Dear Sir,

I recently read that the Cayman Islands Government has issued a request for proposals for a CI$236 million loan facility. When this debt, which was approved by Parliament as part of the 2026-27 Budget, is fully drawn down, it will take Cayman’s core government debt to a record high of CI$634 million (about $760 million) in 2027. Wow, we should be so lucky.

This new loan will be used for capital projects, and under their existing fiscal framework, Cayman will borrow only to fund capital expenditure. The concept is that governments should invest in projects that deliver social or economic returns rather than paying for operating costs.

I found it interesting that some of this money will be spent on loss-making entities such as the government-owned Cayman Airways. Cayman Airways operates as a loss-making state-owned enterprise heavily reliant on government (taxpayer) bailouts and funding. Here at home, we should be thankful that our home-grown BermudAir is privately owned and operated.

Cayman Islands' existing fiscal framework is governed by the Framework for Fiscal Responsibility, an agreement signed with Britain on November 23, 2011, and integrated into Cayman Islands law through amendments to the Public Management and Finance Law in 2012. This agreement came about because of Cayman’s severe public debt, mounting budget deficits and a need to restore financial stability. Cayman's debt-to-GDP ratio is about 7 per cent. (It peaked at 24.5 per cent in 2011). The core components of this framework include:

• A sound business case and risk assessment before any public procurement process begins

• Structured economic planning, value-for-money analysis and long-term risk management in public finances

• Sets strict limits on public borrowing and deficit spending

• Public projects or public/private partnerships (above $10 million and $15 million minimum respectively) require independent legal and financial advisor reviews, alongside public consultation

If the rules are breached or severe fiscal deficits/debt crises emerge, the UK Secretary of State retains the authority to intervene or require UK approval for Cayman’s significant financial and budgetary decisions.

Our story here at home is starkly different. At the end of the 1998 fiscal cycle, Bermuda’s long-term national debt stood at approximately $162 million and the debt-to-GDP ratio was about 5 per cent to 7 per cent. Government policy at the time capped public borrowing at a maximum of 10 per cent of GDP and the statutory debt ceiling was $185 million. Today, the people’s debt stands at $3.2 billion and our debt-to-GDP ratio is about 31 per cent (down from a peak of 46 per cent in 2020).

Can someone tell me what that $3.2 billion debt got us? Where exactly did that money go? Did it go to maintaining/paving our roads and new bridges? Did it get us a state-of-the-art waste facility? How about a superior public education system? Surely, for $3.2 billion, we must have received improved health facilities, adequate long-term care/seniors facilities and affordable housing?

We all know Bermuda has had festering social issues for decades, so we must have made some inroads in reducing crime rates, tackling the gang problem and curbing antisocial behaviour, right? Wrong. With $3.2 billion at our “disposal”, not one of the above-mentioned issues have had significant improvement, if any at all.

So what was it spent on? It went to government capital projects that were massively over budget, policy shifts by different administrations, global economic shocks and the compounding weight of debt servicing. What we have paid in interest payments over the course of this two decades of debt accumulation amounts to billions of dollars.

Over the past 28 years, multiple administrations exceeded their budgets, spending our tax dollars like drunken sailors, which has yielded little in the way of returns for the average working-class Bermudian. Overspending was the norm and successive administrations began aggressively borrowing to fund massive budget deficits. That overspending/borrowing cycle rolled on, with each successive administration happy to blame the previous one for the fiscal mess we are in.

Soon, the Progressive Labour Party will have a new leader and, by extension, Bermuda will have a new premier. Hopefully, that will also mean a new finance minister. Where we go from here depends on who our new leader is and what fiscal decisions they make. Given the recent implementation of the 15 per cent corporate income tax and, according to the Premier, the $1 billion-plus in revenue that has been collected to date, it’s a pity we don’t have an ironclad “Framework for Fiscal Responsibility” agreement like Cayman’s, which will ensure that guardrails for public purse spending are adhered to. All we have now are promises of future debt reduction from the Government and the stern economic advisers’ fiscal recommendations to the Government.

Over the past nine years of just this government’s tenure, we have paid approximately $1 billion in interest to our lenders. Using the CIT revenues exclusively to rid ourselves of this costly debt is the prudent way forward, according to the Government's own financial advisers.

Our existing, everyday sources of revenue (ie, not CIT) should be used for government operating expenses and addressing the pressing needs of struggling Bermudians. Also, it is essential that the Government aggressively carves out and eliminates wasteful spending.

Future policy decisions by our new premier and finance minister will determine whether we kick this debt can and its interest load down the road, or we use the golden CIT opportunity that has been handed to us to get rid of all the red on our public balance sheet, because that debt obligation belongs to all of us.

BEVERLEY CONNELL

Pembroke