It has been said by Bob Richards, the Finance Minister to the MPs that Government is going to raise debt ceiling by 2.5 billion and it will be high for all-time. Mr. Richards said that the increase was an indication of the severe state about the financial condition of the country. This was more than $1 billion high on the present debt ceiling.
According to him, the Government has to borrow above $330 million for the present financial year alone in order to cover a shortage of income in comparison to expenses. He told MPs on his first budget statement that it is the outlook of the Government what has become the yearly practice of diminishing the debt ceiling gives the feeling that there is undoubtedly no debt management at all. This will only sanction the restriction of Government borrowing. However, it does not set down the actual borrowing amount. The only change that can be done to debt ceiling is the final downward adjustment.
Mr. Richards has cautioned the House of Assembly that Bermuda Island is facing one of the severe confronts in the history. The economic basis of the island should be strengthened and secured in a better way. The OBA realizes the level and extent of the challenge and also what can be done. The objective is to make an economy that will work for everyone. This will set up a new basis for broad-based success.
The first path will execute definite pre-growth economic policies to motivate much-needed overseas investment, re-establish confidence in the island in order to make it a place where business can be done successfully and new jobs can be found easily. The second path will eradicate lavish spending of the Government. This will decrease national debt in due course. Besides this, the assigned borrowing requirement over the next year emphasizes the importance of the situation you face. Bermuda will require endurance and commitment to modify the method in which you do your business. However, the Government can’t do anything without proper support. It will obtain new cooperation level and support from the Bermudians in every field. As such, the existence of Bermuda economy is something for which you must work together.
Government anticipates taking in above $871 million in profits in the year 2013-14. But, it will possibly spend around $983 million. An additional $134 million will be spent on servicing Bermuda’s enormous debt.
Mr. Richards has said that the economy seems to be in its fourth year of contraction whereas Gross Domestic Product of the island had been reduced by 10 per cent since the year 2007. He also added that the economic pie shared by all the Bermudians is becoming smaller with very less to go around.
Bermuda Island had also experienced Current Account scarcity for five years. He added every year operating insufficiencies have grown unchecked from a $19 million excess in 2008 to a projected $247 million shortfall in the upcoming financial year. This accelerating progression is not acceptable at all. Thus, debt has been increasing since 2005, leaving the country by about $1.45 billion.
He further added that the debt level was a very big number for a small population that will take several years to pay off. As such, most Ministries’ cash requests have been reduced by a considerable amount during financial planning. Furthermore, the managerial structure of the Government is unnecessarily massive with 71 departments. This is a complication that produces surplus expenditure.