Bermuda’s failure to meet its own goals for spending cuts is “unfortunate” and “will not play out well with rating agencies and our creditors”, according to Grant Gibbons, the Minister for Economic Development.

Under the middle-term expenditure framework, the Bermuda Government had committed to reducing spending by 5 per cent, but instead can only generate a reduction of 3.5 per cent.

The Island’s debt is approaching $2.31 billion, Parliament was told, while Government will seek spending cuts of 4.6 per cent in the 2016-17 fiscal year.

Dr Gibbons said that decision-making by Cabinet that did not take cash flow into account had been “behind the financial crisis that the Government finds itself in”.

Basing decisions on available revenue is “what is meant by living within one’s means”, Dr Gibbons continued yesterday. “We are still living beyond our means.”

The ministry must work to reestablish a “prudent benchmark”, he told the House of Assembly. Dr Gibbons read the brief on behalf of Finance Minister Bob Richards, who was unable to attend Parliament yesterday because of illness.

The statement includes a defence of the multiyear borrowing plans that the Opposition condemned as a “bad bet”, based on an assumption that interest rates were going to rise when a loan of $800 million was approved in 2013.

Dr Gibbons said the minister stood by it, despite interest rates remaining low.

He said that in previous years, the former government had used local banks for much smaller loans that resulted in higher transactional and interest rate costs. By accessing the international market “where size has a direct bearing on interest rates”, both transactional and rate costs had been reduced.

Bermuda has “in general maintained our credit ratings when various other countries have been downgraded”, Dr Gibbons noted. One cost-saving initiative has been to cancel the Island’s contract with Fitch, leaving only two credit rating agencies to grade Bermuda’s financial performance.