Government told to get to grips’ with debt
The Auditor-General has urged the Bermuda Government to come up with a proper plan of action to “get to grips” with its mounting debt.
Heather Thomas said that debt servicing costs were increasingly affecting the Government’s ability to provide services and meet obligations.
Ms Thomas, in a report released yesterday, gave an unqualified opinion that the Government’s financial statements for the four fiscal years from March 2012 to March 2016 presented the Consolidated Fund’s financial position fairly.
But she raised several concerns and highlighted the island’s debt problem.
The report pointed out that there was no effective long-term plan for a reduction in public debt, or the unfunded liabilities of pension plans, or the size of taxpayer indebtedness “all of which continue to grow unsustainably”.
Ms Thomas said: “In my view, Government should make getting to grips with the debt and the deficit its highest priority and provide realistic expectations and timelines with respect to desired outcomes.”
She warned: “The indicators of financial conditions set out in my report demonstrate a level of unsustainability and impaired flexibility for the Fund, which Government must make every effort to address.”
The country’s net debt stood at more than $2.4 billion at the end of March this year.
The Government has forecast a deficit of nearly $90 million for the financial year due to end next March. Growing indebtedness was among “matters of special importance” highlighted in the Auditor-General’s report.
The section also described the need for summary financial statements for the whole public sector, without which the Government is making decisions without knowing its combined financial position.
It added that the Government had also failed to provide the public with the analytical information that would help them understand its financial statements and financial condition.
Ms Thomas said: “Consequently, the resources available to carry out government programmes effectively are predictably being impacted by increasing debt-servicing costs.
“Government needs to be clear about how its goals and priorities will be affected by fewer resources and needs to ensure that the reduced resources are aligned in a way that maximises their effectiveness and has the least impact on the quality of its service delivery.”
She added that she was “extremely concerned” that most of the matters of special importance had already been raised by previous auditors-general.
Ms Thomas warned: “Each year of inaction exacerbates the problems, and must be addressed with a sense of urgency.
“There have been discussions and communications with respect to these matters but no formal plan of action has been developed to date.”
She also urged the Government to make clear whether it accepted recommendations from both the Commission of Inquiry into the Auditor-General’s reports for the fiscal years ended March 2010, 2011 and 2012, and the Spending and Government Efficiency Commission.
She asked the Government to set out a timeline for implementation of the recommendations.
Ms Thomas said: “The Commissions’ reports contain a wide range of recommendations focusing on governance, high-level policy, accountability and administration.
“I recommended that the Government should indicate clearly the extent to which it accepts the Commissions’ recommendations along with the rationale if there are any recommendations not accepted, set out a plan and a timeline for their implementation, and report out periodically on the status of the recommendations’ implementation”.
She added that her report for the fiscal year ended March 31, 2017 would be tabled in the House of Assembly in this fiscal year.