Edness: Cut salaries rather than add debt
Former minister Quinton Edness has implored the Bermuda Government to impose cuts rather than draw on its $200 million loan agreement with Butterfield Bank.
Mr Edness warned last night that incurring further debt on top of the existing $2.185 billion would prove “disastrous” for the Island.
“We should do what has happened in the past — a ten per cent cut in salaries,” Mr Edness said, calling on similar cuts in the private sector to be passed on to the Government by way of tax.
“I know we have had cuts almost everywhere, but it will be a heck of a lot worse if our debt exceeds possibly $2.5 billion — it will still mean that we will have to find the funds.
“It's still going to come from the taxpayer. It would be better to do it now when our debt is as it is.”
Mr Edness conceded that low-income workers could be exempted from salary cuts that would otherwise impose undue hardship on families.
“There is still huge earning taking place in a number of areas — they can afford to pay 10 per cent to help the Government,” he said. “I don't earn any more; I am retired and on a pension, but I believe people like me would be able to give up five or ten per cent.
“I do not want to see us put in the disastrous position of increased debt, where we would be subservient to all kinds of financial conditions and our borrowing capacity and credit rating would go down.”
The loan agreement, approved last month by Parliament, has been likened to an overdraft by Bob Richards, the Minister of Finance, who said it would be acted upon only when “absolutely necessary” to meet financing for 2015-16, as well as reducing the 2016-17 deficit.