The Cayman Islands Government has issued a request for proposals for a $236 million loan facility. When the debt, which was approved by Parliament as part of the 2026 to 2027 budget, is fully drawn down, it will take Cayman’s core government debt to a record high of $634 million in 2027.

According to forecasts in the Strategic Policy Statement, another $85 million will be borrowed in 2028, taking core government debt to almost $656 million. Cayman’s core government debt last reached comparable levels during the fiscal crisis of 2011, when it hit $613 million.

While the nominal debt numbers for 2026/2027 are comparable to 2010/2011, Cayman’s situation is far healthier today, as the debt represents a much smaller percentage of GDP.

The 2010/11 crisis led to the UK and Cayman agreeing the Framework for Fiscal Responsibility, which limits the jurisdiction’s annual debt repayments to 10% of core government revenue, while net debt can’t exceed 80% of core government revenue.

Even with the latest loan, government debt servicing is forecast to be within framework limits at 7.4%, while net debt will be at 24.2%. Ironically the UK has much worse debt metrics – for example, its net debt is around 240% of government revenue.

Another tenet of the framework is that Cayman will only borrow to fund capital expenditure. The concept is that governments should invest in projects that deliver social or economic returns rather than paying for operating costs.

The 2026-2027 budget forecasts a total capital expenditure programme of $264.8 million. The lion’s share will come from the loan facility, with the remaining $28.8 million coming from government.

“Despite the framework, this debt won’t all be used for capital expenditure,” said a Cayman-based economist who asked to remain anonymous because of the sensitivity of the topic.

“Some of the money is being spent on loss-making entities like Cayman Airways and the Turtle Centre, so you’re borrowing money to pay salaries.” The economist’s point isn’t that Cayman is breaking the framework, but that it is not strictly adhering to the principle of investing in projects that deliver returns.

According to the 2026-2027 budget figures, $55.5 million of the capital expenditure programme has been earmarked for “capital/equity investment in statutory authorities and government companies.”

That includes $19 million “to cover debt servicing and operating expenditures” at Cayman Airways and $9 million to “cover operating losses” at the Cayman Turtle Conservation and Education Centre.

$209 million of the capital expenditure programme for the period has been allotted to “ministries portfolios and offices.” That includes investment in roads and schools plus land purchases by government.