Bermuda’s debt set to increase
The House of Assembly yesterday passed legislation to increase Bermuda's debt to about $2.75 billion.
But Curtis Dickinson, the Minister of Finance, told MPs the Government Loans Amendment (No 2) Act had taken effect on September 13.
Mr Dickinson said the legislation took effect under the Provisional Collection of Revenue Act, 1975.
The Act gave the Government room to cover a $165 million guarantee, plus related expenses, for the Caroline Bay development at Morgan's Point, Southampton.
Mr Dickinson emphasised the Government's credit line of $200 million agreed with island banks did not amount to a loan.
He explained that it was “simply the flexibility to borrow up to that amount”.
The Government has drawn about $170 million so far to buy loans for the stalled development.
Mr Dickinson said that the Government had decided to acquire the claims of the lenders, “as opposed to just paying up on the guarantee”.
He explained that route put the Government in a stronger position.
Patricia Gordon-Pamplin, the Shadow Minister of Health, told the House that the government guarantee had been essential for the development to proceed under the land swap agreement when the project moved from the Southlands site, in Warwick, to the Morgan's Point site in Southampton.
She said the former United States base had been left contaminated and that without the guarantee “there would never have been a project at that site”.
Ms Gordon-Pamplin said the Bill was “straightforward”.
She added: “Certainly we understand the reason for the debt ceiling to be raised.”