A Governor appointed by the British Crown is the head of Government. The present Constitution came into effect in 1993 and provides for an Executive Council to advise the Governor on administration of the islands. The Council is made up of five Elected and three Official Members and is chaired by the Governor.
The former, called Ministers from February 1994, are elected from the 15 elected representatives in the Legislative Assembly and have a range of responsibilities allocated by the Governor, while the latter are the Chief Secretary, the Financial Secretary, and the Attorney General. The Legislative Assembly may remove a minister from office by nine votes out of the 15. There is no Chief Minister. There have been no political parties since the mid-1960s but politicians organize themselves into teams. The Chief Secretary is the First Official Member of the Executive Council, and acts as Governor in the absence of the Governor.
The Cayman Islands is the largest offshore centre & the 5th largest financial centre in the world. The original settlers earned their living from the sea, either as turtle fishermen or as crew members on ships around the world. In 1906 more than a fifth of the population of 5,000 was estimated to be at sea, and even in the 1950s the government’s annual report said that the main export was of seamen and their remittances the mainstay of the economy. Today the standard of living is high, with the highest per capita income in the Caribbean. The islands’ economy is based largely on offshore finance and banking, tourism, real estate and construction, and a little local industry. Apart from a certain amount of meat, turtle, fish and a few local fruits and vegetables, almost all foodstuffs and other necessities are imported. The cost of living therefore rises in line with that of the main trading partners.
In 1999 there were 584 licensed banks and trust companies, 473 captive insurance companies and 1,928 registered mutual funds; the banking sector employs more than a tenth of the labour force and contributes 15.5% of gdp. The Cayman Islands Stock Exchange began operating in January 1997 at the same time as the establishment of a Monetary Authority, formed by the amalgamation of the government’s financial services supervision department and currency board. As well as funds based in the Cayman Islands, the exchange hopes to attract overseas clients. By 1999 209 issuers of securities with a market capital of US$20 billion were listed, of which 60% were mutual funds. In 1990 the Cayman Islands signed a mutual legal assistance treaty with the USA and in 1996 the Islands enacted the UK’s ‘proceeds of criminal conduct’ law. There is now an exchange of information with the USA regarding the perpetrators of commercial crime, while banks now alert authorities to suspicious transactions by clients without breaching the confidentiality law. It is an offence for banks to conceal money laundering although tax crimes or tax evasion are excluded because of the Cayman’s tax free status. There is also a large shipping registry, with 1,200 ships on the register in 1999.
Tourism revenues have risen sharply in recent years. The slowdown in the US economy in 1991 brought a sharp drop in air arrivals and hotel occupancy fell to 60% from 68% in 1990, although cruise ship visitors soared by 31% to 474,747, with the introduction of calls by the cruise liner Ecstasy which carries 2,500 passengers. Since 1991 the market has improved. By 1998 cruise ship passenger arrivals were 852,527. Stopover visitors numbered a record 404,205 in 1998 having risen steadily each year. Nearly three quarters of all stayover visitors are from the USA. Total spending by tourists was US$508mn in 1997, of which stayover visitors accounted for US$456 mn.
There was a rapid rise in construction activity in the 1980s to meet demand and tourist accommodation doubled in 10 years. As a result, spectacular rates of economic growth were recorded: 15.6% in 1987, 15.2% in 1988, 10.6% in 1989, slowing to 8.0% in 1990. There was full employment and labour had to be imported to meet demand. The slowdown of the 1990s brought a huge fall in public and private construction projects and unemployment rose to a record 7.6% by 1992. The government budget went into deficit and the public debt rose from US$7mn at end-1990 to US$21.3mn at end-1991. The new Government elected in 1992 curbed public spending and brought the fiscal accounts back into surplus, helped by high gdp growth rates as US demand picked up again.