The Cayman Islands' economy is currently in good stead, according to a report by Moody's Investors Service.
The report was presented by Financial Secretary, Hon Kenneth Jefferson, at the Legislative Assembly (LA) on Monday, 5 March.
Real Gross Domestic Product (GDP) growth soared to 6.5 percent in 2005, as compared to the 1.2 percent average of the past few years.
This figure was mostly driven by the continued expansion of financial services, as well as the reconstruction of residences, homes and public infrastructure. The severity of the hurricane damage did not dampen investment sentiment. On the contrary, the Islands are experiencing a boom in reconstruction and in new housing and tourism projects.
The Cayman Islands continues to be a world leader in the offshore industry, accounting for around 80 percent of the world s mutual fund registrations. In 2005, mutual fund and new company registrations were up in the double digits.
The construction sector benefited from the post-Hurricane Ivan clean up, as the tourism industry took the opportunity to repair or upgrade damaged hotels and restaurants. Such activities extended to private homes as well as public infrastructure.
While the rebound in tourism is augmented, the large setback during the 2004/2005 high season meant that total tourist arrivals (stay-over and cruise) only increased marginally in 2005, with total tourist expenditures posting a 26 percent decline relative to 2004.
However, the expected recovery is in full swing with total arrivals close to pre-Hurricane Ivan levels.
There has been a strong demand for imported construction and capital goods, which widened the trade deficit substantially in 2005.
Financial performance was very favourable during the 2005/2006 fiscal-year (which ended in June 2006), with an estimated 0.9 percent central government economic surplus, a substantial recovery from the 8.5 percent of GDP deficit registered in 2004/2005 due to the aftermath of Hurricane Ivan.
Meanwhile, Government officials are optimistic about the country's economic future. According to the officials, the economy is projected to go on a 10-year growth spurt that would take the country's Administration from a $10 million operating deficit in the current financial year to a $62.8 million operating surplus by June 2016.
Within this growth period, the Government has said it anticipates that all capital spending programmes announced in the current budget will be fully financed by 2011.
It also said there would be an end to borrowing in the following year because the operating surplus is projected to grow to a level that will allow normal capital expenditure to be funded from the Operating Surplus.
This long-term view of Cayman's public finances is contained in the 2006-2007 Strategic Policy Statement (SPS).