support the business community via grants, loans, and other measures.
“Sound fiscal management has allowed the government to continue funding and progressing important capital projects.”
The Hon. Alden McLaughlin
The local financial services industry made a relatively seamless transition to working remotely during the shelter-in-place period. Business continued (and grew in some areas) throughout the height of the local pandemic response. The government did its part to assist with sustaining industry activity through deferring fee payments, extending deadlines and encouraging the use of technological advances to complete transactions.
Our preliminary economic statistics bear out much of these truths. According to the Economics and Statistics Office First Quarter Economic Report 2020, economic activity in the Cayman Islands as measured by the gross domestic product (GDP) in real terms is estimated to have increased by 1.9 percent in the first three months of the year. The financing and insurance services sector, which includes segments of the financial services industry, remained the largest contributor to GDP and grew by an estimated 1.3 percent for the quarter.
It’s also worth noting that the statistics show government had been fiscally prudent leading up to the pandemic, as central government recorded an overall surplus of CI $176.3 million in the first three months of the year. This resulted from revenue of $353.2 million and expenditure of $176.9 million. The central government’s outstanding debt fell and settled at $279.3 million as at March 2020, lower than the $417.4 million recorded as at March 2019.
“The Cayman Islands government does not work in isolation. We carefully consider the input of other important stakeholders.”
Such sound fiscal management has allowed the government to continue funding and progressing important capital projects this year, including the Owen Roberts International Airport renovations.
While the full airport renovation remains ongoing, including expansions to the runway, when completed it will form an integral part of Cayman’s five-year National Tourism Plan. The modern airport will almost triple its current capacity, thus supporting an increase in visitor air arrivals and facilitating even smoother Immigration and Customs processes.
Government has taken the opportunity to explore new initiatives that could boost Cayman’s economy. A Global Citizen Concierge programme was launched in October to attract ‘digital nomads’ who wish to visit the Cayman Islands on a long-term basis and be able to continue to work remotely. The programme, which covers up to a two-year period of residence, is open to individuals earning a minimum annual income of US $100,000 and could provide a roughly $60 million annual contribution to the economy.
All of these facts are testament to the resilience of the government and our industry. This pandemic is unlike anything the world has ever faced but I believe the Cayman Islands relied on the lessons learned as a result of our devastating experience with Hurricane Ivan in 2004 and the financial services industry has proved that its business continuity plans were significantly enhanced.
The Cayman Islands remains a jurisdiction that continues to boast a resilient financial services industry, inclusive of captives, that maintains our place as a leading jurisdiction in global finance.
The Cayman Islands offers a wealth of experience and technical knowledge in multiple disciplines, and in the captive insurance space that equates to Cayman excelling at attracting sound business and aptly catering to the needs of our clients. Our robust legislative framework provides captives with freedom regarding their management and structure, and offers our regulator the tools to adhere to global standards.
Indeed, while legislation and regulation are the ultimate responsibilities of any government, the Cayman Islands government does not work in isolation. We carefully consider the input of other important stakeholders, including our financial services regulator, the Cayman Islands Monetary Authority (CIMA); and the Insurance Managers Association of Cayman (IMAC).
Government is extremely grateful for the insight and knowledge offered by CIMA and IMAC in the captive insurance space. By drawing upon their collective wisdom, government is well positioned to enact policy, legislation, and regulation that both meets global standards and addresses the needs of those looking to domicile captives in the Cayman Islands.