Net debt hits $3 billion mark – The Royal Gazette
Updated: March 12, 2021 5:22 PM
Bermuda debt from 2013 to 2022
Finance Minister Curtis Dickinson (File photo by Blaire Simmons)
The government’s net debt has risen to $3 billion, the finance minister revealed yesterday.
But Curtis Dickinson said the historic figure could have been higher had the government not curbed spending after the Covid-19 pandemic hit.
Mr Dickinson said the pandemic response had cost nearly $290million as he outlined the government’s financial performance over the past 12 months.
He said the coronavirus had lightened the government purse in two ways – a reduction in income coupled with an increase in spending.
Mr Dickinson added that government revenue for 2020/21 had been cut by $1.1 billion to $960 million.
He said the reduction was “primarily due to the impact of the Covid-19 pandemic on just about every source of government revenue, with the main impacts being lower payroll taxes, customs duties and the loss of most tourism-related taxes and levies”. .
Mr Dickinson added that spending estimates for the year had also been sabotaged by the pandemic.
The cost of running government services for the 12 months to the end of March 2021 was first estimated at $935 million.
But the final figure is now expected to top $1 billion.
Mr Dickinson said the government had spent an unbudgeted $127.2million on Covid-19-related expenses, including a $56.8million emergency benefits package for those made redundant as a result of the pandemic.
He added: “Once the decision was made to shut down our island economy, we had less than a week to bring money to our people who were making so many sacrifices.
“It’s no exaggeration to say that we had to break it to do it.
“Bureaucratic machines are not made for quick pivots.
“However, we have achieved our goal – to provide timely and much-needed aid to our people in an unprecedented crisis.”
Mr Dickinson told MPs the government had been forced to cut spending on non-essential services.
He said a funding freeze for vacant positions, a ban on government travel and cuts to discretionary spending such as training, had resulted in savings of more than $55 million – cuts that meant the “spending of normal government operations” for the year was almost 6% lower than the original estimate of $935.6 million.
Mr Dickinson added: “Given the projections outlined above, the revised estimate of the overall deficit for 2020/21 is $245.5 million, which is $225.7 million higher than the 19 year deficit. .8 million originally planned.
“As of March 31, 2021, net debt will be $3 billion. The sinking fund balance will be approximately $348.8 million, which will be used to help fund future deficits.
Mr Dickinson said he was “proud” that the island had faced the crisis “with humanity and discipline…grace and courage”.
He added: “As difficult as this time has been, we have weathered this pandemic well and avoided some of the devastation and confusion that has plagued so many of our international neighbours, large and small.”
But he warned that while Bermuda was “at the dawn of a clear path to recovery”, major problems remained.
Mr Dickinson said: ‘Today we have significant financial commitments, including approximately $3 billion in net public debt, financial guarantees for the new airport and acute care wing and the block grant which covers the health services.
“There are also significant actuarial funding shortfalls in the Public Sector Pension Fund, the Government Employees Health Insurance Fund and the Bermuda Contributory Pension Fund.
“The increase in spending resulting from the pandemic and the financing of the economic recovery is leading to new short-term deficits and increased pressure on public finances.”