Are we bankrupt yet?

Make text smaller Make text larger


December 12, 2012

Dear Sir,

Are we bankrupt yet?

Well, a government does not become bankrupt in the same way as a business or person. A government is rated (by agencies) on the basis that the Government can increase revenue by raising taxes, duties, fees (and not by continually increasing debt), to offset any financial shortfall. What does happen to a government is that they can run short of cash, and cannot pay employees without raising extra funds. So what is the situation here? In February, 2011, the new auditor general Heather A. Jacobs Mathews, provided a wonderful financial synopsis of Bermuda’s finances.

Heather A. Jacobs Mathews has since that time provided reports on the consolidated accounts (these are the high level financial statements of government). Needless to say these reports have highlighted severe deficiencies in the accounting, not to mention the lack of completeness of many underlying financial statements. All can be found at www.oagbermuda.gov.bm

Government is allowed nine months to prepare and present the consolidated accounts. Although these may be complex, allowing that amount of time in this day and age must be unnecessary, and will allow poor financial positions to deteriorate too quickly before they are discovered. The March 31st, 2012 financial statements should be completed by December 31, 2012 with the Auditor’s report. Before that time, they have to be tabled in the house. The financial statements have been completed as has the auditor’s report. So here we are two weeks from the end of the year, and no indication of the financial position has been shown. If Government were proud of the numbers, would we know something about them?

If the auditor’s report has something scathing in it (Heather A. Jacobs Mathews committed to review some of governments contracts issued in the past) would it be made public prior to the election? I believe the Auditor General and the powers that be have a duty to the public to provide sections of at least the auditor’s report to the public before the election.

Key questions about our “financial failure” are: “Has government substantially reduced the deficit between revenue and expenditure?” We are at a critical level as I will show below. I have not seen the necessary actions to stem the huge increasing deficit which was $1.4bn on March 31st, 2011; the vast majority of that occurring in the past 5 years. The deficit amounts, i.e. excess spending each year, have been $215m, $236m, $375m, $312m as at March 31 of 2008, 2009, 2010, 2011. Our public debt at March 31, 2011 was $1bn, and the net debt was $2bn. Our financial cash, or available cash funds to draw on to pay government workers, is very low or non-existent. We are now one year and nine months past that point. So if the government is not proud of the numbers, have we continued at ~$300m annual deficit? Have you seen government substantially reduce spending? If they have not, add another one year and nine months. Government estimates an additional $400m deficit (which seems low by as much as $150m) and increased borrowing of $420m by December 31, 2012. So do the math. Are we bankrupt yet?

I would expect the union to be very concerned, because unless penalising taxes are imposed, or more unbearable debt is added, the government workers may not be paid in the next few years.

While it is said that you have to spend money to make money, you cannot continue to spend beyond your means. Government is essentially deciding that we would rather pay huge burdensome taxes in the future, than curb our spending. Have you seen any abusive spending lately?

VOTER J

Pembroke

You must be registered or signed-in to post comment or to vote.

Published Dec 17, 2012 at 8:00 am (Updated Dec 17, 2012 at 12:11 am)

Are we bankrupt yet?

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon

Take Our Poll

Today's Obituaries

View all Obituaries Place an obituary

Facebook Activity