The Cayman Islands’ Balance of Payments (Current Account) Report 2012 which summarizes the country’s economic and financial transactions on goods and services

Grand Cayman, Dec. 23, 2013 /PRNewswire-iReach/ — Cayman’s Trade in Services Continued to be the Sole Net Foreign Exchange Earner in 2012

The Cayman Islands’ Balance of Payments (Current Account) Report 2012 which summarizes the country’s economic and financial transactions on goods and services, income and transfers with the rest of the world, was released today. Data from the Report is used largely by credit rating agencies, creditors and foreign investors as general indicators of the country’s ability to service its foreign debt.

In 2012, the Cayman Islands’ current account balance was in deficit amounting to CI$485.6 million. The deficit is traced largely to the deficit arising from trade in goods amounting to CI$603.4 million, followed by the deficit in primary income (investment income and compensation) transactions amounting to CI$264.5 million, and the deficit in secondary income amounting to CI$146.9 million. The latter is comprised mainly of workers’ remittances abroad.

Offsetting the above-mentioned deficits was a significant amount of surplus arising from trade in services which reached CI$529.1 million in 2012. Financial services, travel and other business services (including legal and accounting) led the services sector in realizing the surplus account for the Cayman Islands.

SOURCE Cayman Economics & Statistics Office

To read the whole of the Cayman Islands’ Balance of Payments (Current Account) Report 2012 it can be downloaded at: http://www.eso.ky/UserFiles/page_docums/files/uploads/cabinet_note_-_the_cayman_islands_balanc.pdf

The Executive Summary from the Report follows:

1. Executive Summary

1.1 The balance of payments (BOP) is the system of accounts that record all economic and financial transactions between residents of the Cayman Islands and the rest of the world.  It is comprised of three (3) types of accounts:

(i)        the  current  account  which  captures  transactions  in  trade  on  goods  and

services, primary income and secondary income (transfers);

(ii)       the financial account which comprises all types of investment; and

(iii)      the capital account which records all capital transfers.

1.2 A  negative  balance  or  a  deficit  in  any  of  the  categories  in  the  current  account indicates that the total receipts of residents from non-residents are less than their total payments to non-residents.

1.3 This report presents the current account estimates for the years 2008 to 2012, with focus on 2012, and captures economic transactions between residents of the Cayman Islands and the rest of the world in goods, services and income.

1.4  The preliminary estimate of the Cayman Islands’ current account deficit for the year

2012 amounted to $485.6 million, an increase of 6.5 percent from the revised estimate of $456.1 million for 2011.

1.5 The current account deficit in 2012 is comprised of the following balances:

(i)        Balance of trade in goods     : -$603.4 million

(ii)       Balance of trade in services :  $529.1 million

(iii)      Balance of primary income  : -$264.5 million

(iv)      Balance of secondary income          : -$146.9 million

1.6 Balance of trade in goods

Net payments for goods in 2012 grew slightly by 0.2 percent compared to the 2.5 percent increase experienced in 2011. This was largely on account of the fall in export revenue of $1.5 million compared to the $0.53 million decline in payments for imports.

1.7  Balance of trade in services

Receipts from services transactions continue to outpace payments, resulting in a surplus on the trade in services account.  The surplus increased by 29.0 percent in

2012 over 2011. The nine (9) services comprising this current account balance and their corresponding balances in 2012 are as follows:

(i)        Financial services (excluding insurance)   : $315.6 million

(ii)       Travel : $250.8 million

(iii)      Other business services       : $124.7 million

(iv)      Government  goods and services    : $69.5 million

(v)       Transportation          : -$95.7 million

(vi)      Insurance and pension services      : -$94.1 million

(vii)     Telecommunication, computer

and information services and  charges

for the use of intellectual properties          : -$36.1 million

(viii)    Other services           : -$5.6 million

From the above it can be seen that financial services and travel services are the leading sources of foreign exchange receipts for the Cayman Islands.  Other business services and government goods and services were also major contributors to foreign exchange receipts.

1.8  Balance of primary income

The primary income deficit recorded a sharp increase of 123.7 percent compared to

2011. This deficit is traced to the balances from the following income transactions:

(i)        Portfolio investment : $518.9 million

(ii)       Direct investment     : -$638.6 million

(iii)      Other investments    : -$133.6 million

(iv)      Compensation of employees            : -$11.1 million

From the above, it can be observed that income earnings from abroad from portfolio investments  of  residents  were  the  single  biggest  source  of  surplus  of  foreign exchange for the Cayman Islands.  On the other hand, direct investment continues to account for the largest net payments of income largely as a result of dividend payments and reinvested earnings.

1.9  Balance of secondary income

The deficit in the secondary income (current transfers) increased slightly by 0.9 percent  compared  to  the  amount  in  2011.  The deficit  was  influenced  by  the following:

(i)        General government transfers :      $13.3 million

(ii)       Workers’ remittances :                     -$144.0 million

(iii)      Other current transfers :                 -$16.1 million

SEE ALSO ATTACHMENTS FROM THE CURRENT ACCOUNT PRELIMINARY ESTIMATES SECTION