After years marked by deficits and austerity, this year’s Budget reflects an opportunity for Bermuda “to turn the page” towards greater financial resilience and social investment, an economist said.

However, David Annan — an economics professor at the Bermuda College — added that the success of that transition would depend on careful implementation and global economic conditions as well as the Government’s ability to maintain fiscal discipline while managing new expectations.

He supported recommendations by the Tax Reform Commission — measures the Bermuda Chamber of Commerce this week highlighted as “valuable”.

While the Budget offers “cautious optimism and a sense of forward momentum”, Dr Annan said sustained prudence would be critical to ensure that reform measures translated into durable economic stability for the years ahead.

He said for the first time in more than two decades, Bermuda projected a significant Budget surplus this year, an estimated $19.7 million more than forecast for 2024-25.

This marks an “end to austerity” and a shift towards investment, the economist said.

He added: “This is a major positive sign for government finances, allowing for greater flexibility in spending and potentially reducing the need for borrowing.

“It signals a move towards fiscal stability and the ability to reinvest in the community.”

The economist said that when David Burt, the Premier and Minister of Finance, presented the fiscal plan for 2026-27 on Friday, he was expected to announce a slew of cost-of-living plans, which could have direct impact on residents.

However, the measures will have implications — including positive outcomes — with windfall from the corporate income tax regime.

But he cautioned that the Budget’s long-term impact would be “highly sensitive to global economic and political currents” which he said the Government was actively working to mitigate.

On the cost of living, Dr Annan believes Mr Burt may announce tax breaks and duty reductions aimed at easing the financial burden on residents, as outlined in the Pre-Budget Report in December.

They include a probable reduction in customs duty on building materials to 10 per cent, the elimination of customs duty on motor vehicle parts and a 50 per cent reduction on the monthly mobile phone tax, from $12 to $6.

He also foresees a reduction of fuel duty for electricity generation to four cents per litre, which may save average customers about $300 per year on electricity bills.

A base rate of land tax reduced from $300 to $150, starting this year, could be on the list, as well as a further 10 per cent reduction on private car licensing fees.

Dr Annan added: “These measures are designed to put more money back into residents’ pockets, stimulate economic activity — especially in construction — and address the high cost of living, which has been a significant concern.”

However, he said some deferred tax breaks could be revisited in the 2026-27 budget.

In further analysis, the economist projects increased investment in public services and infrastructure fuelled by a record capital investment of $149.8 million.

In healthcare, he foresees additional funding of approximately $56.25 million for universal healthcare and increased coverage limits for HIP and Future Care.

He also predicts expansion of annual health exam coverage and funding for hospital staff back-pay and cost-of-living allowances.

This investment is likely to have a twofold impact on the insurance sector, as it presents both a direct financial cost to insurers and a strategic opportunity for the wider industry.

Further, he projects the most immediate impact to be an end of the four-year freeze on the Standard Premium Rate for health insurance.

He acknowledged the move was necessary to help fund a $38 million retroactive pay package for hospital staff and to keep the Bermuda Hospitals Board financially stable.

Dr Annan projected a $149.2 million allocation for education, including a 26 per cent increase in substitute teachers, capital boost for new primary schools and scholarship allocation.

He expects “significant funding” for road repaving, new ferries and buses, replacement of the Swing Bridge at St George’s and upgrades at the Tynes Bay Waste Facility.

In the housing sector, the economist anticipates a $17 million allocation for the Bermuda Housing Corporation, aimed at delivering 30 additional affordable housing units in 2026.

If these measures were implemented, he expected increased healthcare costs, which he said would lead to higher insurance premiums for residents.

He also foresees “deep-seated issues”, which may continue to constrain the housing market, such as very high construction costs and a shortage of local skilled tradespeople.

On future opportunities for Bermuda, Dr Annan cited a KPMG budget analysis which said the island was missing out by not explicitly incorporating climate strategy and green finance into its fiscal planning.

Meanwhile, the Chamber of Commerce urged the Government to provide a detailed outline of healthcare funding proposals, including metrics for outcomes to be expected.

It said it supported the TRC’s healthcare initiatives, including an allocation of $60 million annually for senior support, assistance for the underinsured and low-income healthcare.

“These measures address critical cost-of-living challenges, particularly for vulnerable groups, and align with the TRC’s goal of reducing healthcare system inefficiencies,” the group added.