April 7, 2014

Dear Sir

It appears that there is widespread confusion within our community over the decision by the One Bermuda Alliance Government to borrow more money on top of all the money borrowed by the Progressive Labour Party. After all the protests to this borrowing by the OBA why did the OBA borrow more? Unfortunately the truth is that the OBA had little choice as either they were going to have to lay off thousands of civil service personnel, which they had promised not to do, or borrow more money to be able to continue to pay them. At the time the OBA came to office in December 2012 salaries wages and other personnel costs amounted to $586 million out of total revenue of about $850 million and the PLP were running a deficit of over $300 million.

All credit lines were tapped out and the Government were in danger of not being able to pay their bills. This is what is known by economists as the debt trap. You borrow money for projects that you deem necessary thinking that the economy will recover but it does not. Then you have no choice but to borrow more money and get ever deeper into debt. In the private sector this leads to bankruptcy; in the public sector this leads to very tough times for all.

Having inherited this economic mess from the PLP the OBA government decided to borrow enough money to see itself through three years of expected deficits thus giving itself time to introduce business friendly policies as opposed to unfriendly ones, eg term limits, which would bring about revenue growth while at the same time reducing expenses where it could without laying people off. After a year and a half or so it does appear that these business friendly policies are beginning to work: there are more company registrations than in the year before, we have more self sufficient people living here, retail sales are improving for some, real estate activity both in rental and sales is improving, forward bookings for hotels are better, several south shore hotel properties have been purchased for redevelopment, the Green family are investing heavily in the future and the Tourism Authority has been organised and a leader found.

In the last few months we have seen the PLP frantically objecting to everything, creating as much political distraction as possible and sowing as many doubts about the policies of the OBA as they can. Instead of taking responsibility for the economic mess they created they do not want to give the OBA policies a chance. The strategy made possible by the OBA’s financing strategy is gaining traction and needs to be supported by the entire country. If we continue on with business friendly policies as we are we may just be able to take responsibility for ourselves and avoid going cap in hand at the end to the UK government or the IMF!

KIRK KITSON