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Financial services

Moody's Affirms Cayman Islands' Aa3 Sovereign Rating with Stable Outlook

Strategic Insights

— 2 min read

The Cayman Islands have maintained their Aa3 sovereign rating with a stable outlook, according to Moody's Investors Service. This assessment is based on the territory's exceptionally strong fiscal position, supported by low debt burden, substantial liquid reserves, and a consistent track record of prudent financial management. The economy benefits from high per capita income, strong institutions, and a well-regulated financial sector. The Cayman Islands' commitment to prudent financial management, backed by strong institutions and substantial fiscal buffers, provides resilience against external shocks, including those related to global financial regulation and climate-related risks.

Key Takeaways:

  • The Cayman Islands' debt burden is well below that of similarly rated peers, at just 6.4% of GDP at the end of 2024.
  • The government's commitment to prudent financial management, backed by the Framework for Fiscal Responsibility (FFR), reinforces the jurisdiction's fiscal strength.
  • The economy benefits from high per capita income, strong institutions, and a well-regulated financial sector.
  • The Cayman Islands' economy has shown resilience and adaptability during economic shocks, supporting our assessment of policy effectiveness and economic strength.
  • The government's fiscal trajectory is expected to be anchored by consistent operating surpluses, with fiscal deficits of 1-2% of GDP annually driven by capital expenditures.
  • The economy is expected to grow at an average rate of 2.5% over the next three years, driven by steady growth in financial services and tourism.
  • The Cayman Islands have established themselves as a global financial center, offering a combination of tax neutrality, regulatory efficiency, and international credibility.
  • The financial services sector is diversified across key sub-sectors, including banking, investment funds, structured finance, and securitization.
  • The Cayman Islands' exposure to climate shocks is partially mitigated by high building standards and widespread insurance coverage.

Statistics:

  • GDP per capita (PPP basis, US$): 88,699 (2024)
  • Real GDP growth (% change): 3.2% (2024)
  • Inflation Rate (CPI, % change Dec/Dec): 2.9% (2024)
  • Gen. Gov. Financial Balance/GDP: 0.1% (2024)
  • Current Account Balance/GDP: -12.4% (2024)
  • External debt/GDP: 6.4% (2024)
  • Debt burden: 6.4% of GDP (2024)
  • Fiscal surplus: 1-2% of GDP (expected annually)
  • Economic growth: 2.5% (average rate over next three years)

Sources:

  • Moody's Investors Service
  • Public Management and Finance Act
  • Framework for Fiscal Responsibility (FFR)
  • Bank for International Settlements
  • Bank for International Settlements
  • November 2022 Sovereigns methodology, available at https://ratings.moodys.com/rmc-documents/395819
  • Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology

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